From Uche Usim, Abuja; Kate Halim, Lagos; Aloysius Attah, Onitsha; Obinna Odogwu, Awka And Chinwendu Obienyi, Abuja.
Did the Central Bank of Nigeria (CBN) actually direct all commercial banks to freeze all accounts belonging to non-governmental organisations (NGOs), churches, schools, social clubs, community associations, etc. without certificates of registration from the Corporate Affairs Commission (CAC)?
That is one question that has been causing confusion in the minds of many Nigerians.
“Yes, it did,” noted some banks, which claimed they have already frozen a lot of such accounts with them, after issuing ‘several warnings.’ But some account holders claimed they never heard of any such warnings and so were shocked by the development. Some have even threatened to take the banks to court over what they described as “breach of trust.”
But the confusion even worsened, as some CBN officials claimed they never issued such a directive.
Ordeals of account holders
In Anambra State, concerned account holders are said to be reeling from the shock of the development, which they claimed has affected many groups, community/village associations, churches and social clubs. This followed the sudden “wipe-out” of their accounts by their banks, without prior notice, it was alleged. Some of the account holders said debit alerts on their phones reducing their lodgements running into hundreds of thousands of naira to zero forced them to run to their various banks. They had initially thought that their accounts might have been wiped out by fraudsters who hacked into the banks’ system. But their fears were somehow allayed when they were told that the action was taken deliberately by the bank’s authorities to enable a seamless tracing of funds within the banking system.
Chukwujekwu Ilozue, Chairman of the Correspondents Chapel, Nigeria Union of Journalists (NUJ), Anambra State Council said he could not hide his disappointment and anger when he received such zero balance alert from the chapel’s bank. Before this time, the chapel was said to have concluded plan to make some withdrawals from their account to furnish its new office in Awka with. It was said to be in fulfilment of one of the promises made by Ilozue while he campaigned for the chairmanship position last year. But he was taken aback when the alert that came showed that the account was now in the red. He said he did not receive any prior message or notice from the bank before the sudden action, which has now left the union penniless, was taken.
He said: “On July 9, 2022, we received an alert showing that our bank account, in which we had about half a million naira, had been depleted. The next message from another alert was that the action was ordered by CBN. I rushed to the bank immediately because I couldn’t comprehend the reason for such. But on getting there, the bank told me that it was an instruction from the CBN that any group or association not registered with the Corporate Affairs Commission should go and do so. I told them that the chapel is a body of the NUJ and we are not supposed to register again as a separate body. But the lady attendant told me that I should go and meet the Chairman of NUJ and do a letter attaching a copy of the NUJ registration with the CAC. That is the process we are at right now.”
But while they at it, Ilozue said members of the chapel are threatening to sue the bank for its brazen action, more so when information in the public space at present counters the bank’s position that it was carrying out CBN’s directive.
Said he: “My members are saying that the bank has stolen our money and that we should sue them. But we have decided to take the initiative of writing them formally and asking them to restore our money.” Asked whether the bank gave them any prior notice before the action, he claimed total ignorance of such notice. But the bank said it issued warning notices. The chairman said his only regret is that the bank’s action has stalled the association’s plan to equip their office.
Former assistant secretary of Catholic Men’s Organisation (CMO), REPACCO branch, Chika Nwankwo-Arinze, confessed that the new policy had hit the organisation. He said: “One of our accounts has been closed as a result. That account had over N70, 000 in it. But the one we have with another bank is still running. It has over N500, 000. But we have resolved to move the money before they close it also.” Asked how they intend to go about it, he said: “First of all, we considered that the cost of registration with the CAC is high. It’s over N120, 000, which we cannot afford now. So, what we have opted to do is to withdraw the money and put it in one of our members’ accounts for now. On the issue of registration, we have an alternative. A banker told us that we could go to the local government area and register the association.”
The lucky ones
But Colernus Onu, Chairman, Aji Friends Associates, an association of youths from Enugu community but based in Onitsha, said that the association narrowly missed the bank’s hammer. This is because it got wind of the development and quickly withdrew its money. He added that even though the youths had withdrawn their money, they have started the process of registering the association with the Corporate Affairs Commission. He also disclosed that following the development, the registration fee and processing of documents for CAC registration has been increased. He said that they were charged N40, 000 extra by the person handling their registration. “He cited the recent surge in the number of new applicants as the reason for the increase,” he explained.
