CBN releases guidelines for registration, operation of Neutral Cash Hubs

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GUIDELINES FOR THE REGISTRATION &
OPERATION OF BANK NEUTRAL CASH HUBS
(BNCH) IN NIGERIA
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Contents
1.0 INTRODUCTION ……………………………………………………………………………………………….. 2
2.0 OBJECTIVE………………………………………………………………………………………………………. 2
3.0 PERMISSIBLE AND NON-PERMISSIBLE ACTIVITIES…………………………………………………. 2
3.1 Permissible Activities…………………………………………………………………………………………………2
3.2 Non Permissible Activities…………………………………………………………………………………………3
4.0 ELIGIBLE PROMOTERS……………………………………………………………………………………….. 3
5.0 REGISTRATION REQUIREMENTS ………………………………………………………………………….. 3
5.1 Requirements for Approval-In-Principle (AIP) ………………………………………………………..3
5.2 Requirements for Grant of Final Approval ………………………………………………………………4
5.3 Financial Requirements…………………………………………………………………………………………….5
5.4 Conduct of Pre-Approval Inspection………………………………………………………………………5
5.5 Post-Commencement Requirements………………………………………………………………………5
5.6 Technology Requirements ……………………………………………………………………………………….5
5.7 Data and Network Security Requirements ……………………………………………………………..6
6.0 ROLES & RESPONSIBILITIES…………………………………………………………………………………. 6
6.1 Role/Responsibilities of CBN …………………………………………………………………………………….6
6.2 Role/Responsibilities of BNCHs…………………………………………………………………………………7
6.3 The Role/Responsibilities of Cash-In-Transit (CIT) Company…………………………………8
6.4 The Role/Responsibilities of Deposit Money Banks (DMBs)……………………………………8
6.5 The Rights/Responsibilities of Customers…………………………………………………………………8
7.0 FEES AND COMMISSIONS…………………………………………………………………………………. 9
8.0 THRESHOLD FOR DEPOSIT AND WITHDRAWAL LIMIT AT CASH HUB FACILITY…………… 9
9.0 SUPERVISION…………………………………………………………………………………………………… 9
9.1 Compliance ………………………………………………………………………………………………………………9
9.2 Monitoring………………………………………………………………………………………………………………….9
10.0 CONSUMER PROTECTION & DISPUTE RESOLUTION (BY DMBs & CPCs)…………………..10
10.1 Consumer Protection Measures……………………………………………………………………………..10
10.2 Dispute Resolution Mechanisms …………………………………………………………………………….10
11.0 CESSATION OF BNCH SERVICE………………………………………………………………………….10
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1.0 INTRODUCTION
The Central bank of Nigeria (CBN), in furtherance of its mandate to promote a sound
financial system in Nigeria, in collaboration with Banker’s Committee initiated the
Nigerian Cash Management System (NCMS) which seeks to reduce cost and improve
operational efficiency in the country’s cash management value chain.
One initiative towards the above stated goal is the introduction of Bank Neutral Cash
Hubs (BNCH). BNCHs are cash collection centers to be established by registered
processing companies or Deposit Money Banks (DMBs) based on business needs. They
will be located in areas with high volumes of commercial activities and cash transactions.
The hubs will provide a platform for customers make cash deposits and receive value
irrespective of the bank with which their account is domiciled.
This guideline aims to provide minimum standards and requirements for BNCH registration
and operations for effective supervision.
2.0 OBJECTIVE
The key objective of setting up Bank Neutral Cash Hubs (BNCH) is to reduce the risks and
cost borne by banks, merchants and huge cash handlers in the course of cash
management activities; deepen financial inclusion; and leverage on shared services to
enhance cash management efficiency.
3.0 PERMISSIBLE AND NON-PERMISSIBLE ACTIVITIES
3.1 Permissible Activities
A BNCH may carry out the following:
i. Receipt of Naira denominated deposits on behalf of financial institutions from
individuals and businesses with high volumes of cash.
ii. High volume cash disbursement to members of the public on behalf of financial
institutions.
iii. Any other activities that may be permitted by the CBN.
