EFCC harassment: Banks suspend cross border transactions on ATM cards

By Babajide Komolafe

Banks may have decided to suspend international transactions on Naira and

Dollar denominated ATM cards in protest of harassment of staff by the

Economic and Financial Crimes Commission (EFCC). Indications to this

emerged last week, when a bank announced a temporary shutdown of

Mastercard International transactions.

"Please be informed that all international transactions on your MasterCard

Naira and Dollar (Debit, Prepaid) will be temporarily declined, effective May

26, 2016 due to the current volatility in the foreign exchange market.

However, your Naira denominated cards can still be used for local

transactions on PoS Terminal, ATM and online for Nigerian retailers", the

bank informed its customers.

A bank executive who spoke to Vanguard on condition of anonymity said that

the development was in connection to the harassment of bank staff over the

exchange rate charged for international transactions on naira debit cards.

He said that the bank's decision to shut down Mastercard international

transactions was to prevent arrest or further arrests of its staff by EFCC.

"That is what you get when you have the EFCC arresting banks' staff and the

CBN not doing anything to defend the banks," he said, adding that, "You will

see more of such actions from other banks as time goes on."

In a letter written to the CBN last month, banks complained that, EFCC has

been going to banks and arresting staff of banks stating that card rate for

cross border transactions should not be more than the CBN rate plus a

margin of N0.50.

Titled, "Harassment of banks by the Economics and Financial Crimes

Commission over charges on FX Card Rates," the letter stated, "As you will

recall sir, the Central Bank of Nigeria does not sell foreign exchange (FX) to

banks for settlement of international cards schemes for the cross border

spend on our Naira debit card, most banks have had to be sourcing FX from

autonomous markets.

At several meetings of the CBN with Deposit Money Banks, it was reiterated

that we need to protect the scarce FX of the country and limits were placed

on cross border spend of naira debit ($300/ day for ATM withdrawal and a

total of N50,000 p.a for ATM and PoS purchase per card). One the measures

adopted by banks to discourage the abuse of usage was the card rate as

most banks PTA/BTA at the CBN rate.

Any customer of a bank travelling with appropriate document can access the

PTA window at $4,000 per quarter. Deposit Money Banks set the card rates

based on a daily market competitor scan, thereby leaving market forces to

dictate what the banks can charge their customers.

"As the sole regulator of banking practice in Nigeria, we hereby request the

CBN to urgently take steps to clarify to the EFCC that the banks have been

allowed to offer the product solely on a market determined basis. This has

become unavoidable in order to forestall further harassment by the EFCC".