CBN Prescribes Sanctions For Non-Reversal Of Failed e-Funds Transfers By Banks

In view of the growing acceptance of electronic bank transactions as envisaged under its cash economy policy launched a few years ago, the Central Bank of Nigeria (CBN), on Friday unveiled regulations on instant (inter-bank) electronic funds transfer services in the country.
The regulation, according to an accompanying circular by ‘Dipo Fatokun, CBN’s Director, Banking and Payment System Department, dated September 13, 2018, banks will now face monetary sanctions for not reversing failed electronic payments into a customer’s account within 24 hours.
The rule, which becomes operational on October 2, 2018, states that such banks are liable to N10,000 fine per item upon complaints by the sender or beneficiary, same as “delayed application of inward NIP into beneficiary’s accounts beyond 4 minutes, (based on) complaints of sender and/ or beneficiary.”
The sanctions, the circular warned, shall apply along with “any other prescribed in the Nigeria Bankers’ Clearing System Rules or any amendment thereto, shall apply.”
The regulations, the CBN explained, is necessary in line with powers under Sections 2(d), 33 (1)b) and 47(2) of the CBN Act 2007 to “to promote sound financial system in Nigeria, issue guidelines, facilitate the development of an efficient and effective payments system in Nigeria, the CBN hereby issues the following rules and regulations for the efficient operation of Instant Electronic Funds Transfer Services in Nigeria.”
The regulation requires receiving banks to credit the beneficiary customer’s account within 60 seconds, and where impracticable “due to security, system or other considerations, (to) notify the parties and assure them “that pending credits will be applied as soon as the issue is resolved but not exceeding 24 hours.”
The parties are to “ensure that bank statement of the beneficiary features, in the minimum, the Sender’s name and Transaction Narration Information as contained in the inward EFT message, to aid reconciliation by the beneficiary.”
They are also to provide in the transaction status notification, service support contacts a customer can report to in case of mis-application of credit to a wrong account.
In the case of a notification of an erroneous credit, necessary reversal authorization is to be sought, after which the Receiving Entity shall reverse the erroneous credit.
The banks must also “comply with the approved Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT) directive, and transaction value limits as may be set from time to time by the CBN and other relevant regulatory bodies.”
All instant Electronic Funds Transfer (EFT) transactions must “be settled as agreed amongst participants but not later than T+1 basis,” based on set fees and charges in compliance to the approved Guide to Bank Charges.
“The Receiving entity shall not earn income on funds transferred. However, statutory levies/charges shall apply.”
The CBN also stipulates that “where a Sending Entity erroneously sends value contrary to customer’s instructions due to wrong account number, wrong amount, duplication, etc to a Receiving Entity and requests the reversal in writing within 14 working days of the transaction, the Receiving Entity shall oblige within one business day 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 notify its customer that the account was wrongly credited and provide proof of such notification to the Sending Entity.
“The Receiving Entity shall notify the customer the consequences of not funding the account within 24 hours, which includes watch-listing in the banking industry, Credit Bureau and reporting to law enforcement agencies. The Receiving Entity shall watch-list the customer if he fails to provide fund within seven days.
The Receiving Entity shall refund the transaction as soon as funds are either partially or fully available.
“The Receiving Entity shall not use the wrong credit to settle the customer’s outstanding indebtedness to it and shall not consider such credit as the property of the customer,” the CBN noted.
In the case of fraud, “The provisions of the CBN circular with reference number BPS/DIR/GEN/CIR/02/004 dated 11th June, 2015 on the Establishment of Fraud Desks or any amendment thereto shall apply.”