CBN Stands Firm Against Financial Crimes: Social Media Handles Now Part of KYC

The Central Bank of Nigeria takes a leap in KYC requirements by including social media handles, enhancing customer identification and strengthening financial security.

In a robust response to the growing concern of financial crimes, the Central Bank of Nigeria (CBN) has rolled out its Customer Due Diligence Regulations 2023 for the financial institutions it oversees.

This aligns with global best practices and enhances compliance with counter-terrorism financing (CFT) and anti-money laundering (AML) measures.

Merging Technology with Customer Identification

The CBN is raising the stakes in customer identification by making it mandatory for financial institutions to collect and verify customers’ social media handles.

This is an integral part of their Know Your Customer (KYC) requirements.

Imagine walking into a bank and, along with your name and address, they ask for your Twitter handle.

Surprising, isn’t it?

A Closer Look at the New Regulations

This newly minted regulation strengthens the measures outlined in the CBN’s 2022 Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction in Financial Institutions Regulations.

They are geared towards fortifying the fight against money laundering, terrorism financing, and proliferation financing.

KYC: Not Just an Acronym

Under these regulations, financial institutions are compelled to lay down internal procedures and processes for conducting due diligence for existing and potential customers, including occasional customers.

Customers, both individuals and legal entities, must be identified, and relevant information, including legal names, addresses, contact details, identification documents, account types, banking relationships, and signatures, must be collected.

The regulations also emphasize the need to identify politically exposed persons (PEPs).

Identity Verification: More Than Just Your Name

Verifying customer identities goes beyond just checking names.

Financial institutions have to rely on independent source documents, data, or information.

For individuals, this means confirming the date of birth, residential address, contact details, and the validity of official documentation.

On the other hand, legal persons or arrangements need to be thoroughly checked.

This includes searches on public registries or databases, reviewing annual reports or relevant financial statements, and examining board resolutions.

A critical component of these regulations is the maintenance of up-to-date customer information and the importance of record-keeping.

Financial institutions must hold on to records obtained through due diligence measures, account files, business correspondence, and analysis results for at least five years following the termination of a business relationship or occasional transaction.

Reviews: Regularity is Key

The regulations necessitate regular reviews of existing customer records based on risk categories.

Customers who are high-risk require annual reviews, medium-risk customers every 18 months, and low-risk customers every three years.

Social Media Handles and KYC

Under the new regulation’s section 6 (IV), CBN-regulated financial institutions are now obligated to collect and verify customers’ social media handles as part of their KYC process.

This applies to both individuals and legal entities.

The goal behind including social media handles in KYC requirements is to enhance the accuracy and depth of customer identification.

This extra information grants financial institutions invaluable insights into customers’ online presence and activities, enabling a better assessment of potential risks associated with money laundering, terrorism financing, and proliferation financing.

Unraveling the Optics

The CBN’s decision to include social media handles as a compulsory KYC requirement recognizes the growing influence of social media platforms in individuals’ and businesses’ everyday lives.

This implies that social media can offer valuable information about customers’ professional networks, affiliations, and potential income sources.

Financial institutions will need to establish internal processes and procedures to accurately collect and verify customers’ social media handles.

This data will be used alongside other KYC information to form a comprehensive customer profile.

Understanding the Implications

The introduction of social media handles to the KYC requirements underscores the CBN’s commitment to stay abreast of technological advancements and evolving risks in the financial sector.

By including digital footprints in its regulations, the CBN aims to ensure that financial institutions have a comprehensive understanding of their customers.

This promotes enhanced due diligence and risk mitigation.

This development is a reminder to businesses and individuals to be aware of their online presence and activities.

Customers should ensure that the information shared on social media platforms matches their stated profiles and is consistent with their financial transactions.

Financial institutions will leverage this information responsibly, strictly adhering to data privacy and protection regulations.

In the face of growing digital influence, the CBN’s latest regulations showcase a progressive approach to battling financial crimes.

By making social media handles an integral part of KYC requirements, CBN seeks to promote more transparency and deter potential threats.

While some may raise eyebrows, it’s worth noting that this step aligns with our increasingly digitized world.

Ultimately, this is an essential step towards a safer financial environment.

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FAQs

Why are social media handles being included in KYC requirements?

Social media handles provide additional insights into a customer’s online activities and affiliations, thus enhancing customer identification and risk assessment.

Who does this new regulation apply to?

This regulation applies to both individuals and legal entities who are customers of CBN-regulated financial institutions.

What is the purpose of these new regulations?

These regulations aim to bolster the fight against financial crimes like money laundering and terrorism financing.

What kind of customer information is being collected under the new regulations?

The collected information includes legal names, addresses, contact details, identification documents, account types, the nature of banking relationships, signatures, and now, social media handles.

What happens to the collected information?

The information is stored for at least five years following the termination of a business relationship. It is used for due diligence and risk assessment, and is treated according to data privacy and protection regulations.


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