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3.2 Non Permissible Activities
A BNCH shall not:
i. Carry out investing or lending activities.
ii. Receive, disburse, or engage in any transaction involving foreign currency.
iii. Undertake any other transaction which is not prescribed by this guideline.
iv. Sub-contract another entity to carry out its operations
v. Any other activities that may be prohibited by the CBN.
4.0 ELIGIBLE PROMOTERS
The following may apply for registration of a BNCH:
i. Deposit Money Banks (DMBs)
ii. Cash Processing Companies (CPCs)
5.0 REGISTRATION REQUIREMENTS
The promoters shall submit a formal application to the Director, Currency Operations
Department (COD) requesting to be granted approval to operate a BNCH, which shall
be processed in two stages, namely: Approval-in-Principle (AIP) and Final Approval.
5.1 Requirements for Approval-In-Principle (AIP)
A. Prospective promoters of BNCH (CPC or DMB) seeking to operate a BNCH shall
apply in writing to the Director, Currency Operations Department (COD) and
submit the following documents with the application:
i. A valid DMB license or a valid proof of CPC registration issued by the CBN;
ii. A non-refundable application fee of N100,000 only, or such other amount
as the CBN may specify, in a bank draft payable to the CBN;
iii. Evidence of board resolution approving the application duly signed by the
Chairman and Secretary of the board of the CPC or the DMB;
iv. Detailed business plan or feasibility report which shall, at a minimum,
include:
a. Objectives of the BNCH;
b. Services to be rendered by the BNCH;
c. Justification for the application;
d. Organizational structure, showing functional units, responsibilities, reporting
relationships;
e. List of proposed staff in charge of BNCH operations/services;
f. Technical Services Agreement (where applicable); and
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v. Certificate of Incorporation and certified true copies of other incorporation
documents of the CPC or the DMB;
vi. Detailed Manuals and Policies, including but not limited to:
a. Operations manual;
b. Dispute resolution protocols
c. Whistle-blowing policy;
d. Enterprise Risk Management (ERM) Framework
e. Code of Business Ethics and Conduct.
B. Following the receipt of an application with complete and satisfactory
documentation, the CBN shall issue a no objection to the promoters of the
BNCH.
C. In all cases, the CBN shall communicate its decision to the promoters within
thirty (30) days of receipt of the application.
5.2 Requirements for Grant of Final Approval
Upon the issuance of no objection to the application and before the grant of Final
Approval to operate as BNCH, the promoters shall submit the following:
i. Evidence of location of office (rented or owned) for the takeoff of the business;
ii. Evidence of ability to meet technical requirements and provision of modern
infrastructural facilities such as office equipment, computers,
telecommunications, to perform the BNCH’s operations and meet CBN and
other regulatory requirements;
iii. Evidence of insurance to cover hub vault cash.
iv. Evidence of collaboration with the Nigeria Police Force (NPF).
v. A facility with; adequate office space for day-to-day operations; a secure minivault for storage of cash; basic security infrastructure such as 24/7 electronic
CCTV surveillance, access control and monitoring etc by appropriate security
personnel.
vi. Secure connectivity with the Nigerian Interbank Settlement System (NIBSS) who
must provide interoperability amongst DMBs to establish a platform for
customers at the BNCHs to receive same day value for their deposits.
vii. Provision of Service Level Agreement between Currency Processing Company
and Deposit Money Bank, for the extension of clearing, settlement and indirect
connectivity with NIBSS.
viii. Internal Control Policy;
ix. Business Continuity Plan;
x. Comprehensive plan on the commencement of the BNCH’s operations with
milestones and timelines; and
xi. Evidence of staff training program.
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xii. Evidence of insurance of total deposits
5.3 Financial Requirements
The financial requirements for an approval to operate as BNCH, which may be
amended by the CBN as it deems necessary, are as follows:
i. Non-refundable application fee of one hundred thousand Naira (N100,000);
and
ii. Non-refundable approval fee of five hundred thousand Naira (N500,000).
5.4 Conduct of Pre-Approval Inspection
As a requirement for the grant of final approval, the CBN shall conduct an
inspection of the premises and facilities of the proposed BNCH to, amongst others:
i. Check the suitability of the physical structure of the office building and
infrastructure provided for take-off of the BNCH;
ii. Sight the original copies of the documents submitted in support of the
application for Approval; and
iii. Meet with the Management team.
