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Recent Legal Issues in Electronic Banking in Nigeria – Adeyemi O. Owoade

Introduction
Technology has impacted lives immensely. It has permeated all sectors of global living and the Nigerian economy is no exception. The influx of electronic devices connected to the internet, and the internet itself has changed the global lifestyle narrative. Commercial transactions have also taken a nascent new look, with the pace of commercial activities geometrically progressing. These commercial transactions may not be completely successful without the use of electronic banking. The conventional method of banking was, until now, visiting a banking hall to effect all kinds of banking transactions. Now, men sit in the corners of their rooms or office places and effect transactions.

Notably, these transactions have not been devoid of hazards legal challenges. In several parts of the world, different legal reforms have been embarked upon at different times. It is important to answer the question of whether Nigeria has joined the developed climes in regulating electronic banking; and if they have, what has been done so far. I shall consider some recent legal issues that have arisen in the world as a result of electronic banking and the different legal frameworks that have been introduced to cater for them right here in Nigeria.
Electronic banking is defined by Section 58 of Cybercrime (Prohibition, Prevention Etc.) Act, 2015 to mean:
Any transfer of funds which is initiated by a person by way of instruction, authorization or order to a bank to debit or credit an account maintained with that bank through electronic means and includes point of sales transfer, automated teller machine transactions, direct deposits or withdrawal of funds, transfer initiated by telephone, internet and card payment.”

From the foregoing, Electronic Banking can be said to include Mobile Banking, Internet Banking, Point of Sale (POS) transactions, Automated Teller Machine transactions, and so on.

Recently in Nigeria, the Central Bank has introduced a guideline to control the use of electronic banking in the banking sector.

Some Recent legal Issues and situations have however arisen from this development in the Banking Sector.

Admissibility of Electronically Generated Evidence
Section 84 of the Evidence Act, 2011 (EA) provides for the admissibility of computer-generated evidence. However, in section 258 of the EA,

computer” means any device for storing and processing information, and any reference to information being derived from other information is a reference to its being derived from it by calculation, comparison or any other process;.

Section 84(2), EA provides that all evidence generated from computer is admissible upon the satisfaction of the following conditions;

1. That the said document was produced by the computer which was at that time in regular use of storing and processing information.

2. That the document was produced in the ordinary course of business

3. That at the time of generating the document the computer was in good working condition and to the extent that the fact that it was not working well did not affect the production of the document.

4. That the information contained in the statement reproduces or is derived from information supplied to the computer in the ordinary course of the activities.

See Kubor v. Dickson (2013) 4 NWLR (Pt. 1345) 534, 577-578; Omisore & Anor v. Aregbesola & Ors. (2015) 7 SCM 92 at 157 paras B-F

In addition to the above, the EA also allows the use of Electronic Signatures. Section 93(3) of the EA provides:

An electronic signature may be proved in any manner, including by showing that a procedure existed by which it is necessary for a person, in order to proceed further with a transaction, to have executed a symbol or security procedure for the purpose of verifying that an electronic record is that of the person”.

The Law of Evidence as it pertains to electronically generated evidence especially documents is a facet of law that can hardly be divorced from Electronic Banking.

Liabilities for Misdocumentation of Electronic Funds
Questions have been raised on who will be liable for wrongful documentation of funds. Will it be the bank? Will it be the customer or the network provider in between? The answer was vague until 2018 when the Central Bank of Nigeria introduced ten thousand Naira (N10,000) fine for the act of wrongfully debiting a customer’s account and not correcting it within 24 hours. The fine will be paid to the customer. Even though there is no decision on this issue, yet the Courts have categorically held in a plethora of cases that the bank owes its customer a legal duty to exercise reasonable care and skill in carrying out its customers instructions. It was held further that the duty of care a banker owes to its customer revolves around the whole range of the banking business with respect to the bank’s contracts with its customer. The following cases are instructive in this regard: First Bank of Nigeria Ltd v. African Petroleum Ltd (1996) 4 NWLR (PT. 443) 438; UBA v. Folarin (2003) 7 NWLR (PT 818) 18.
At this juncture, we must note that there is no statutory regulation in this aspect of electronic banking afore-elucidated and thus, disputes in this regard may be decided in favour of the customer. This is however not a conclusion as the peculiarity of a case certainly affects the decision of the court. Until then, the Central Bank of Bank of Nigeria’s penalty on wrongful debiting of customers’ account still stands.

