Section 63-73 Nigerian BOFIA 2020
Section 63-73 BOFIA 2020
Section 63 to 73 of the Bank and Other Financial Institutions Act 2020 is under Part VIII (OTHER REGULATORY POWERS OF THE BANK) of the Act.
Section 63 BOFIA 2020
Risk-based capital requirements
(1) The Bank may, by notice in writing, require any bank, specialised bank or other financial institutions to maintain capital funds of such amount (not being less than the minimum prescribed in section 9 as the case may be) and in such manner as the Bank considers appropriate, having regard to the risks arising from the activities of the bank, specialised bank or other financial Institution, and such other factors as the Bank may consider relevant.
(2) Without limiting the generality of sub-section (1) of this section, a notice by the Bank, may prescribe —
(a) the appropriate level (which may be expressed in the form of a ratio) and quality of capital that is commensurate with the type and concentration of risk of the bank, specialised bank or other financial institution;
(b) the manner and process for calculating the level or quality of capital of the bank, specialised bank or other financial institution;
(c) the internal processes of each bank, specialised bank or other financial institution in assessing the adequacy of its level and quality of capital, having regard to the risks arising from the activities of the bank, specialised bank or other financial institution may consider relevant;
(d) the reports to be submitted by each bank, specialised bank or other financial institution; and
(e) restrictions on the distributions by a bank, specialised bank or other financial institution of dividends, bonuses, commissions, payments as a result of a buyback of shares, and any other payment, in the event that it fails to maintain the level or quality of capital prescribed under sub-section (1) of this section
(3) The Bank may, if it considers appropriate in a particular circumstance, having regard to the risks arising from the activities of a bank, specialised bank or other financial institution and such other factors as the Bank considers relevant, vary any capital adequacy requirement imposed by a notice under section 9 of this Act by a notice on that bank, specialised bank or other financial institution.
(4) Without prejudice to subsection (3) of this section, the Bank may restrict or suspend the operations of a bank, which fails to comply with a notice under this section.
(5) A bank, specialised bank or other financial institution which fails to comply with a notice under this section or any restriction or suspension imposed by the Bank under subsection (4) of this section, shall be liable to a penalty of not less than N2,000,000 and an additional penalty of not less than N50,000 for every day during which such failure continues.
Section 64 BOFIA 2020
Consolidated supervision
(1) The Bank may, by regulations, prescribe the framework for the exchange of information among regulators of entities related to, associated with, or otherwise affiliated to banks, specialised bank or other financial institutions.
(2) The Bank may, from time to time, cause an examination to be carried out by an examiner appointed by it, in writing, of the books, accounts and records of any bank, specialised bank, other financial institution and entities associated with or otherwise affiliated to the bank, specialised bank or other financial institution as the case may be.
(3) When an examination is conducted pursuant to subsection (2) of this section, the institution concerned and every officer and employee thereof shall produce and make available to the person conducting the examination all the books, accounts, records and other documents of the institution and such correspondence, statements and information relating to the institution, its business and the conduct thereof as the person conducting the examination may require and failure to produce any books, accounts, records, documents, correspondence, statements or information shall constitute a contravention of the provisions of this Act.
(4) The examiner may make copies of any books, accounts and other documents required for the purposes of the examiner’s report; and (c) all information obtained in the course of the examination shall be treated as confidential and used solely for the purposes of this Act.
(5) The examiner shall submit the examiner’s report to the Bank drawing attention to any breach or non-observance of the requirements of this Act and any regulations made thereunder, any irregularity in the manner of conduct of the business of the entity any mismanagement of the business or lack of management skills the institution and any other matter revealed or discovered in the course of the examination warranting, in the opinion of the examiner, remedial action or further investigation.
