Generally speaking, the relationship between the Bank and its customers is contractual. Contract therefore, is a legally and enforceable binding agreement which recognises and governs the rights and duties of the parties to the agreement. Put rather nakedly, a contract is a duty fixed by the parties, the breach of which confers on the aggrieved party right to compensation. Hence the maxim, ubi jus ibi remedium (where there is a right there is a remedy).
Where therefore a party unilaterally breaches a legally binding agreement, the aggrieved party is to be restored back to the position he would have been assuming such breach did not occur (restitutio in integrum). It means that the Bank and its customer must at all material time consent and/or be on all fours if anything is to happen to the customer’s account (consensus ad idem), save for exceptional cases. The Bank CANNOT on its own volition and/or in connection with a party not legally authorized by the Customer do anything with a Customer’s account, whether beneficial or otherwise.
That contractual responsibility imposed on the Bank by law in favour of its Customers entails that:
- The Bank should honour a Customer’s cheque ;
- Act as collecting banker to the Customer;
- Observe secrecy in handling the Customer’s account;
- Exercise care and skill in handling the Customer’s affairs.
Among all these duties, the Bank’s duty of SECRECY and HONOUR OF CHEQUES are pre-eminence. This basically forms the crux of our discussion.
CBN Consumer Protection Regulations for Banks
Section 1 (1) of the EFCC Act, 2004 established the Economic and Financial Crimes Commission (EFCC) and conferred it with the requisite powers to fight financial crimes. This means that EFCC may in some circumstance interfere with an individual’s money deposited with Bank.
It is instructive to know that Section 34 of the EFCC Act empowers the Commission to obtain an ex parte Order from a Court before directing any Bank to freeze a Customer’s account. The said section provides thus:
“Notwithstanding anything contained in any other enactment or law, where any person is arrested under this Act, the Chairman of the Commission may, if he is satisfied that the money in the account of an arrested person is made through the commission of an offence under this Act, may apply to the Court exparte for power to issue or instruct a bank examiner or such other appropriate regulatory authority to issue an order as specified in Form B of the Schedule to this Act, addressed to the manager of the bank or any person in control of the financial institution where the account is or believed by him to be or the head office of the bank or other financial institution to freeze the account.
(2) The Chairman of the Commission or any other officer authorised by him may by an order issued under subsection (1) of this section, direct the bank and other financial institution or designated non-financial institution to supply any information and produce books and documents relating to the account and to stop all outward payments, operations or transactions (including any bill of exchange) in respect of the account of the person.
(3) The manager or any other person in control of the financial institution shall take necessary steps to comply with the requirements of the order made pursuant to subsection (2) of this section.”
With the above relevant provisions of the law in mind and in view of the nature of duty a Bank owes its Customers, how then will the interest of all the parties be reconciled? The answer to the above poser is simple.
It must be clearly stated that there is no law forbidding the Bank from freezing and/or interfering with a Customer’s account pursuant to the directive of the EFCC. However, there is a condition that must be followed before any such interference. Such directive of the EFCC must be accompanied with a Court Order. EFCC must be afforded with every available support to enable them discharge their function, however, such performance of their function must be in strict compliance with the law.
In the recent case of Guaranty Trust Bank PLC v. Mr Akinsiku Adedamola & 2 Ors delivered on 1st March, 2019, the Court of Appeal held that where there is an allegation of commission of a crime against a customer of a bank in relation to the funds in his account, the commission is empowered by law to set in motion the process of investigating any such funds perceived to be derived from proceeds of crime. In conducting the investigation, the commission is required to observe due process and satisfy the requirements of the law. The commission or its officers must, first, go to court and obtain an ex parte order before freezing the account. Any failure to follow due process will render the action taken by the commission a violation of the rights of the customer. Going further the Court stated thus:
“…in this case, there is no evidence that the applicant committed any criminal offence, or was even reasonably suspected to have committed any offence. The EFCC has not come up with anything suggestive that Akinshiku Roy mentioned the applicant as having conspired to commit the alleged offence he was accused of.
“Even if the applicant was alleged to have committed a criminal offence, the EFCC cannot, on its own, direct the bank to place a restriction on his accounts in the bank without an order of court. The law allows the EFCC to come to court even with an ex parte application to obtain an order freezing the account of any suspect that has lodgments suspected to be proceeds of crime. No law imposes a unilateral power on the EFCC to deal with the applicant this way.
“Again, Guaranty Trust Bank has no obligation to act on EFCC’s instructions or directives without an order of court…”
It is apparent with the above decision of the Court that the Bank cannot solely on mere direction of the EFCC without more restrict and/or interfere with a Customer’s account. Where the Bank acts otherwise, such Customer can on the strength of these authorities adumbrated above institute an action to enforce his rights. The Bank primarily will be liable and same with the EFCC.
Written by Eze Gabriel C.