Banks directed on automatic reversal of wrong electronic fund transfer

ALL Nigerian companies or Financial Institutions licensed by the Central  Bank  of Nigeria  (CBN) to carry on the  business  of  facilitating  Electronic  Funds  Transfer (ETF)  services  have been directed by the apex bank to reverse within 14 days, any transaction where a customer transfers money to wrong account number.

This directive  was contained in a draft guidelines signed by the Director , Banking and Payment System Department of CBN, Dipo Fatokun to all Deposit Money Banks, other Financial Institutions and Payment Service Providers, on instant (inter-bank) electronic funds transfer services in Nigeria.

The apex bank stated that the aim of the guidelines was to ensure  high standards  of  conduct  and  management  throughout  the  banking system in exercise  of  the  powers  conferred  on  the  it  by  Section  28  (1)  (b)  of  the Central  Bank  of  Nigeria  Act  1991  (as  amended).

It read in part “where a Sending Entity sends a transaction with a wrong account number to  a  Receiving  Entity  and  requests  the  reversal  within  14  days  of  the transaction,  the  Receiving  Entity  shall  immediately  oblige  without  recourse to  the  customer  (beneficiary)  of  the  Receiving  Entity  provided  funds  are available.

“ An  automatic  indemnity  shall  be  inferred  against  the  Sending Entity making the reversal request.

Where  funds  are  not  available,  the  Receiving  Entity  shall  immediately  formally  notify  its  customer  that  the  account  was  wrongly  credited  with feedback  to  the  Sending  Entity.  The  customer  shall  be  notified  that  the consequence  of  not  funding  the  account  within  24  hours  includes  watch-listing  in  the  financial  system,  BVN  system,  Credit  Bureau  and  reporting  to law enforcement agencies.”

While calling for further input from stakeholders, the apex bank said that the Receiving Entity shall reverse the transaction as soon as funds are either partially or fully available.

Where the (beneficiary) owner of the wrong account is known to the complainant, the Sending bank shall encourage  the  complainant  to  contact  the  beneficiary  for  an  amicable settlement.

It further clarified that the  Sending  Entity,  having  received  a  reasonable  entitlement  from  customer  shall notify  the Receiving  Entity who shall lien the amount in  the  account of  the beneficiary   and   thereafter   obtain   the   consent   of   the   beneficiary   to execute refund.

“Where  the  beneficiary  does  not  give  consent  the  chief  internal  auditors  of the  Sending  and  Receiving  Entities  shall  adjudicate  between  the  two customers,  within  two  weeks  of  the  complaint  to  resolve  the  issue,  and  their  decisions  shall  be  final,” the CBN stated.

Accordingly,  the  bank stated, the freezing of the account  shall  not  last  more  than  two weeks and where  the  supposed  beneficiary  has  utilized  the  fund  such that  lien  could not  be  placed,  and  he/she refuses  to  fund  the  beneficiary  account  to facilitate refund,the Receiving Entity’s Chief Internal Auditor shall watch-list the customer’s Bank Verification Number (BVN) and the Sending Entity may seek the assistance of Law Enforcement  Agencies  (e.g.,  Police,  EFCC, NFIU,  etc)  for  recovery .

The guidelines however described the Sending Entity as a Nigerian company or Financial Institution licensed by the CBN to carry on the  business  of  facilitating  Electronic  Funds  Transfer  services  in  Nigeria  and who initiates an Instant EFT on behalf of its customers, while a Receiving Entity is a Nigerian company or Financial Institution licensed by the CBN to carry on the  business  of  facilitating Electronic  Funds  Transfer  services  in  Nigeria  and who receives the proceeds of Instant EFT on behalf of its customer.