(6) For purposes of this Act, the Bank shall be the coordinator of the consolidated supervision of a group to which a regulated entity belongs, and as such may appoint a competent authority from any other entity or entities with expertise in the relevant field to carry out an inspection of the operations of the associated, holding or subsidiary company of a bank, specialised bank or other financial institution, or of any person who exercises control over such institution, in order to satisfy itself that the operations of such associated company are not detrimental to the operations of the bank, specialised bank or other financial institution concerned.
(7) The Bank may upon receipt of a report under the preceding section require changes to the legal or management structure of a group or banking group if it determines that such structures in their current form constitute an impediment to the discharge of the Bank’s supervisory functions; and require a group or banking group to retain a single auditor to provide an overall review of the group or banking group, including the preparation of consolidated financial statements as the Central Bank may prescribe.
Section 65 BOFIA 2020
Competition
(1) The provisions of the Federal Competition and Consumer Protection Act shall not apply to:
(a) any function, act, financial product, or financial services issued or undertaking, and transaction howsoever described by a bank or other financial institutions licensed by the Bank; and
(b) the Bank, the Governor, or other executive officer or staff of the Bank.
(2) Notwithstanding anything to the contrary in this Act but subject to subsection (3) of this section, sections 92 (1), (2) and (3), 94 and 98 of the Federal Competition and Consumer Protection Act (FCCPA) shall apply to a merger, acquisition or other form of business combination which involves a bank, specialised bank or other financial institution.
(3) All references to the Federal Competition and Consumer Protection Commission in Sections 92 (1), (2) and (3), 94 and 98 of the Federal Competition and Consumer Protection Act, shall be deemed Competition. and construed as a reference to the Bank.
(4) Notwithstanding anything to the contrary in this section, the Governor shall have the power to prescribe additional or other rules and procedures for mergers, acquisitions and other business combinations involving banks, specialised
banks and other financial institutions.
Section 66 BOFIA 2020
Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT)
(1) All banks, specialised banks, and other financial institutions shall adopt policies stating their commitments to comply with Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) obligations under subsisting laws, regulations and regulatory directives and to implement internal control measures to prevent any transaction that facilitates criminal activities, money laundering or terrorism.
(2) Notwithstanding anything to the contrary in this Act or in any other enactment, the Governor shall have power to issue Regulations, guidelines and policies from time to time to fight money laundering and combat the financing of terrorism
for banks and other financial institutions, in line with international best practices and standards.
(3) The Governor shall have power to liaise with relevant bodies in other countries with similar objectives for the purposes of sharing information and relevant data that would aid the fight against money laundering and combat the financing
of terrorism.
Section 67 BOFIA 2020
Corporate governance and ethics
(1) The Governor shall have power to issue regulations and guidelines for or with respect to –
(b) the corporate governance, including the appointment of principal officers, of banks and other financial institutions in Nigeria, their affiliates or other entities in which the banks and other financial institutions acquires or holds, directly or indirectly, a major stake;
(b) the prohibition or restriction on mutual holding of shares or other interests between banks, specialised banks and other financial institutions, related corporations or other entities; and
(c) the risk management of banks, specialised banks and other financial institutions.
(2) Regulations made pursuant to this section may relate to all, or any class, category or description of persons or banks and other financial institutions, and may specify different provisions for different classes, categories or descriptions of persons banks and other financial institutions or a particular person or bank and other financial institution or of general or specifically limited application.
Section 68 BOFIA 2020
Cybersecurity regulation by the Bank
(1) The Bank may issue regulations and guidelines to banks, specialised bank or other financial institutions to address cybersecurity issues in the delivery of financial or banking services.
(2) All banks, specialised bank or other financial institutions shall comply strictly with the cybersecurity regulations and guidelines issued by the Bank pursuant to subsection (1) of this section.
(3) Any officer of a bank, specialised bank or other financial institution who, through an action or omission, fails to comply with subsection (2) above, shall be liable to a penalty of not less than N2,000,000 and an additional penalty of N50,000 for each day during which such failure occurs.
