Should In-Person Or Banking Hall Verification Still Be Mandatory For Bank Accounts In Nigeria?

Under Nigeria's current regulatory framework, a customer must still visit a bank physically to open a Tier 3 bank account, which currently is the only bank account category with no transaction limits and access to full banking services. This requirement, first introduced under the Central Bank of Nigeria (CBN) Three-Tiered Know Your Customer (KYC) Requirements (2013), appears to have been designed to safeguard the financial system from money laundering, terrorism financing, and fraud, in an environment where identity infrastructure was weak and where there was no unified database linking citizens' biometrics and personal data. However, more than a decade later, and with the Money Laundering (Prevention and Prohibition) Act 2022 and CBN Customer Due Diligence Regulations 2023 now in force, the question arises as to whether this in-person verification should still be mandatory.

The Current Landscape

Under the CBN's Three-Tiered KYC Framework, bank accounts are categorized into three levels as follows:

Looking Forward

There are a number of reasons why mandatory in-person verification may no longer be optimal or competitive. We highlight some below:

1. Leveraging Nigeria's Robust Digital Identity Infrastructure

Nigeria now operates the Bank Verification Number (BVN) and the National Identification Number (NIN), national digital identity databases containing biometric and demographic data. With these systems, banks can reliably authenticate customers remotely, making mandatory physical presence largely redundant. It is useful to note that the CBN has now extended the requirement for all account holders ( including Tier-1 accounts) to link their accounts to BVN and/or NIN.

2. Regulatory Shifts Favoring e-KYC

Regulation 14 of the CBN (Due Diligence Regulations) 2023 now requires banks to comply with the CBN e-KYC requirements. Regulation 35 of the CBN (Due Diligence Regulations) 2023 also stipulates minimum requirements which banks must comply with, for remote verification. A combined reading of these provisions indicates a potential regulatory shift away from in-person verification for Tier-3 accounts, reflecting a risk-based approach to customer due diligence.

3.Enabling Financial Innovation and Inclusion

Removing mandatory in-person verification requirement for Tier-3 Accounts would likely enable more foreign currency inflows, support fintech innovation, and deepen inclusion under the National Financial Inclusion Strategy and make financial services more accessible to more Nigerians, including Nigerians abroad and those in rural areas. A removal of this requirement also supports the new CBN framework on Non-Resident Nigerian Ordinary Accounts and Non-Resident Nigerian Investment Account, as the framework essentially moves in the direction of digital onboarding with less dependence on branch visits.

4. Driving Operational Efficiency and Cost Savings

Removing the mandatory in-person verification requirement for Tier-3 Accounts would likely reduce unnecessary customer footfall in banking halls, allowing banks to manage branch traffic more efficiently while reallocating staff to higher-value services. In many ways, this should further drive operational efficiency, lower compliance costs, and expand access

5. Aligning with Global Best Practices

Lastly, this approach reflects global best practice endorsed by the FATF, where electronic verification is accepted as an effective substitute for physical presence. In particular, the 2020 FATF Guidance on Digital Identity encourages a flexible, risk-based approach to using digital ID systems for customer due diligence that supports financial inclusion. The FATF Guidance provides that:

In other words, the FATF Guidance clarifies that non-face-to-face customer-identification and transactions that rely on reliable, independent digital ID systems with appropriate risk mitigation measures in place, may present a standard level of risk, and may even be lower-risk.

Key Takeaways

While the original policy intent behind mandatory physical presence was valid, Nigeria's digital ecosystem has evolved significantly. This is no doubt attributable to forward looking policies of the CBN. However, with the integration of BVN, NIN, and the wide availability of advanced e-KYC tools, the continued insistence on in-person verification for full accounts seems increasingly outdated, exclusionary, and inconsistent with risk-based regulation.

Despite the flexibility introduced under Regulations 14 and 35 of the CBN Customer Due Diligence Regulations 2023, and in the absence of further clarification from the Central Bank of Nigeria, the requirement for in-person verification still appears to remain the general rule binding on financial institutions. Thus, remote or non-face-to-face onboarding, while now recognised within the regulatory framework, appears to still be prohibited and continues to be treated as a higher-risk activity that demands enhanced due diligence and additional safeguards.

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