The Central Bank of Nigeria (CBN), yesterday, demanded statutory powers from the Nigerian Senate that will enable it to freeze bank accounts that are linked to criminal suspects.
The apex bank’s director in charge of legal services, Mr. Kofo Salam-Alade, argued this point while appearing before a Senate Committee Hearing for a new Act seeking to replace the Banks and Other Financial Institutions Act (BOFIA) of 2004. The lawmakers have commenced the process of repealing/replacing BOFIA 2004 with the re-enactment of BOFIA 2020. However, a particular omission in the new bill has the CBN worried In his presentation to the lawmakers, Mr. Salam-Alada pointed out that the new BOFIA bill has ‘inadvertently’ omitted a clause that should normally grant the CBN Governor the power to freeze any bank accounts linked to criminals, using of a court order. Note that BOFIA 2004 contained this clause. However, the new bill seeking to re-enact BOFIA does not have it. Interestingly, this new bill has passed its second reading at the senate, meaning that it could soon become law.
Speaking further, Mr. Salam-Alade argued that the clause should be re-introduced into the new BOFIA bill in order not to frustrate the apex bank’s fight against fraud and other financial crimes.
“This omission erodes the powers of the CBN and creates a huge gap in the regulatory and resolution framework. Therefore, we propose that the extant provisions should be reinstated,” Mr. Salam-Alada noted.
The CBN director later called on the lawmakers to consider the creation of a credit tribunal that will have the responsibility of addressing the persistent issue of non-performing loans in the banking sector. Such a tribunal is expected to fast-track the recovery of bank loans and other financial institutions through the enforcement of rights over collaterals. Salam-Alade said:
“As part of measures to address the role of nonperforming loans, we propose the creation of a credit tribunal. The overarching objective is to create an efficient regime for the recovery of eligible loans of banks and other financial institutions and enforcement of rights over collateral securities.
Several new types of licensed institutions have entered the Nigerian financial services sector since the enactment of the 1991 Act. These include the non-interest banks, credit bureaux, payment system service providers, among others. There is a compelling need to introduce new provisions in the bill to address the unique peculiarities of these institutions.”
Another important point Salam-Alade raised during the hearing was the fact that the CBN’s power to intervene and rescue a failing bank was ‘inadvertently omitted in the new BOFIA bill.
Further Reading attempting to explain this proposed bill.