Section 69 BOFIA 2020
Standard for payment, settlement and clearance activities
(1) Subject to the provisions of this Act, the Bank may, by regulation, prescribe the administration and standards, governing the operations relating to the payment, clearing, and settlement activities of banks, specialized banks or other financial institutions, taking into consideration existing prudential requirements and relevant international standards.
(2) The term ‘‘payment, clearing, and settlement activity’’ means an activity carried out by one or more financial institutions to facilitate the completion of financial transactions, but shall not include any offer or sale of a security under the Investment and Securities Act 2007.
Section 70 BOFIA 2020
Designation of systemically important banks
(1) The Bank shall by regulation prescribe the assessment criteria for designating systemically important banks or such other designation as the Governor may from time to time determine, and the policy measures, considered appropriate, to address the risks posed by such designated banks including liquidity standards, stress testing requirements, recovery and resolution plan, enhanced supervision, and disclosure requirements.
(2) The Governor may in furtherance of subsection (1) of this section, designate any bank as a systemically important bank or such other designation as the Governor may specify and a bank so designated shall be obliged to immediately apply and comply with the standards and requirements of a systemically important bank as may be prescribed by the Bank pursuant to subsection (1) of this section.
(3) Any bank which fails to comply with any of the policy measures in the guidelines issued by the Bank pursuant to this section is, in respect of each such failure, liable to a penalty of not less than N5,000,000 and an additional penalty of N200,000 for each day during which such failure occurs.
(4) The Bank in taking any resolution measures in connection with a failing systemically important bank or any failing bank, may request for the cooperation of any government agency or corporation in Nigeria, with regulatory oversight in respect of such failing bank or whose mandate would be impacted by the resolution measures and such government agency or corporation shall be obligated to cooperated with the Bank.
Section 71 BOFIA 2020
Restriction on operations of Agents of banks
(1) The Bank may by guidelines, regulate the operations of agents of banks.
(2) An agent shall not–
(a) accept any withdrawals by cheque; or be a direct member of the Nigeria Bankers Clearing System; or
(b) accept any deposit above an amount which shall be prescribed, from time to time, by the Bank;
(3) For the purpose of this section, “agent” means a person, or an entity contracted by an institution and approved by the Bank to provide the services of the bank on behalf of the bank, in such manner as may be prescribed by the Bank:
(4) Any agent which acts in contravention of or fails to comply with any of the provisions of this section is guilty of an offence and liable to a fine of not less than N50,000 and an additional fine of N5,000 for each day during which such
failure occurs.
Section 72 BOFIA 2020
Unclaimed funds/ abandoned property
(1) Where a current or savings account has not been operated for a period of one year or such other period as the Bank may specify, from time to time no withdrawal shall be made on the account except with the approval of two authorised signatories of the bank, specialised bank, or other financial institution involved.
(2) The account referred to in subsection (1) of this section shall be transferred to a separate register of dormant accounts and remain deposit liabilities in the books of the bank, specialised bank or other financial institution and the bank, specialised bank, or other financial institution shall immediately notify the account holder by electronic email and in writing at the account holder’s last known address, informing him of the dormancy of the account.
(3) Where an account which is transferred under subsection (2) of this section is subject to a service charge the charge may continue to be levied up to the date on which the account was transferred to the register of dormant accounts.
(4) Where an account which is transferred under subsection (2) of this section is interest bearing, interests shall be applied to the account up until the time when the balance is transferred to the Bank in accordance with subsection (8) of this section.
(5) Where an account is transferred to the register of dormant accounts and has been on the register for ten years, the bank, specialised bank or other financial institution shall advertise in at least two daily newspapers with national circulation, giving notice that the account has been transferred to the register of dormant accounts.
(6) Each bank, specialised bank or other financial institution shall submit to the Bank quarterly reports on all dormant accounts stating the efforts made by the bank, specialised bank or other financial institution to locate the account holders.
