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.

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