The Central Bank of Nigeria (CBN) has issued its Customer Due Diligence Regulations 2023, which apply to financial institutions that fall under its regulatory purview, as it takes a firm stance against financial crime.
The Central Bank of Nigeria’s latest move aims to improve compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) provisions while aligning with international best practises.
The CBN has made it mandatory for financial institutions to collect and verify customers’ social media handles as part of their Know Your Customer (KYC) requirements in order to improve the accuracy and depth of customer identification.
New Rules and Regulations
These new regulations, which supplement existing provisions outlined in the Central Bank of Nigeria’s Anti-Money Laundering, Combating Terrorism Financing, and Countering Proliferation Financing of Weapons of Mass Destruction in Financial Institutions Regulations of 2022, are intended to strengthen the fight against money laundering, terrorism financing, and proliferation financing.
Financial institutions must establish internal processes and procedures for conducting customer due diligence measures for both potential and existing customers, including occasional customers, under the new regulations.
Customers, whether individuals or legal entities, must be identified, and specific information such as legal names, addresses, contact information, identification documents, account types, nature of banking relationships, and signatures must be obtained. Furthermore, the regulations emphasise the importance of identifying politically exposed individuals (PEPs).
Financial institutions must rely on reliable and independent source documents, data, or information to verify customer identities.
Individuals must confirm their date of birth, residential address, contact information, and the validity of official documentation.
Financial institutions are required to conduct searches on public registries or databases, review annual reports or relevant financial statements, and examine board resolutions in the case of legal persons or legal arrangements.
The regulations also emphasise the importance of maintaining accurate records and customer information.
Financial institutions must keep customer due diligence records, account files, business correspondence, and analysis results for at least five years after the termination or cessation of a business relationship or an occasional transaction.
Based on risk categories, regular reviews of existing customer records are required, with high-risk customers requiring annual reviews, medium-risk customers requiring reviews every 18 months, and low-risk customers requiring reviews every three years.
Handles for Social Media
Financial institutions operating under the CBN’s regulatory purview are now required to collect and verify customers’ social media handles as part of their KYC process, according to the new regulations.
Individuals and legal entities are both subject to this requirement.
Incorporating social media handles into KYC requirements aims to improve the accuracy and depth of customer identification.
Financial institutions can gain valuable insights into their customers’ online presence and activities by obtaining this additional information, allowing for a better assessment of potential risks associated with money laundering, terrorism financing, and proliferation financing.
Optics
The CBN’s decision to include social media handles as a mandatory KYC requirement acknowledges the growing influence and prevalence of social media platforms in the daily lives of individuals and businesses.
It recognises that social media can provide valuable information about customers’ professional networks, affiliations, and potential income sources.
Financial institutions will be required to develop internal processes and procedures for accurately collecting and verifying customers’ social media handles.
This information, along with other KYC data such as legal names, addresses, contact information, and identification documents, will be used to create a comprehensive profile of the customer.
What does this mean?
The inclusion of social media handles in the KYC requirements demonstrates the CBN’s commitment to keeping up with technological advancements and evolving financial risks.
The CBN intends to ensure that financial institutions have a more holistic understanding of their customers by adapting regulations to include digital footprints, promoting enhanced due diligence and risk mitigation.
Individuals and businesses should be aware of their online presence and activities as a result of this development.
Customers should ensure that the information they share on social media platforms is consistent with their stated profiles and with their financial transactions.
Financial institutions will use this information responsibly while adhering to strict data privacy and protection regulations.
