The financial sector regulatory authority, National Bank of Ethiopia (NBE), urge banks to coalesce together multiple accounts owned by a single entity or individual.
It is to be recalled that the regulator gave banks set directives on knowing your customers (KYC) and customer due diligence (CDD), to which banks were in a rush to comply following the timeframe of six months which was set to authenticate customers’ accounts with required information and data, for the directive issued on August 27.
The operation has since then been concluded as per the given time frame and as Capital has learned banks have now got a new order from the regulatory body to harmonize duplicated bank accounts under one and single account as per the preference of their customers.
This now means that a bank customer who has multiple accounts in a single bank for instance the Bank of Abyssinia will have to merge all his/her accounts to one as per preference. “All the saving amounts will be included under a single account according to the preference of the account holder,” explained a bank clerk that Capital spoke to.
Currently, there are over 72.3 million bank accounts but it is common for a single customer to have more than one account in a similar bank which duplicates the number of accounts.
As was the norm, bank branches used to insist customers to open account in their branches without double checking whether they had similar accounts on other branches of the same bank.
Now as per the decision of NBE, bank branches have started approaching their customers to merge their accounts under a single account. This has also resulted in branches to compete for customers to settle in their account branch as opposed to the other.
One bank customer told Capital that unusually he has got a call from one of the bank branches where he is a depositor. “In this particular bank, I have more than one account in different branches. Early this week, one of the branches reached out to me in order for me to stay at their branch. However, I explained to them that the branch closer to my office and business activity was far more convenient for me,” he explained.
Experts stated that such move by NBE mainly targets to strength the illegal act on the financial and related issues.
The KYC and CDD directive, ‘requirements for undertaking account based transactions and ensuring of regulatory limits directive No. FIS/04/2021’ stated that KYC and CDD practices are critical to ensure proper identification of customers, appropriate assessment and monitoring of transactions including ensuring of proper compliance to regulatory transaction limits set by NBE.
It added that the implementation of KYC and CDD will combat illegal and unauthorized transactions. Thus the directive ordered banks or microfinance institutions and payment instrument issuers to have relevant information of their customers. Article five, sub article 5.1 for instance stated that in opening a deposit account, a financial institution will at a minimum record comprehensive customer profile that allows it to acquire adequate knowledge of the customer and identify suspicious transactions in a relatively easy and swift manner. “To this end a financial institution will use annex I which is part of a directive as a sample on how financial firms register customers profile, of the directive as a minimum standard for account opening at all time in a manner that ensures consistency across the financial industry,” it added.
Under the direction of NBE financial firms were in rush to know their customers ahead of the deadline in February 2022. Accounts that were found to not have the required profile were to be transferred to the regulatory body, as per the issued directive.
To this end, in the past few weeks, banks have been approaching their customers through different communication tools like text message (SMS), phone call or media announcements, for customers to appear at their branches for rechecks in their accounts information.
Bank clerks that reside in different banks’ branches told Capital that the new scheme has become an additional workload for them since the number of account holders who are visiting their branches are growing by the day.
“The new scheme has imposed further burden on our day to day activity,” a clerk said.
The clerk explained that despite being in a branch that is not regarded as a big branch with regards to the number of account holders, the numbers of visitors have continued to increase in the past few weeks.
“Our bank has already called all its customers to visit their branches. We will also give a call for customers if they do not appear in the coming weeks,” another bank clerk that works at a branch located around Bole Medhanialem told Capital.
She said that the bank called all of its accountholders regardless of customers having the required document like photo and ID with the bank, for a thorough check.
One customer that Capital interviewed for instance said that he received an SMS from the bank that he has a deposit account with, and went on to visit his branch. “However I have learnt that all the required profile was already filled when I opened the account years back and I have proved that on my latest visit to my branch,” he explained his case.
The work load mainly on big banks is very huge according to bankers since their bank account holders are in millions, while the story of Commercial Bank of Ethiopia (CBE) is different owing to its large customer base.
One of the clerks that Capital talked to at one of the state giant CBE branches said that the number of customers visiting in relation with the latest announcement has an unprecedented flocking of customers at their doorstep.
CBE has over 34 million accountholders. Recently Yinager Dessie, Governor of NBE, said that in relation with last year’s currency change an additional 7.2 million bank accounts have been opened. It is estimated about 60 million accounts are opened across all banks.
The new rush is followed by the NBE directive of knowing your customers (KYC) and customer due diligence (CDD) that issued in August 27 which became effective the same day.
Experts stated that such move by NBE is mainly targeted to strength the illegal act on the financial and relate issued.
The KYC and CDD directive, ‘requirements for undertaking account based transactions and ensuring of regulatory limits directive No. FIS/04/2021’ stated that KYC and CDD practices are critical to ensure proper identification of customers, appropriate assessment and monitoring of transactions including ensuring of proper compliance to regulatory transaction limits set by NBE.
NBE had given six months starting from August 27 as a transition period for financial firms to capture required customer profile from its long time and new customers so as to issue a unique customers ID and introduce a centralized account opening approval. The transitional period included loading of the information to the financial institution’s system. For those who failed to comply with the requirements of this directive the penalty incurred would be from 20,000 to 100,000 birr which differs as per the britches, while other administration measures were to be applied.
According to the information obtained from bankers, the account of those who do not have the required profile will be transferred to the regulatory body.