Banks were gripped on Wednesday by the fear of a major liquidity
crisis should the government pull out funds belonging to customers
without Bank Verification Number (BVN). The deadline given by the court
for such customers to lose their cash is tomorrow.
Justice Dimgba Igwe of the Federal High Court, ruling on an ex
parte application filed by the Federal Government through the Office of
the Attorney-General of the Federation on October 21, granted the
temporary forfeiture of such cash within two weeks unless the owners
justify their ownership of such accounts.
There has been confusion over the status of such funds after the 14-day deadline.
The Nation learnt yesterday that the Central Bank of Nigeria (CBN)
might, at the expiration of the deadline, compel the 21 commercial banks
to provide a status report on non-BVN-linked accounts in their books.
When that happens, banking sector liquidity may suffer as lenders begin
to return un-linked funds to government coffers.
The Vice-President, West African Pan African Lawyers Union (PALU),
Emeka Obegoru, said if there was no suit challenging the court ruling,
the banks will have to produce a full list of their customers without
BVN.
He said failure to comply meant the banks will have to tell the court why they could not produce the list.
Director-General of the West African Institute for Financial and
Economic Management (WAIFEM) Prof. Akpan Ekpo agreed with Obegoru. He
said if neither the banks nor individuals complained and the timeline
elapsed, the government must find a way to get the funds from the
lenders.
He disclosed that many people with skeletons in their cupboards
still refused to enroll on the BVN network because it will expose their
illicit financial dealings.
He, however, said it would remain an uphill task for the government
to trace the funds, given that the banks are more likely to protect
their customers unless whistle blowers give out information on the
accounts to the public or the government.
Ekpo said keeping money in safe, a practice that does not require
BVN, had been a regular practice, and will continue to be an avenue
where fraudulent persons keep huge cash in banks’ vaults to evade asset
tracers.
“I think it will turn a money spinner for whistleblowers as
government pressures the banks to get the true position of key accounts
without BVN,” he said.
Ekpo said lenders could collude with high net-worth customers or
politically exposed persons without BVN or accounts not linked to BVN to
ensure their financial dealings are not exposed.
“How to get the funds out from the banks is going to be a
problem for government because chances are that banks will protect their
customers. Even if the government decides to raid the banks, genuine
customers’ money may be carted away,” he said,
Former Executive Director, Keystone Bank, Richard Obire, said for
now, neither banks nor civil society groups had challenged the exparte
the judgment, hence leaving the implementation of the ruling at the
discretion of the Federal Government.
He said where the funds involved were large enough, the liquidity
of the banking sector might be threatened as more cash leave to
government coffers. “If the funds leave the banks to government
coffers, the affected lenders may suffer liquidity challenges depending
on the level of their customers’ involvement,” he said.
He added that the government may react to the criticisms by being selective in its implementation.
Principal Counsel at Eze & Associates, Chukwuemeka Eze, said
when the implementation begins, individuals affected by the policy could
challenge it in court. That means the burden of proof will shift to the
owner of the money not linked to the BVN.
“The person has to prove where he was, and why he was not able
to enroll on the BVN network. It will be based on individuals making
case for themselves when the timeline expires tomorrow,” he said.
Eze said the banks might escalate the discussion at the next
Bankers’ Committee meeting because of the sensitive nature of the matter
involved.
“When the banks come under serious pressure as the
implementation begins, which is likely, they will have to call for a
Bankers’ Committee meeting to decide on how to approach the dilemma. But
there are still going to be some exceptions, such as Nigerians in
Diaspora and those serving long prison sentences,” he said.
Eze said the government had to be careful in implementing the court
order, as it had the capability of causing economic dislocation. The
real targets, according to him, are people who open accounts with fake
names to hide fraudulently obtained wealth.