Chairman of Elite Brothers Club, Onitsha Branch, Elias Njoku said that their association also scaled through the undesirable action. This they did by opening a joint account with the initials of three key officers of the association. They had been joint signatories to their bank account. But instead of opening the account with their unregistered association’s name, they did in their own names. But he noted that the development has now come as an eye opener to them to act fast by going the whole hog in formally registering with the CAC, an action, he said, over which they had been procrastinating for years.
A particular new generation bank has been fingered as the institution withholding people’s funds for now. But a senior customer officer of the bank, who did not want his name used, said the bank’s action was a temporary setback, assuring that people’s funds were still intact.
But like Ilozue, many account holders claim ignorance of such directive. Mrs. Oyinlola Adebayo, an ex-student of Tonia International College, Lagos 2001 and President of the Old Students Association of the school known as TOSA is one of such. She said: “I don’t know how true it is because I have not received any such memo from our bank concerning our account. Furthermore, I asked a friend of mine who works in a bank if the information was true, but she said her bank had yet to receive a memo to that effect from CBN.”
She said the association was reluctant to take any hasty step towards withdrawing its money from the bank.
Ebenebe community in Awka North Local Government Area, Anambra State, which operates an account with a commercial bank, also said that the apex bank’s policy had not affected it. President-General of the town’s union, Paul Nnatuanya, told Saturday Sun: “We have not registered with the CAC. But we still have our money intact, although the money is not much. The little money we have in the bank is still there,” But like others he promised to register the association soon with the CAC.
Executive Director of Human Rights Liberty Access and Peace Defenders’ Foundation (HURIDE), Dede Uzor, who said that his organisation was registered with the CAC, asked for some extension to enable those affected by the directive to comply with it. He said: “People should be given more time to formalise their CAC registration. They should be given up to one year to enable those who have not registered to do that. No organisation’s money should be taken away on the grounds that they didn’t register with the CAC.”
Confusion over alleged CBN directive
Bur right now there is confusion as CBN denies giving such instruction. Asked to clear the air on the raging controversy, the Central Bank of Nigeria (CBN) stated that it did not issue any such order. In a forum on Wednesday, the CBN Governor, Godwin Emefiele, who was represented by the Deputy Director, Banking Services, Egboagwu Ezulu, said: “This is not a directive issued by Central Bank to Deposit Money Banks (DMBs) to commence the closing down of accounts of unregistered associations and societies domiciled in their respective banks. It is rather an operational issue from the banks. Categorically, a Know Your Customer (KYC) issue and it is a consequence of CAMA. Also, these banks have not done a lot of sensitisation in that space.” A cursory search on the CBN’s website revealed that no such directive exists. When the paper contacted one of the concerned bank’s spokesperson, he declined further comments on the matter.
But one of the banks in question, it was gathered, had notified its customers that it would begin the process of closing such accounts from July 12, 2022. The bank’s statement partly read: “Dear esteemed partner, following CBN’s directive on unregistered Community Savings Accounts, please be advised that all associations or societies are expected to provide their registration documents on or before July 12th, 2022. All accounts not regularised by this date will be closed accordingly.”
The bank further stated that funds on closed accounts could not be migrated or transferred and that the registration of the association must precede any further action on the account.
A staff of the bank, who didn’t want his name used, confirmed that the bank had commenced the process of closing down accounts of unregistered associations and societies. “This situation arose from the fact that these associations are sometimes in dispute and take each member to court over breach of trust whether in contribution or something different. This made us to take such action,” he volunteered.
Amid the raging controversy and ensuing confusion, many corporate account holders are beginning to heed the alarmist’s advice of a blogger who made a video that has gone viral on the issue: She said: “Even if you have the CAC registration, you will still need to see your bank with your BVN numbers if you are signatories. Account holders should go and collect or transfer their money before it is too late, that is, if your money is still there.”
Sources noted that there has been a significant surge in the volume of intending CAC registrations by associations. This they are doing in order to escape the so-called directive. But none of these measures has succeeded, in any way, in clearing the lingering confusion that exists over the order. In spite of CBN’s denial, a bank source insisted that it’s the apex bank’s mandate. Unregistered accounts, he explained, need to be regularised, with their signatories known and their BVN captured. His words: “A lot of hefty accounts are being operated by ‘ghosts’ so to speak. So, it becomes imperative for those who operate what may look like a corporate account to visit their banks and illuminate grey areas if any. There’s nothing new about the circular. It’s all about the KYC policy, which has been in existence. Just for cooperation of associations and clubs to update or regularise their details. The banks are not withholding anyone’s funds. Rather, customers are expected to comply and then resume transactions. Anything else constitutes an infraction and must be reported to the apex bank,” the source explained.