CBN canvasses abolishing offshore banks in Nigeria
*Seeks more powers to revoke licences
*Concurs with Reps on stiffer penalties for banks
The Central Bank of Nigeria (CBN) is seeking the abolition of offshore banks operating in the country without been licensed locally, saying that such facilities serve as conduits for money laundering.
CBN Governor, Godwin Emefiele made the request on Tuesday, at the two-day public hearing organised by the House Committee on Banking and Currency on a bill to amend the Banking and Other Financial Institutions Act (BOFIA) and other bills in Abuja.
He said that the shell banks, apart from being used for money laundering, distort the banking system and make a problem to regulatory agencies.
Emefiele, who was represented by the Director, Legal Services Department, Johnson Akinwunmi said that “we wish to propose the introduction of new subsection 3(6) and (7) for the proscription of shell banks in response to the latest recommendations of the Financial Action Task Force (FATF) on money laundering.
“Any bank or its subsidiaries without physical presence in the country where it is incorporated and licensed and is not affiliated to any financial services group that is subject to effective consolidated supervision shall not be allowed to operate in Nigeria and no Nigerian bank, orbits subsidiaries shall establish or continue any relationship with such bank or subsidiary.”
Similarly, the CBN is also seeking additional powers to revoke licences of banks and the power to inject funds into a falling bank by way of equity participation up to a level that guarantees control by the CBN.
The additional powers, according to the director is to enable the CBN acquire equity investment institutions and its ability to ensure a sound financial system.
The CBN also backed the House of Representatives in imposing stiffer penalties and terms of imprisonment of certain offences on erring commercial banks and their staff.
But in his presentation, the Ddirector of Legal/Board Secretary, Nigeria Deposit Insurance Corporation (NDIC), Belema Taribo opposed the proposed fines, saying they were too high.
On the issuance of licences, the NDIC proposed that the CBN should seek its consent before granting any application for banking licence, adding that “this is to enable the corporation have a prior evaluation of the applicants with regard to insurance of deposits.”
Earlier, in his welcome address, Chairman of the House Committee on Banking and Currency, Rep. Jones Onyereri said, increase in penalties to the bank operators would streamline the operations of such banks to conform to international best practices.
He informed that the proposed amendments to the Bofia Act 2017 was initiated by three lawmakers, namely, Rep. Daniel Reyeneiju (PDP/Delta); Rep. Betty Apiafi (PDP/Rivers) and Rep. Jones Onyeriri (PDP/Imo).
Some of the penalties in the 70 proposed amendments to the BOFIA Act 2017 include: a fine of N20 million on banks that fail to comply to the conditions of the licence, a fine of N20 million on any director that fails to declare any property he/she owns that runs contrary to the Act.
“A fine of N10 million against a director or manager that fails to keep a book of account and a fine of N2million on banks that fail to publish its annual report of its general meeting in two reputable national dailies, amog others.
