Tier-1 Transition: Navigating CBN's New Customer Verification Requirements

Amid growing concerns stemming from high-profile fraud incidents and critiques of lenient KYC standards, Nigeria is promoting financial system stability by reinforcing KYC procedures. 

The Central Bank of Nigeria (CBN) has introduced a new Know Your Customer (KYC) measure for Tier-1 account openings, effective April 2024.

Here’s what you need to know: 

The critical change: ID verification is now required for Tier-1 accounts

The new rules come as an amendment to Section 1.5.3 of the Regulatory Framework for Bank Verification Number (BVN) Operations and Watchlist for the Nigerian Banking Industry. 

The CBN released a circular detailing all the updates, but the fundamental change is that BVN or NIN linking for tier-1 accounts is now mandatory. This means all new and existing Tier-1 bank accounts and digital wallets for individuals must have a Bank Verification Number (BVN) and/or National Identification Number (NIN) on file.

Implementing the new KYC process for Tier-1 accounts

Opening New Accounts: The account opening process for Tier-1 accounts will commence by electronically retrieving BVN or NIN-related information from the NIBSS' BVN or NIMC's NIN databases. 

This can be retrieved by integrating directly with government agencies or through a KYC provider like Smile ID. 

Updating Existing Accounts: Regardless of whether an existing BVN or NIN is on file, the existing account must be revalidated.
 

• For accounts with an NIN or BVN linked, you must re-check the linked ID number against an official electronic government database.
• Accounts that do not have an NIN or BVN linked will need to retrieve an ID number from the client and validate it against an official electronic government database.
   

Important note: All BVN and NINs now must be electronically verified. Going forward, you cannot manually create a customer profile and later attach a BVN or NIN. 

Benefits of using a KYC verification partner for Tier-1 account verification

While financial institutions in Nigeria can verify relevant IDs with NIBBS & NIMC, there are benefits of using third-party solutions like Smile ID.



Ensure a seamless user experience: Smile ID's solutions are designed to be user-friendly, ensuring a smooth customer experience during the KYC process. We also have measures to accommodate verifying tokenised IDs or processing OTPs in a streamlined flow for your clients to easily follow. 

Access multiple ID types in a single integration: With Smile ID, you can integrate into our APIs or SDKs once to support all necessary IDs for verification. We also have various integration options to fit in with your existing app or mobile banking infrastructure. 

Get backlog support for re-verification: With this new mandate, you will likely have thousands of users to re-verify. Our customer support team can help you clear the backlog faster by processing bulk verification requests.

If you need support through this transition, we are here to help! Contact info@smileidentity.com 

Roll-out timeline

Enforcement of the new KYC regulations will roll out in stages, and the regulation will be in full effect starting April 2024. 

Here are some key dates you should keep in mind:

Contact Smile ID for help meeting the new Tier-1 KYC requirements.

Smile ID offers a comprehensive suite of solutions that align with the latest regulatory changes in Nigeria. Contact us today to meet CBN's new Tier-1 customer verification regulations effortlessly.

FAQs 

What if my customer does not have a BVN or NIN? 

If someone wants to open an account but doesn't have a BVN or NIN, you can start enrolling them in the BVN system or suggest they visit a NIN enrollment centre. 

You can finish the account setup once they get the BVN or NIN. However, you may not use any fake BVN or NIN as a placeholder in the meantime to open the account. The account can only be opened with a verified ID number. 
 

Are there any changes to the requirements for Tier-2 and 3 accounts? 

There are no changes in this mandate for Tier-2 and 3 accounts. BVN and NIN remain mandatory for individuals' Tier-2 and 3 accounts and wallets.

Smile ID offers a suite of compliance solutions that make achieving KYC compliance much easier. With access to Africa's largest government ID information network, our KYC solution empowers businesses to conduct KYC due diligence, and AML checks via APIs, SDKs, or no-code integration. 

This improves customer onboarding rate and makes it easier for the institution to comply with CBN's recent regulations and protect it from money laundering and other financial crimes.

Have more questions or ready to get started? Book a free demo with our experts today.