• Thursday, July 18, 2024
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BusinessDay

Fraudsters recruiting unbanked Nigerians to access unclaimed dividends

Bank-Fraudsters

Desperate fraudsters are deploying new strategies to access part of the N126 billion unclaimed dividends in the Nigerian capital market, BusinessDay investigation has revealed.

These fraudsters go as far as opening bank accounts for individuals from unbanked areas of the country just to get Bank Verification Number (BVN) which is one of the requirements in the electronic-Dividend Mandate Management System (e-DMMS), an initiative by the Securities and Exchange Commission (SEC) to eradicate or reduce unclaimed dividends. The initiative allows investors’ accounts to be credited immediately they are mandated with the registrars and the relevant banks.

As part of the Know-Your-Customer (KYC) requirements, investors are requested to make available their BVN, a biometric identification system implemented by the Central Bank of Nigeria (CBN), which gives each bank customer a unique identity across the Nigerian banking industry.

A market source close to this development, however, told BusinessDay that while BVN has helped a lot in solving the conundrum about unclaimed dividends, “it is not foolproof and has not delivered 100 percent”.

Our source further said that some of these fraudsters go as far as the remote areas of northern and eastern parts of the country to recruit young Nigerians for their shenanigans.

The fraudsters, apparently leveraging insider information, target investments of the deceased, most of which were not known by their relatives or close family members, BusinessDay also learnt.

To claim ownership of these unclaimed dividends, the fraudsters recruit the services of unbanked individuals. These individuals are enrolled for BVN process, take on the name of the deceased individual in the unclaimed dividend register, and then lay claim to such funds.

This is coming on the heels of several initiatives by the SEC to address the issue of unclaimed dividend in the financial ecosystem.

With this development, BVN has proven not to be foolproof for identifying rightful owners of the dividends as the perpetrators aim to deprive the rightful owners of those benefits, according to our source.

BusinessDay also learnt that while some registrars have fallen victims of this trend already, others have decided to create in-house check mechanism to checkmate this ugly development.

Other targets are those investors with multiple accounts, most of them forgotten.

The SEC encourages investors to take advantage of the regulatory window to regularise their multiple accounts and claim their dividends. Already, about 2.82 million investors have enrolled in e-Dividend Mandate Management System.

The issue of multiple accounts became pronounced during the banking consolidation of 2004 and the Nigerian capital market saw a sharp increase in the number of companies being listed on the Nigerian Stock Exchange, especially financial institutions.

Investors adopted several covert means while acquiring their shares in a desperate bid to beat the standard limits that are standard during every Initial Public Offering, including limits on age and number of applications. These investors adopted pseudo-names, among other illegal means.

SEC has on various occasions opened an ‘amnesty window’ for investors to regularise their holdings.

The value of unclaimed dividends rose from N5.1 billion to N103.1 billion between 2002 and November 2016, compared with the value of N2.09 billion in 1999. As at September 2018, it remained high at N100 billion and stood at N126.03 billion as at March 2019.

The source, however, called for an Act, if possible, that would ensure forfeiture of such unclaimed funds to the government as it is obtainable in the US and UK.

 

IHEANYI NWACHUKWU & OLUFIKAYO OWOEYE