It's Paul Olarewaju's Blog Again!!!: Revealing Your BVN Is Not A Security Threat – CBN


Monday, 9 November 2015

Revealing Your BVN Is Not A Security Threat – CBN

Last week, messages had gone round through the social media that revealing one’s Bank Verification Number (BVN) will expose the bank account number of such to fraudsters and the account could be cleared.

This had formed part of the reasons some walk-in customers of Bureau De Change (BDC) operators had refused to disclose their BVN numbers before conducting foreign exchange transactions.

The apex bank had directed that effective November 1, BDC operators in the country must demand for the BVN of any customer as a requirement for the sale of foreign exchange transaction. The BVN must also be verified before the transaction is consummated and the BDCs are also required to make a returns of the transactions to the apex bank.

Basically, BDCs are to verify the BVN given to them by the customers either through a USSD short code *565*1# or through the he Nigeria Inter Bank Settlement System (NIBSS) portal. Customers who do not know their BVN can also call it up from their mobile phones by dialling the short code *565*0#.

According to Chief Executive of H.J Trust BDC, Mr Harrison Owoh, “most of the customers were not willing to submit their BVN due to fear of what it might be used for. This has slowed down sales of forex by BDCs because we can’t sell without obtaining the BVN.”

In the era of cybercrime, increased electronic banking fraud and scams, bank customers are becoming more wary in giving out information of any sort. While this should be the case, many are unaware of the nature and use of the BVN.

Contrary to the belief of some, the BVN cannot be used to electronically or otherwise withdraw funds from the customers’ accounts, Director of Corporate Communications Department of CBN, Ibrahim Mu’azu explained that the submission of BVN to BDCs for foreign exchange transactions should not be seen as a security threat.

“This probably has to do with people with illicit flows, and not for fear of the BVN itself. And for people with illicit flows, they are avoiding documentation, the way they avoid the banks.

“To us, if not for the likely impact on the black market, it is a good development because it means the foreign exchange market is now demand driven. For example, if you go to the banks for ‘Form A’ foreign exchange transactions, it requires more than the BVN” he said.

Mu’azu in a statement issued last Thursday explained that the provision of BVN by customers at the point of foreign exchange purchase or for any legitimate banking transaction with any bdc or deposit money bank does not attract any security risk. Rather it protects the customer against identify theft.

The adoption of BVN as a condition for the purchase of foreign exchange he said is expected to reduce the incidence of “multiple purchases, round tripping and illicit transfer of funds, facilitate enforcement of authorized limits of forex sales to end users, sanitize the retail segment of the market and engender policies that will facilitate better allocation of the forex, based on genuine demands.

“The BVN is neither a payment instrument nor an account number and therefore could not be used to access any account by unauthorized users. The banks, BDC operators and even regulators use the BVN to validate the identity of a customer using some biometric information such as finger prints and photograph obtained at the point of enrollment.

The BVN is a unique identification number for every bank customer that safeguards their identity and protects it with the use of biometric features which are hard to break. Although it is like the regular account number, it does a lot more than that as it also links all the customers’ accounts together giving the customer a unique identity across the banking industry.

Asides that, it protects the customers’ accounts from unauthorized access and addresses the issue of identity theft, thus reducing the customers exposure to fraud. The BVN was also designed as a tool to fish out fraudsters as all traction a become more traceable and transparent. Every customer is identified and cases of monies moving into unidentified accounts becomes a foregone issue.

Explaining how the BVN will curb the level of fraud in the system, Director, Banking and Payment System of the CBN, Mr ‘Dipo Fatokun said any bank account that does not have a BVN cannot receive or take out money. “So if you are a fraudster and you try try to transfer money to an account that does not have a BVN, the system will reject it. If you are fraudster and you transfer money to an account that has BVN then we know you.”

Adding that the data collated will be harmonized with other biometric data collected by other security and identity agents in the country, Fatokun said “once we have that harmonization, the is no hiding place. If any account is used to defraud anyone, we will know who it is.

Likewise, Executive Director at Sterling Bank, Mr Abubakar Suleiman has said when fully implemented, the BVN will help to curb arbitrage in the foreign exchange market.

The Bankers Committee and the Central Bank of Nigeria (CBN) had cut spending limits on naira denominated cards for transactions abroad.

The policy reduced the spending limit on the usage of the naira denominated debit cards for transactions abroad, from $150,000 per person annually, to $50,000 per person annually, while daily cash withdrawal limit on the card was also fixed at $300 per person.

Since BDCs are not allowed to sell more than $5000 to an individual, the requirement of BVN for the purchase of Foreign exchange will however ensure that every one complies with the directive and the nation’s reserve is not depleted by Maloney launderers who cash out foreign exchange to take out of the country.

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