CBN Orders Banks To prevent ATM card from working in Fraud countries.

The Central Bank of Nigeria in a new circular has ordered banks in the country to prevent their ATM cards from working in fraud-prone countries.

The Central Bank also said that the banks would be liable for frauds committed abroad using cards belonging to their customers.

The CBN, in a circular to the Deposit Money Banks on Monday, said from February 1, 2015, the banks must stop the payment/ATM cards from working in non-Europay, MasterCard and Visa countries.

The new directive also ensures that the cards are only activated when customers are travelling abroad and only for the period of the travel.

The circular was signed by the CBN Director, Banking and Payment System, Mr.Dipo Fatokun, “The occurrence of card present fraud in non-EMV environments is on the increase, especially when international hybrid cards issued by Nigerian banks are used in non-EMV environments like the USA.

“It has therefore, become necessary for the CBN to issue the following directives’ all DMBs should do the following: collate all their card frauds abroad and send to the CBN not later than January 30, 2015; subsequently, all data on card frauds occurring abroad should be rendered on the NIBSS fraud portal.

implement anti-fraud solution on their card management systems not later than January 30,2015.

Ensure that from February 1, 2015, only customers that expressly indicated the intention of traveling to non-EMV jurisdictions would have their cards default to the magnetic stripe and for the period indicated by the cardholder only.

“To this end, banks should ensure that their customers are adequately educated; carry out regular awareness campaign to cardholders on tips to avoid fraud in non-EMV environment; ensure strict compliance on the PCIDSS and their vendors/partners involved in card processing activities;

all the DMBs will be liable to make refunds on card frauds abroad except items II to V are fully complied with.

Please be guided and ensure strict compliance with the content of this circular.”

This circular is due to increasing cases of electronic frauds, especially ATM-related scams, which had forced some of the lenders to prevent their payments cards from working in the US, China and a few other countries.

According to CBN statistics, the banks lost N40bn to electronic frauds in 2013 alone.
However, findings showed that prior to the recent deactivation of the payment cards from working overseas, refunds made by banks to customers who were victims of cards frauds were in excess of N1bn.

One of the ‘Systemically Important Banks’ made refunds in excess of N200m in 2014, it was learnt.

What is your opinion about this new directive? Share your thoughts in the comments.