Post COVID-19 economy: considering unclaimed monies in banks as temporary source of revenue

The outbreak of novel coronavirus disease (COVID-19) has forced countries around the world to resort to fighting for themselves and discovering new sources of revenue to lubricate the wheels of their economies. CHIMA NWOKOJI unravels secrets behind unclaimed monies in Nigerian banks as calls for review of laws guiding dormant accounts intensify.

Although the guideline released by the Central Bank of Nigeria (CBN) with effect from October 7, 2015 for management of dormant and inactive accounts has been in operation, Deposit Money Banks in reality have complied only partially. This has raised concerns among bank account holders, regulators and other stakeholders.

The guideline carefully sets operational standards for banks and Other Financial Institutions (OFls) in line with best practices and to reinforce the rights of depositors and/or customers and finally curb possible abuses. Like every other document from such regulatory institutions, this is good but how is it being implemented?


What the CBN says

A major objective is to eliminate the possibility of banks converting dormant accounts’ balances to income; and strengthen risk management and internal control processes. Yet, evidences of shocking violations abound.

According to the CBN, an account shall become inactive if there has been no customer or depositor-initiated transaction for a period of six months after the last customer or depositor-initiated transaction. In this case the customer shall not be required to provide any documentation to activate the account. Simple deposit or withdrawal shall suffice to activate the account. Also, a bank account shall be classified as dormant if there has been no customer or depositor-initiated transaction in it for a period of one (1) year after the last customer or depositor-initiated transaction.

“When the account becomes dormant, the bank shall institute controls consistent with its precautionary policies, including surveillance procedures and second level authorization. To make such account active, the customer is to provide satisfactory evidence of account ownership, means of identification and present place of residence,” the guidelines stated.

Interestingly, CBN said unclaimed funds shall be categorized as: “Proceeds of stale local and/or foreign currency drafts not yet presented for payment by beneficiaries; Funds received from a correspondent bank without sufficient details as to the rightful beneficiary and/or a recall of funds made to the remitting bank to which the Nigerian bank’s account had not been debited; and  judgment debt for which the judgment creditor has not claimed the amount of judgment award.”

It requires interest-bearing accounts to retain their interest earning status during the period of dormancy and banks are expected to continue to monitor such accounts that show tendencies of inactivity and initiate actions for their reactivation or protection from wrong usage.

Such actions according to the CBN shall include, though not limited to any of the following: SMS, e-mail, visitation, and/or phone calls. In all cases, the cost of monitoring the accounts and contacting the customers shall be borne by the bank.

Once accounts become dormant, they shall be reported quarterly to Banking Supervision or Other Financial Institutions Supervision Department of the CBN, as the case may be, along with efforts made by the obligor bank to locate the owners or their personal representatives.

The guideline further directed that three months to dormancy, the bank shall notify the account holder of the status of the account. For individual accounts that the bank cannot reach the account holder during the three (3) months period, it shall contact the next-of-kin to assist in locating the account holder(s). This will be done within one month after the account has been declared dormant. (For corporate accounts the bank shall contact the directors of the entity or seek information from the Corporate Affairs Commission on the Directors).

“Dormant accounts balances shall be covered by Deposit Insurance Scheme. Banks that have in the last five (5) years from the date of these guidelines, appropriated credit balances in dormant accounts to income are to reclassify such accounts to deposits not later than six (6) months from the effective date of the guidelines,” the CBN stated.


Shocking revelations about dormant/ inactive bank accounts

The Nigeria Inter-Bank Settlement System Plc (NIBSS) published a report in April 2020, indicating that Nigerians abandoned 300,000 bank accounts in the first quarter of 2020 (Q1’20). The data showed that the number of inactive bank accounts rose by 0.7 per cent or 300,000 to 45.87 million in Q1’20 from 45.57 million in Q4’19. It also reported that 9.1 million Bank Verification Numbers (BVN) are inactive in various banks nationwide as at December 31, 2019. This implies that in just one year, about ten million bank accounts recorded zero transactions.

Analysis of the NIBSS report did not show why those BVNs remained inactive but experts linked some of them to possible death of the owners, and inability to service the accounts due to income stress, fraud and other reasons. So, in this period of financial difficulties when not only individuals and companies but governments are running from pillar to post to borrow money, economic, finance and public policy experts are calling for such funds to be brought into the economy through approved beneficiaries.

