Last weekend the Central Bank of Nigeria released its Customer Due Diligence Regulations 2023. Under section 6 (VI) of the new regulations, the CBN has ordered banks to collect and verify customers’ social media handles as a part of their Know Your Customer (KYC) requirements. As part of the CBN’s efforts to encourage compliance with the anti-money laundering (AML) and counter-terrorism financing (CFT) provisions, the CBN believes that banks and other financial institutions can gain insights into their customers by acquiring additional information.
Incorporating social media handles will allow financial institutions to have comprehensive KYC data reducing chances of malicious intentions and illegal operations. The CBN also believes that having social media handles in KYC procedures will make tracking high-income customers and businesses easier, as banks can trace suspicious activities. However, away from its advantageous effects, barely 31 million Nigerians of its 213 million population have social media accounts. Social media KYC may hinder the drive for financial inclusion in the country, as many Nigerians who do not have social media accounts will have difficulty creating bank accounts or accomplishing smooth transactions.
Many unpleasant reactions from Nigerians have welcomed the CBN’s moves, as people consider the National Identification Number (NIN) sufficient for these financial institutions. Others are concerned about the poor technological infrastructure in the country and their right to privacy. Thus the CBN will be charged with the responsibility of thinking through its strategy for combating issues like money laundering while ensuring convenience in the financial industry to promote financial inclusion