Monday, 31 January 2011 By Enitar Ugwu

 

‘Banks create ‘dummy accounts’ to conceal funds’ – Sanusi Lamido

 

With the expiration of the Central Bank of Nigeria (CBN) mandatory bank accounts update today (January 31st, 2011), it has ordered banks to flag any account that is not updated or with defective details.

 

In banking parlance, to flag an account means to close it or deny the owner access to it.

However, investigation by The Guardian shows that some banks are in quandary on how to conceal the identities of the owners of some fat accounts in their custody.

 

Some of these customers, it was learnt, are public office holders, political figures and also businessmen whose sources of income cannot be satisfactorily explained.

 

To achieve this feat as well as keep these sets of customers, The Guardian was reliably informed that the affected banks have been creating ‘dummy accounts’ with fictitious credentials to conceal some of these funds.

 

Their thinking, it was learnt, is that the CBN might not have the time nor the manpower to investigate the accounts in all banks which are in the region of trillions account numbers.

 

This scheme, it was also learnt, is being carried out in active connivance with the original owners of these accounts.

 

Meanwhile, a source in the CBN, over the weekend disclosed that the exercise will expose a lot of illegal funds hidden in the banking system, adding that, “with the heat on them from foreign banks, they have resorted to hiding illicit funds in Nigerian banks.

Apart from that, he explained that, this would also enable the apex bank to have a clear picture of the funds in the system with a view of planning adequately.

 

This stance was also alluded to, over the weekend, by the Committee of Chief Compliance Officers of Banks in Nigeria, where it noted that, as industry practitioners, we appreciate the need for this exercise as a tool for improved customer service and also for fighting money laundering/terrorism financing in line with global requirements.

 

Similarly, in a notice over the weekend, the Federal Inland Revenue Service (FIRS) warned all collecting and lead banks that they run the risk of being delisted as lead and collecting banks of FIRS funds, if they fail to update their customer account information with Taxpayer Identification Number (TIN) by January 31, 2011.

 

It would be recalled that the CBN had on November 29 last year directed all customers of banks and financial institutions to update their accounts information by December 31, failing which the accounts would be suspended from January 1, 2011.

The account update is part of the Customer Due Diligence (CDD), which involves Know Your Customer (KYC) compliance, which is accepted worldwide as a tool for the fight against money laundering and terrorism financing as well as protecting the interest of customers, the apex bank had explained.

 

The CBN extended the update of accounts to January 31st, 2011.

 

Source: The Guardian