5.5 Post-Commencement Requirements
A BNCH shall:
i. Comply with the requirements incidental to the authorization to perform its
operations as stipulated by the CBN from time to time;
ii. Comply with all guidelines and regulations issued by the CBN;
iii. Maintain an adequate accounting system and keep records that capture
information which reflect the financial condition of the;
iv. Notify CBN upon commencement of operations.
5.6 Technology Requirements
The technology implemented by the BNCH shall comply with the industry standard
technology in terms of hardware and software. The BNCH shall ensure that:
i. Transaction information is transmitted in a secure manner.
ii. The technology deployed comprises a set of interoperable infrastructure
modules that work seamlessly with the common platform provided by
NIBSS.
iii. Customers get immediate value for successful transactions.
iv. Payment instructions are instantly executed.
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v. Immediate reversal shall be mandatory, In the event of communication
failure during a transaction,
vi. Generation of receipts or durable acknowledgements for successful
transactions.
vii. Audit trail is maintained and made available on request.
viii. All settlement information details are preserved for a minimum period of 5-
years, and are made available via the Cash Activity Reporting Portal
(CARP).
ix. The BNCH shall put in place adequate measures to mitigate all the risks that
could arise from the deployment and use of its IT architecture.
5.7 Data and Network Security Requirements
BNCHs shall put in place systems that specifically and at a minimum address the
following issues:
i. Availability of services.
ii. Data confidentiality and integrity.
iii. Encryption of electronic transactions.
iv. Customer accountability and non-repudiation of transactions.
v. Error messaging and exception handling.
vi. Secure integration to the Cash Activity Reporting Portal (CARP).
6.0 ROLES & RESPONSIBILITIES
6.1 Role/Responsibilities of CBN
In line with the CBN Act 2007(as amended), the CBN shall:
a. Register and de-register;
b. Exercise regulatory and supervisory functions, which include:
i. Prescribing minimum criteria for the operation of BNCHs;
ii. Prescribing permissible activities;
iii. Regular monitoring of industry activities;
iv. Reporting on industry performance;
v. Imposing sanctions for infractions; and
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c. Exercise any other powers in line with the BOFIA 2020, the CBN Act or any other
applicable law.
6.2 Role/Responsibilities of BNCHs
The role/responsibilities of BNCHs shall include:
a. Provision of all the requirements listed above for the operation of the BNCH.
b. Ensuring that only registered Cash-In-Transit (CIT) companies are engaged for
cash movements to and from the BNCH site.
c. Proper record keeping, evacuation, accounting and reconciliation process
shall be maintained.
d. Adequate employment policy (casual staff shall not be engaged).
Background checks by security agencies and biometrics data capture shall
be carried out on all employees.
e. Verification, approval and accountability for the credibility and integrity of
their partner organizations.
f. Seeking and obtaining necessary approvals from relevant regulatory
authorities.
g. The deployment and delivery of the cash deposit and withdrawal services to
the customer.
h. Ensuring that the BNCH meets all specified standards as provided in these
Guidelines.
i. Putting in place adequate measures to mitigate all the risks that could arise,
following the deployment and use of its service.
j. Providing access for on-the-spot assessment and verification of its transactions
by the CBN.
k. Providing regulatory reports (on activities, assets and expenditure) in line with
the reporting requirements of the Cash Activity Reporting Portal (CARP).
l. Keeping records of transactions emanating from the BNCH’s system for a
minimum of seven (7) years.
m. Ensure that dispute resolution mechanisms are in compliance with CBN
Consumer Protection Regulations 2019.
n. Submission of incident reports to the Bank in the event of any occurrences
outside of the ordinary, as specified in the BNCH operations manual.
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o. The BNCHs shall display in a conspicuous place on its premises the following:
i. Name and logo.
ii. Services offered.
iii. A notice to the effect that services shall be provided subject to availability
of funds and confirmation of debit from customer’s account for withdrawal
services.
iv. Charges or fees applicable for each service which are payable by the
customers.
v. The dedicated telephone number(s) and email addresses through which
customers can contact the BNCH.
vi. Times/Period during which services are available to members of the public.