This call is similar to the Federal Government’s request in 2018, for an order of final forfeiture of all the funds contained in all accounts without Bank Verification Numbers in the country’s 19 commercial banks. But the Federal High Court in Abuja in June that year, rejected the request.

Rather, Justice Nnamdi Dimgba affirmed his ruling of October 17, 2017, which was modified on November 15, 2017, directing the 19 commercial banks in the country to freeze all accounts without the BVN and advertise the details of the accounts, including the amounts in them in a widely read newspaper. Till today, nothing of such has been published.

Nigerian Tribune has beamed its searchlight and unraveled why dormant accounts are rising like the COVID-19 cases. As the number of dormant accounts rises, obstacles to getting the funds are not being looked into, while obvious manipulations by interested individuals continue unabated.

Although there are allegations that some money-laundering customers abandoned the accounts as the noose are tightened on them by the Economic and Financial Crimes Commission, as they don’t want activities in those accounts traced to them, many are confirmed to belong to dead people.

Experts recognize three events that terminate the operation of an account: death, bankruptcy and insanity. If any of these happens, the operation of that account is terminated and no one will have access to the account unless there is a letter of administration and this letter is not easy to get.

Nigerian Tribune has beamed its searchlight and unraveled why dormant accounts are rising like the COVID-19 cases. As the number of dormant accounts rises, obstacles to getting the funds are not being looked into, while obvious manipulations by interested individuals continue unabated.

Although there are allegations that some money-laundering customers abandoned the accounts as the noose are tightened on them by the Economic and Financial Crimes Commission, as they don’t want activities in those accounts traced to them, many are confirmed to belong to dead people.

Experts recognize three events that terminate the operation of an account: death, bankruptcy and insanity. If any of these happens, the operation of that account is terminated and no one will have access to the account unless there is a letter of administration and this letter is not easy to get.

Investigations revealed that when relations of the deceased are aware, it takes years to obtain this letter, not to talk of when they are not aware that such account exists.

Meanwhile, there is a rule that requires banks to contact customers every three months to find out why there is no activity in their accounts, but the banks only do this when they know the customer is wealthy and capable of bringing in more money. They feign ignorance or rely on bulk SMS when it involves the not-so-wealthy.

Because most issues in Nigeria are like this; not very clear, banks either convert dead people’s money into equity or move some to dormant account to avoid paying interest on them. This is why the former president of the Chartered Institute of Bankers of Nigeria, Mazi Okechukwu Unegbu, is concerned with the law guiding dormant accounts. He wants it revisited to empower the central bank to reveal how much is in that account and advise on how it could be utilized especially in this period of financial difficulties.

According to him, the funds in such accounts which data are with the commercial banks can be a source of immediate liquidity for the government and more spending power for the people of Nigeria, especially in these challenging times.

Though the banks give reports to CBN for assumed transparency purposes, these reports rarely present comprehensive figures in those accounts. More so, the regulator only uses such to gauge the health of the banks when measuring Capital Adequacy Ratio, Liquidity Ratio among others. Even, because of the existing laws like the confidentiality issue, the CBN cannot really come to the aid of the customers in this matter.

That is where the lacuna is. Banks operate under certain fixed rules and regulations. There is oath of secrecy and there is ethical responsibility of confidentiality on the part of the banks. If something happens and the customer is dead when none of the family members is aware of that relationship, it becomes a problem.

Nigerian Tribune investigations reveal that there are cases where, some bankers who are privileged to know a high net-worth customer’s health condition, on hearing about the death of such customer usually withdraw the victim’s money, knowing the rigors that next of kin usually go through chasing the money, if they ever have time after mourning.

In most cases, the next of kin does not bother to chase dead people’s money because it is painful to go through such rigors that bring back memories of the dead. A grandmother was reported to have died in 2015 at Ilasamaja Lagos, till date mama’s over N5million has not been traced.

There are also allegations that some relations of the dead, who happen to be contacted or know the account officers use unofficial means to get the money out. In this case, they must agree to part with certain percentages behind closed doors.  Also, most account officers alternatively go to the extent of selling details to hackers to hack into such accounts.

The hackers’ themselves not only target deceased people’s money that has remained there for some years, but other available funds. When their sinister plans are hatched and the monies laundered using several customers’ accounts, the bank will report cyber-attacks to the CBN.

Some stakeholders are worried that though banks are expected to make use of deposits in their vaults, some top bank officials allegedly manipulate these trapped funds to do private businesses. Some allegedly go to the extent of using their position to reactivate the accounts and eventually go away with the money.

