Why CBN demand customer social media handles

In an effort to combat financial crimes, the Central Bank of Nigeria (CBN) has added social media handles to its Know Your Customer (KYC) requirements for bank customers.

As a result, the apex bank has issued its Customer Due Diligence Regulations for 2023 for financial institutions under its regulatory jurisdiction in an effort to combat financial crimes.

The Central Bank of Nigeria's (CBN) most recent action seeks to strengthen compliance with anti-money laundering and counter-terror financing provisions while aligning with global best practises.

The new CBN laws on customer due diligence apply to both natural and legal entities.

The Customer Due Diligence Regulations 2023 require financial institutions to establish internal processes and procedures for performing customer due diligence on potential, existing, and occasional clients.

Banks and other financial institutions are required to identify their consumers, whether they are individuals or legal entities, and collect information such as legal names, addresses, contact information, identification documents, account types, nature of banking relationships, and signatures. The rules underscore the need to identify politically exposed individuals.

To verify client identities, financial institutions must utilise credible and impartial source documents, data, or information.

For individuals, this involves verifying their date of birth, residential address, contact information, and the authenticity of their official documentation.

In the case of legal entities or legal arrangements, financial institutions must conduct inquiries on public registries or databases, review annual reports or pertinent financial statements, and evaluate board resolutions.

The regulations emphasise the significance of recordkeeping and maintaining current consumer data.

Financial institutions must retain records obtained through customer due diligence measures, account folders, business correspondence, and analysis results for at least five years following the end of a business relationship or an occasional transaction.

High-risk customers require annual evaluations, medium-risk customers require reviews every 18 months, and low-risk customers require reviews every three years.