The Central Bank of Nigeria (CBN) Regulations on Electronic Funds transfers, first issued in July, 2018, were made pursuant to the Central Bank of Nigeria Act 2007 to promote a sound financial system in Nigeria and the facilitation of an efficient and effective payments system in Nigeria.
This article will be looking at these regulations in-depth, with a focus on the topics of:-
– Their applicability scope
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– Their objectives
– The important stakeholders in the electronic instant transfer value chain and their roles and responsibilities. This would also include the roles and responsibilities of receiving and sending entities
– Dispute Resolution
– Sanctions
What is the applicability scope of the CBN Regulations?
The regulations apply to instant electronic fund transfer services in Nigeria on various payment channels and any payment platform that seeks to provide instant electronic funds transfer services in Nigeria.
What are the objectives of the regulations?
The objectives of the regulations are :-
– Setting out the rules for the operation of instant electronic funds transfer services in Nigeria.
– Prescribing the rights and obligations of the parties to such services.
– Provision of the minimum standards for the operations of the parties to EFT services.
– The stipulation of procedures geared towards the enhancement of the soundness of instant EFT services while adequately protecting the interests of instant EFT customers and operators.
Which parties are mentioned in the regulations as stakeholders in instant EFTs and what are their respective roles and responsibilities?
The regulations mention the following entities as stakeholders :-
- The CBN as a regulator
- Financial Institutions (FIs)/Sending and Receiving entities
Responsibilities (Sending entity)
– To provide name enquiry support to the customer to minimize instances of wrong credits.
– To not provide instant EFT services to walk-in customers without any bank account in Nigeria.
– To fully secure debits against customer accounts before initiating transfers.
– To provide notification of debits to customer accounts as agreed with customers.
Responsibilities (Receiving entity)
– Apply instant EFT proceeds to the customer’s account within 60 seconds.
– Ensure that instant EFT proceeds have been credited to a customer’s account before confirming to the sending entity that the transaction was successful.
– Process all inward instant debit transactions subject to valid debit mandates.
- Instant EFT Service providers
Roles and Responsibilities
– Ensure compliance with the minimum standards issued by the CBN and as amended from time to time.
– To develop and circulate user guides to educate and enlighten other stakeholders on its instant EFT service.
– To maintain confidentiality of instant EFT transactions and information obtained in the course of discharging its responsibilities and shall ensure that those responsibilities extend to its employees.
– To provide name enquiry support to minimize instances of wrong credits.
- Customers (originator & beneficiary)
Responsibilities
– To provide accurate beneficiary account details for every EFT instruction.
– To report problems arising from EFT transactions promptly to the sending/receiving entity.
– Whenever a credit has been erroneously applied to the customer’s account with the receiving entity, the customer shall promptly notify the receiving entity and authorize the reversal of such erroneous credit.
- Any other stakeholders as may be determined by the CBN.
What are the provisions of the regulations regarding dispute resolution?
The CBN Regulations provide that instant EFT service providers shall properly document and circulate among sending and receiving entities a dispute resolution system, DRS, process. Also , all instant EFT disputes shall be resolved within 3 working days.
What are the provisions of the regulations regarding sanctions?
The regulations provide that failed NIP transactions not reversed into customer accounts within 24 hours based on a complaint of a sender or beneficiary shall result in a fine of 10,000.00 Naira per item.
Also, delayed applications of valid NIP transactions into the accounts of beneficiaries beyond 4 minutes based on the complaints of senders or beneficiaries shall incur a fine of 10,000.00 Naira per item.