• Wednesday, June 19, 2024
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CBN seeks to expand banking net in new-tiered KYC requirements


Central Bank of Nigeria (CBN) Monday said it has reviewed upwards, the transaction limits and restrictions on the operations of Tier 1 and 11 accounts, as part of its efforts to deepen financial inclusion and bring more people into the banking net.

The CBN’s three-tiered Know Your Customer (KYC) regime, which aimed at promoting financial inclusion, specifically seeks to implement a flexible account opening requirements for low-value and medium value account holders subject to caps and transaction restrictions.

The CBN in the new guidelines raised the limit for Tier 1 accounts from a maximum single deposit amount of N20,000 to N50,000, and also maximum cumulative balance for same category from N200,000  to N300, 000.
The new framework equally raised maximum single deposit for Tier 11 category from N50,000 to N100,000, and cumulative balance from N400,000 to N500,000 allowable at any give time.

Under the three-tiered KYC, which aims to promote financial inclusion and combat money laundering and terrorism financing, Tier 1 and Tier 11 categories represent low and medium sized deposits, respectively.
But for mobile money, maximum single transaction limit and daily cumulative transaction limit was retained in line with earlier requirements.

The CBN said the review followed representations made by stakeholders for the review of the limits and restrictions on the operations of Tier 1 and 11 accounts, and in furtherance of its efforts to deepen financial inclusion.
CBN’s latest figures show that about 39.2 percent of adult Nigerians do not have access to financial services, majorly attributed to irregular income, unemployment, distance and low level of bank branches and cumbersome account opening requirements/procedures.

There are also concerns that the full enforcement of account opening procedures often excludes some segments of the population from financial services and keeps them out of the formal economy and indirectly proposes the informal sector.

In its January 18, 2013 circular, the CBN introduced the three-tiered Know Your Customer (KYC) requirements, which required the banks to assist in ensuring, that socially and financially disadvantaged persons are not precluded from opening accounts or obtaining other financial services for lack of acceptable means of identification.

The key argument was that to continue to maintain the same level of KYC requirements for all segments of the population encourages prevalence of the informal financial systems, which in turn undermines the Anti Money Laundering/Combating the Financing for Terrorism (AML/CFT) objective.

“Following representations made by stakeholder for the review of the limits and restrictions on the operations of Tier 1 and 11 accounts, the CBN in furtherance of its efforts to deepen financial inclusion, has reviewed upward the current transaction limits on Tier 1 and 11 accounts,” CBN’s latest circular to banks and financial institutions read in part.

The regulator therefore directed financial institutions to adopt the provisions of the three-tiered KYC in addition to the provision of the AMT/CFT regulations, 2009.