CBN threatens to sanction banks on ATM frauds

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By Babajide Komolafe

The Central Bank of Nigeria, CBN has threatened to sanction banks over the rising incidence of frauds through Automated Teller Machines (ATMs).

atm2The apex bank said that though there is increased acceptance and usage of electronic payment channels, there is however increasing incidence of ATM fraud. It therefore directed banks to install on their ATMs technologies that can forestall this trend.

This was contained in a circular to banks titled, Need to install anti-skimming device at all ATM terminals. The circular was signed by Mr. Dipo Fatokun, Director, Banking and Payment System department, CBN. It stated, The Central Bank has observed the growth in the adoption of e-payment of ATMs by Nigerians as one of the channels of e-payment The Bank is therefore committed to the deployment and management of ATMs in line with global best practices.

“However, we have observed with dismay, an upward increase in the number of ATMs related fraud in the banking system. The development does not portend good for the industry and requires urgent steps to curb the abuse.

“Consequently, in addition to the existing guidelines on card related frauds and in order to guard against card skimming at ATM channels across the country, all deposit money banks (DMBs) are hereby mandated to comply with the provisions of section 3.2 ‘ATM Operations’ and 3.4 ‘ATM security’ of the Standards and Guidelines on ATM operations in Nigeria and also install risk mitigating devices on their ATM terminals on or before June 1st, 2014. The CBN would invoke appropriate sanctions for non compliance with this circular.”

Last week, the apex bank in an effort to fast track the adoption of e-payment, released the guidelines on electronic payment of salaries, pensions, suppliers and taxes in Nigeria, saying enforcement will commence from January 2014.

This means, “Deposit Money Banks are to dishonor payment instructions for all forms of salaries, pensions, suppliers and taxes payment not transmitted on a Bank approved straight through electronic payment and collection platform issued by organisations with more than 50 employees.

“This means payment instructions and associated schedules are no longer to be transmitted to deposit money banks (DMBs)  by all public and private sector organisations through unsecured channels, such as paper- based mandates, flash drives, compact discs (CD), email attachments , etc.

The guideline stated that, “The objective of the end-to-end electronic payment of salaries, pensions, suppliers and taxes initiative is fully aligned with the core objectives of the National Payment Systems Vision 2020 (NPSV), which is to ensure the availability of safe and effective mechanisms  for conveniently making and receiving all types of payments from any location and at  any time, through multiple channels .

This will reduce the time and costs of transactions, minimise leakages in Government revenue receipts and at the same time provide  reliable audit trails, thereby making the Nigerian payments  system   comply with  global  payment standards.

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