Another former CIBN president and a lawyer, Professor Segun Ajibola, speaking on why dormant accounts keep swelling up, said that bank customers are not transparent enough to have information about their accounts and dealings with banks shared with their family members. According to him, due to trust issues, some customers are afraid that if their children, wife or husband as the case may be, knows they have certain amount of money in their account, and that they are beneficiaries, they will help fast-forward their (owner’s) death.

Explaining further, Ajibola gave another scenario that leads to account dormancy. He noted that when a person starts work as a bachelor or spinster, that person uses a brother, sister or any relation as next of kin. After marriage, this person forgets to change the next of kin to their spouse, and make them beneficiaries. At death, the banks’ hands are tied.

Amending laws guiding this aspect of banking will not only stop unapproved secret deals that go on around monies in the accounts of deceased customers and stop dubious deals, it will also create avenues for such funds to be easily accessible by beneficiaries, thereby boosting spending powers of the owners post COVID-19.

According to experts, applying development law policy, there is a basket of moral, legal and ethical issues to be addressed. For instance, some customers leave all their account information in a mobile phone. This pose access challenges in the event of death.  There is need to update account information every three years and banks should be more transparent about it.

To Mohammed Ali Baba, former director at CBN, ordinarily, people don’t go about disclosing their account details to relations. For now, as far as regulation is concerned, the relationship is between a customer and a bank not any other party.

But there is need for a regulation to stop banks from profiting from such funds that are trapped in their vaults.  CBN, according to him, can work out details by which legal beneficiaries can have access to the deceased’s fund. He is concerned that when banks observe inactivity in an account for a long period, they feign ignorance and even when the family members are aware, the documentation may take three to four years.

He further recommended publication of details of such accounts. “Just the way they publish names of recalcitrant debtors, banks should be made to also publish details of dormant accounts. That way, family members of deceased persons can see and come for them. Banks invest these monies in the interbank market. If there are N5,000 in 2million accounts, the aggregation will give so much money,” the former banker stated.

Also, former General Secretary of the Nigerian Bar Association, Afam Osigwe, in a TV programme monitored in Lagos, drew attention to why re-jigging of the law is necessary in this context. He explained that the way it is at the moment, next of kin does not mean the person is intended to be the beneficiary of the money in the owner’s account in case of death. Next of kin according to him, means a person that should be contacted in case of any emergency. It does not confer any beneficial interest.

He said one way to ensure that a relation has access to a person’s account is by express instruction that money should be paid to the named beneficiary (ies) upon death. Another way is by having a joint account by which case whoever survives takes the money except there is contrary instruction. Usigwe said a bank has a confidential duty to protect accounts of customers and “if you did not notify the bank, it will not come looking for you with a dead person’s money… CBN’s duty is to ensure protection of such funds. We are very secretive. Sometimes there may be family legal disputes that could trap the funds for up to 10 years.”



In view of the forgoing, some concerned citizens who have joined calls for a review of the laws guiding dormant and inactive accounts, reason that instead of allowing fraudsters and a few individuals to reap where they did not sow (unclaimed funds in banks), government should rather appropriate such funds for the benefit of over 40 per cent of Nigerians who are living below N380 a day, or N137,439 a year according to the National Bureau of Statistics.

These are issues that constitute big problems for banks in dealing with deceased customers deposits. It is not limited to bank deposits, but also landed properties. The Securities and Exchange Commission (SEC) solved this problem with dividend payment by introducing e-dividend to eliminate the incidence of unclaimed dividends in Nigeria, valued already at about N130 billion as at December 2019.

So, Ajibola, in agreement with Osigwe, believes that there is need for amendment of extant laws governing this matter. Bank’s hands are tied because most times they make reference to such laws as the CBN Act of 2007, BOFIA and the NDIC Act. Good enough, the Banks and Other Financial Institutions Act (BOFIA) is being looked into by the legislature and the Nigerian Deposit Insurance Corporation (NDIC) Act is also being amended.

In applying development law policy, issues that touch on account opening forms should not be overlooked. It can be couched in a way that it confers the next of kin rights to the customer’s money and even other properties if the beneficiary is not expressly stated.

“There should be a separate return on deceased customers to the CBN. We should establish express or constructive notice on how the banks will be informed about a customer’s death.  In the judicial aspect, the process of obtaining letter of administration should be made easy. I think a commercial court can deal with this issue. I have seen customers pursuing their dead person’s money for two to three years and eventually abandoning the account,” Ajibola said.



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