Sylvia Duruson
The Central Bank of Nigeria (CBN) recently made headlines with a new regulation that requires banks to collect and verify customers’ social media handles as part of their Know Your Customer (KYC) process. The move is aimed at combating financial crimes and strengthening customer identification measures.
According to the CBN’s “Customer Due Diligence Regulations 2023” report, all financial institutions must identify their customers, regardless of their status or nature, whether individuals or entities. As part of the KYC requirements, social media handles of customers should now be obtained, along with other personal information such as names, addresses, contact details, and identification numbers.
This initiative by the CBN seeks to improve compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations, while aligning with global standards. By enforcing these measures, the CBN aims to enhance customer due diligence efforts and ensure compliance with relevant laws and regulations.
Including social media handles in the KYC process enables financial institutions to utilize the wealth of information available on social platforms to strengthen their due diligence. Insights into customers’ financial behavior, associations, and lifestyle choices obtained from social media can assist in verifying identities and detecting suspicious activities.
However, it is worth noting that social media usage in Nigeria remains relatively low. Out of a population of over 220 million, only around 34 million individuals, accounting for approximately 15%, are connected to social media platforms. This poses challenges when verifying accounts, especially in cases where fake names are used or for individuals residing in rural areas with limited social media familiarity.
While some argue that social media handles can be seen as online addresses, similar to physical addresses, the CBN report did not explicitly mention this perspective.
The compulsory requirement of social media verification raises concerns about its potential impact on the government’s initiatives for financial inclusion and the principle of freedom of speech associated with social media. Critics speculate that it could serve as a tool for government regulation and control over social media content distribution.
In implementing the inclusion of social media handles in the KYC process, financial institutions must prioritize compliance with privacy regulations and guidelines to safeguard customers’ personal information.
Protecting the privacy and social lives of citizens is essential, but it remains uncertain whether there are specific policies in place to ensure the proper implementation and protection of personal information in this context. Striking a balance between regulatory objectives and individual rights is vital to address these concerns and maintaining trust in the financial system
