CBN to halt controversial social media KYC requirement

Nigerian federal legislators have asked the Central Bank of Nigeria (CBN) to suspend the implementation of the directive the required banks and other financial institutions to collect and verify social media handles of customers as part of the Know-Your-Customer (KYC) procedure.

“As laudable as this directive may appear, it is unnecessary as it is likely to bear pressure on teeming Nigerian masses at a trying period,” Kelechi Nwogu,  a lawmaker from Rivers state stated. He added that the policy violates section 37 of the country's constitution which guarantees privacy rights.

According to Mr Nwogu, since the financial institutions have access to the names, telephone numbers, passport photographs, emails, national identification numbers, biometric verification numbers, utility bills and other basic requirements with which to identify, know and monitor customers, social media is not necessary.

In its Customers Due Diligence Regulations released in June, the CBN disclosed that the social media KYC amongst other requirements is to enable the Nigerian financial sector to tackle money laundering, terrorism financing, and proliferation financing.

However, the lawmaker argues that money laundering and terrorism financing can be monitored through the Nigeria Police Force, Nigeria Financial Intelligence Unit, the Economic and Financial Crimes Commission and other intelligence and crime tracking agencies.

In BD Insider 168, we said if the regulation is not amended, it will unbank several Nigerians, especially those in rural areas who cannot afford internet. As of January 2023, only 14% of the Nigerian population was active on social media. Mr Nwogu also echoes this concern: “If the directive takes effect, Nigerians who are not on social media, with large turnovers from their businesses and trades, would be compelled to or systematically excluded from formal banking systems with its attendant negative effects and implications.”

“The mandatory requirement of social media handles or addresses of customers does not serve any legitimate aim. Such information may be used to unjustifiably or arbitrarily restrict the rights to freedom of expression and privacy," SERAP deputy director Kolawole Oluwadare said in a letter to the CBN. "There are other means of identification [...] which banks and other financial institutions already require their customers to provide.”

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