CBN enforces stricter penalties and mandatory verification checks to curb dud checks, boost regulatory compliance and safeguard Nigeria’s bank.
Nigeria’s Central Bank has unveiled a sweeping set of enforcement measures that will see banks fined millions of naira for failing to verify the status of customers before opening current accounts. The policy is designed to tighten compliance standards, curb the growing problem of dud checks and strengthen confidence in the country’s financial system.
Under the new directive, Commercial, Merchant and Non-Interest Banks will face a minimum penalty of ₦3 million for each failure to confirm a customer’s standing. The Central Bank says the checks must be carried out through the dud check database on the Centralized Risk Management System (CRMS) or any other platform it designates.
The penalties vary across the wider financial sector. Primary Mortgage Banks will be sanctioned at ₦1.5 million per infraction, depending on whether they operate nationally or at state level. Microfinance Banks will face fines ranging from ₦500,000 for national operators to ₦100,000 for Tier 1 Unit MFBs, while Tier 2 Unit MFBs will also incur penalties under the CBN’s category-based framework.
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The measures were outlined in an exposure draft titled Guidelines on the Treatment of Dud Checks by Banks and Other Financial Institutions in Nigeria, signed by Rita I. Sike, Director of the Financial Policy and Regulation Department. The document clarifies the responsibilities of banks in detecting, reporting and addressing dud checks—an issue that has long created friction between financial institutions and customers.
Beyond the fines, banks must now review at least two existing current accounts linked to an applicant before authorizing the opening of a new one. The CBN says the intention is to limit systemic risks, reduce fraud, and ensure that individuals with a history of issuing bounced checks do not re-enter the system without appropriate scrutiny.
The draft guidelines also introduce strict sanctions for serial offenders. Any customer barred for repeated dud check issuance will face a five-year restriction, during which they cannot access the check clearing system, obtain credit from any bank, or open additional current accounts. These measures, the CBN says, are necessary to reinforce accountability and protect the integrity of financial transactions.
Banks are further reminded that checks must only be issued on accounts with sufficient funds. Where accounts lack adequate balances, institutions must impose returned-check charges in line with the existing Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions.
The Central Bank says the updated rules are part of a broader campaign to promote discipline, reduce avoidable financial losses and safeguard the stability of Nigeria’s banking environment.