(7) An account which has been transferred under subsection (2) of this section may only be transferred out of the register following a request by the depositor or the legal representative of the depositor, where such depositor is dead or incapacitated, once all necessary identification and evidence of account ownership have been established by the bank, specialised bank or other financial institution.
(8) Where an account has been in the register of dormant accounts for 10 years, the bank, specialised bank or other financial institution shall after the advertisement under subsection (5) of this section, transfer the balance on the account including the interest earned to an account earmarked for that purpose at the Bank.
(9) Where a balance has been transferred under subsection (8) of this section, the Bank shall refund the balance to the depositor, or if the depositor is deceased, to the legal representative of the depositor’s estate, once the Bank is satisfied that the claimant is the owner of the funds requested.
(10) The Bank shall invest the funds deposited with it pursuant to subsection (8) of this section, in treasury bills or other securities as the Bank may determine and interest accrued on any such sums shall be payable to any claimant pursuant to subsection (9) of this section.
(11) The Bank shall issue guidelines on the administration of unclaimed funds in banks, specialised banks and other financial institutions pursuant to the provisions of this Act.
Section 73 BOFIA 2020
Avoidance of pre-liquidation transfers
(1) The liquidator of a bank, specialised banks and other financial institutions may set aside the following transactions affecting the assets of the bank, specialised banks and other financial institutions and recover the assets from the transferee or other beneficiary of the transaction-
(a) gratuitous transfers to, or to persons related to, affiliates, insiders or key management personnel of the bank, specialised banks and other financial institutions made within five (5) years prior to the effective date of the
liquidation;
(b) transactions with affiliates, insiders or key management personnel of the bank, specialised banks and other financial institutions conducted within five (5) years prior to the effective date of the liquidation, if detrimental to the interest of depositors and other creditors.
(c) gratuitous transfers to third parties made within three (3) years prior to the effective date of the liquidation;
(d) transactions in which the consideration given by the bank considerably exceeded the received consideration, made within three (3) years prior to the effective date of the liquidation;
(e) a transaction based on a forged or fraudulent document that the bank, specialised banks and other financial institutions has executed to the detriment of creditors
(f) any act done with the intention of all parties involved to withhold assets from the creditors of the bank, specialised banks and other financial institutions or otherwise impair their rights, within five (5) years prior to the effective date of the liquidation;
(g) transfers of property of the bank specialised banks and other financial institutions to, or for the benefit of, a creditor on account of a debt incurred within one (1) year prior to the effective date of the liquidation which has the effect of increasing the amount that the creditor would receive in a liquidation of the bank, specialised banks and other financial institutions provided, however, that payment of deposits otherwise than by the transfer of property of the bank (other than money), specialised bank or other financial institution shall not be subject to
this provision; and
(h) any attachment or security interest, except one existing six (6) months prior to the effective date of the liquidation.
(2) Any action to set aside a transfer pursuant to subsection (1) of this section under this section shall be taken by the liquidator within one (1) year following the effective date of the liquidation.
(3) Notwithstanding the provisions of this section, the liquidator may not set aside a payment or transfer by a bank, specialised bank or other financial institution if it was made in the ordinary course of business, or if it was part of a contemporaneous exchange for reasonably equivalent value, or to the extent that following the transfer the recipient extended new unsecured credit to the bank, specialised bank or other financial institution which had not been satisfied by the bank, specialised bank or other financial institution as of the effective date of the liquidation.
(4) The liquidator may recover property or the value of property transferred by the bank, specialised bank or other financial institution from a transferee of an initial transferee only if the second transferee did not give fair value for the property and knew or reasonably should have known that the initial transfer could be set aside under this Act.
(5) The liquidator may order that notice of an action to set aside a transfer be recorded in the public records for real estate ownership and any other rights in property and a person taking title to or acquiring any security interest or
other interest in such property after the filing of such a notice takes his title or interest subject to the rights of the bank, specialised bank or other financial institution to recover the property.