6.3 The Role/Responsibilities of Cash-In-Transit (CIT) Company
The role/responsibilities of CIT Company shall include
a. Securely move cash as and when engaged by BNCH in line with the revised
guidelines for registration of CIT & CPCs.
6.4 The Role/Responsibilities of Deposit Money Banks (DMBs)
The role/responsibilities of DMBs shall include:
a. Ensure the provision of all services, within agreed timelines, as specified in
Service Level Agreement (SLA) with the BNCH.
b. Ensure unhindered access to all relevant information where disputes or any
other issues arise.
c. Ensure the resolution of all disputes within the time limits prescribed in CBN
Consumer Protection Regulations 2019.
6.5 The Rights/Responsibilities of Customers
The rights/responsibilities of Customers shall include:
a. Privacy, Trust and Security of transaction
b. Accessibility to funds on completion of transaction process within the defined
settlement cycle of not later than same day.
c. Easy and prompt access to dispute resolution process
d. Ensure prompt reporting of fraud cases, errors and complaints
e. Ensure proper confirmation of transaction and account details before
authorizing transactions.
f. Comply with all security rules as provided by the BNCHs.
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g. Escalate complaints to the Consumer Protection Department (CPD) of the
Central Bank of Nigeria, if resolution of complaints takes longer than prescribed
time limits in CBN Consumer Protection Regulations 2019.
7.0 FEES AND COMMISSIONS
Service charges, fees and commissions shall be subject to CBN’s regulatory approval.
8.0 THRESHOLD FOR DEPOSIT AND WITHDRAWAL LIMIT AT CASH HUB FACILITY
The threshold for eligible transactions at a BNCH shall be as follows:
i. A minimum transaction value of ₦500,000 (Five hundred thousand Naira only) for
individuals.
ii. A minimum transaction value of ₦1,000,000 (One million Naira only) for corporate
entities.
9.0 SUPERVISION
9.1 Compliance
BNCHs are expected to comply with the following in the course of their operations:
a. CBN Cashless Policy.
b. CBN Consumer Protection Regulations.
c. Provisions of the Central Bank of Nigeria Anti-Money Laundering and
Combating the Financing of Terrorism in Banks and Other Financial
Institutions in Nigeria Regulation and extant laws of the Federation aimed
at combatting money laundering and the financing of terrorism.
d. Cash handling charges as approved by the CBN from time to time.
e. Extant CBN Guide on charges for banks and other Financial Institutions.
9.2 Monitoring
9.2.1 CBN shall have right of access to the BNCH facility for the
purpose of compliance monitoring of activities and
examination of records/books.
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9.2.2 BNCH shall comply with the reporting requirements and timelines
specified in the Cash Activity Reporting Portal (CARP) Industry
Handbook by providing data and information not limited to:
Total number of customers and cumulative value and volume of
transactions to their name;
Volume and value of withdrawal and deposit transactions;
Incidents of fraud, theft or robbery;
Nature and number of customer complaints and remedial measures taken.
Any other report as may be required by the CBN.
9.2.3 BNCH shall include in its annual reports and accounts, all activities of
its operations.
10.0 CONSUMER PROTECTION & DISPUTE RESOLUTION (BY DMBs & CPCs)
10.1 Consumer Protection Measures
BNCHs operators shall:
a. Ensure that a channel of communication is in place 24/7 to entertain
enquiries and complaints from customers.
b. Clearly inform customers of all charges for services
c. Ensure that appropriate consumer protection mechanisms are put in place
against loss of service, fraud and privacy of customer information to
enhance confidence in the BNH services.
d. Provide the leading role in dispute resolutions and take necessary steps to
reach other agencies in the ecosystem that are relevant to resolving
disputes.
e. Resolve customer complaints within a reasonable time and not later than
48 hours from the date of reporting or lodging the complaint with the BNCH.
10.2 Dispute Resolution Mechanisms
Any dispute that arises should be resolved in line with any Service Level Agreement (SLA)
in place and extant CBN consumer protection regulations.
11.0 CESSATION OF BNCH SERVICE
The cessation of operations of any BNCH can be:
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a. By order of the CBN.
b. By any licensed BNCH operator subject to not less than ninety (90) days’ notice to
the CBN.
The CBN shall have powers to order any BNCH to meet its outstanding obligations before
shutting down its operations.