Data Protection Issues
Very fresh in the banking sector at the moment is the issue of protection of customers’ information volunteered during registration, Bank Verification Number applications and other relevant transactions with the Bank. Many reports have been read of customers’ data volunteered for specific bank transactional purposes being treacherously used against the same bank customers. Though the CBN guidelines, 2003 on Electronic Banking directed banks to secure their sites from hackers, we do have a somewhat plausible guess as to what the gentlemen of the internet are capable of unleashing. The question therefore is who bears or shoulders liability for such data theft and wrongful usage? The afore-cited Guidelines provide in Section 3.0 (d) thus:

Banks should protect the privacy of the customer’s data by ensuring:
i. that customer’s personal data are used for the purpose for which they are
compiled.
ii. consent of the customer must be sought before the Data is used
iii. data user may request, free of cost for blocking or rectification of inaccurate data or enforce remedy against breach of confidentiality
iv. processing of children’s data must have the consent of the parents and there must be verification via regular mail.
v. strict criminal and pecuniary sanctions are imposed in the event of default.”

We must not quickly forget the National Information Technology Development Agency (NITDA) Act, 2007 which empowers NITDA to “develop guidelines for electronic data interchange and other forms of electronic communication”. The doubt yet unresolved by the Act is its application to companies in the private sector, bearing in mind that banks and financial institutions are private organizations in this sense. Although Section 1.3 of the NITDA Guidelines majorly mentioned public agencies and not private, the Court will have to beam the halogen of clarity on this. As it stands, it would appear that the NITDA Guidelines are not applicable to private companies.

The Court held in Habib Nigeria Bank Limited v. Fathudeen Syed M. Koya (1990 – 1993) 5 NBLR p. 368 at 387 that Bankers owing Customers a fiduciary duty of care which ensures keeping of secrets and confidential matters is elementary knowledge. In short, it may be concluded that a Banker, whether operating online or within the banking hall, owes the Customer a duty of protection of the data freely given to them in the course of banking business. Suffice it to say that a Nigerian Customer whose data is not well protected can sue the Nigerian Bank for liability.

Conclusion and Recommendations
Electronic banking is an indispensable aspect of commercial transactions globally and it has come to stay. It is important that Nigeria, like other responsible countries in the world, introduces legal frameworks to secure the commercial interests of her citizens. It is recommended that Banks work more diligently and insightfully on their cyber security and ensure that data are properly protected. Banks should also make their electronic banking platforms clear and easy to access/use. Errors and unnecessary debiting of account should be adequately controlled, if not reduced to the barest minimum. Customers also should ensure that they hold in all confidentiality, all PINs and passwords to prevent susceptibility to internet fraud.

References and Further Readings

Adewuyi I. D. : Electronic Banking in Nigeria: Challenges, the Regulatory Authorities and the way forward. International Journal of Economics Development Research and Investment Vol. 2 No. 1 April 2011 pp. 149-156

Andrea Schaechter: Issues in Electronic Banking : An Overview. 2001 IMF Policy Discussion Paper PDP/02/06

Central Bank of Nigeria (2003a), Report of the Technical Committee on Electronic Banking, February.

Central Bank of Nigeria (2003b), Guidelines on Electronic Banking in Nigeria , August (
http://www.cenbank.org/OUT/PUBLICATIONS/BSD/2003/E-BANKING.PDF ).

Chimezie C. Onwudiwe: Legal Aspects of Electronic Banking in Nigeria : An Overview. electronic banking in nigeria – Covenant University Repository PDFeprints.covenantuniversity.edu.ng › Lega…

E M Aguw & A. Carter: Mobile Phone Banking in Nigeria: Benefits, Problems and Prospects. International Journal of Business and Commerce Vol. 3 No. 6 February 2011 pp. 50-70

Nnamdi Ukamba: Legislating Stricter Standards for Electronic Banking in Nigeria.(Online) February 2016 http://www.advocaat-law.com>resources

Tajudeen T. Lawal ET al: An Evaluation of the Legal and Regulatory Challenges of Electronic Banking System in Nigeria

Udo Udoma & Bello-Osagie: Data Privacy Protection in Nigeria( available on http://www.uubo.org>media>data-privacy-protection-in-nigeria.pdf )

Oyesanya Y (2004b), Review of Central Bank Guidelines for Electronic Banking , The Nigerian Village Square, July 13 ( http://www.nigeriavillagesquare.com/ )

Adeyemi O. Owoade
Co-founder/Deputy Editor-in-Chief,
Law Axis 360°
adeyemi_o_owoade@yahoo.com

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