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INTRODUCTION
An erroneous transfer occurs when funds are mistakenly sent to the wrong recipient, account, or amount. The situation has become a common occurrence due to advances in digital banking and the growth of FinTech Companies in Nigeria. Consequently, the Central Bank of Nigeria devised a solution to curb the delay in ratification of Electronic Transfer errors without resorting to a court order and Litigation.

Thus, on September 14, 2018, the Central Bank of Nigeria, through its Financial Policy and Regulation Department, released a Circular on the Regulation for the Operation of Indirect Participants in the Payment system, which went into effect on 2nd October 2018, with the following mandate:
1. Setting out the rules for the operation of Instant Electronic Funds Transfer Services in Nigeria.
2. Prescribing the rights and obligations of the parties to such services.
3. Provision of the minimum standards for the operations of the parties to EFT services.
4. Stipulate procedures geared towards the enhancement of the soundness of instant EFT services, while adequately protecting the interests of instant EFT customers and operators

1. The Regulation was primarily to regulate the activities of Financial Institutions (FIs)
   a. Deposit Money Banks
   b. Other Financial Institutions (OFIs), i.e. licensed Primary Mortgage banks,
   c. Development Finance Institution (DFI)
   d. Instant EFT Services Providers
   e. Customers (Originator and Beneficiary)
   f. Any other stakeholder as may be determined by the CBN from time to time.

CBN circular on the Regulations On Instant Electronic Funds Transfer Services In Nigeria S.3.0

MODE OF RECONCILIATION OF ERROR IN ELECTRONIC FUNDS TRANSFER
In the event of an electronic fund transfer, the regulation by CBN specifies that all Instant EFT disputes shall be resolved within 3 working days.
Where the Sending and receiving entities fail to agree, the aggrieved entity shall report to the Director, Consumer Protection Department, CBN, within five (5) working days of the failure to resolve the dispute to minimize customer pain.

WRONG TRANSFER DUE TO BANK ERROR
Where a Sending Entity erroneously sends value contrary to customer’s instructions due to wrong account number, wrong amount, duplication, etc to a Receiving Entity and requests the reversal in writing within 14 working days of the transaction, the Receiving Entity shall oblige within one (1) business day, without recourse to the customer(beneficiary) of the Receiving Entity provided funds are available funds are available. Where funds are not available, the Receiving Entity shall immediately notify its customer that the account was wrongly credited and provide proof of such notification to the Sending Entity.

WRONG TRANSFER DUE TO FRAUD
The provisions of the CBN circular with reference number BPS/DIR/GEN/CIR/02/004 5 dated 11th June, 2015, on the Establishment of Fraud Desks or any amendment thereto shall apply. The Fraud Desks Circular provides that financial institutions are required to maintain a dedicated fraud desk responsible for receiving and responding to fraud alerts and carrying out services which include blocking and/or placing of no-debit restrictions on accounts upon receipt of fraud complaints.

This implies the Fraud Desk Circular empowers financial institutions to block or restrict any account upon receipt of a complaint relating to fraud. This power is exercisable without seeking any order of the court, as illustrated in the case of Kuda Microfinance Bank Ltd v. Amarachi Kenneth Blessing,6 where the Court of Appeal held that a financial institution is justified in placing a PND on a customer’s account when a complaint
of fraud is made. The court noted that in such cases, the bank is acting on its obligation to prevent fraud and the contractual agreement with the user.

2 ETF S.4.0
3 ETF S.10.1
4 ETF S.10.2
5 CBN CIRCULAR ON ESTABLISHMENT OF FRAUD DESK
https://www.cbn.gov.ng/OUT/PUBLICATIONS/REPORTS/RSD/2009/CBN%20DRAFT%20ANNUAL%20R
EPORT%

WRONG TRANSFER DUE TO CUSTOMER ERROR
Where a customer claims to have made an error, the following provisions shall apply:
Where the beneficiary is known to the complainant, the Sending Entity shall encourage the complainant to contact the beneficiary for an amicable settlement. where the beneficiary is not known to the complainant or a known beneficiary refused to effect a refund to the complainant, the Sending Entity, having received a tenable claim from the customer, shall notify the Receiving Entity, who shall place a lien on the amount in the account of the beneficiary and thereafter obtain the consent of the beneficiary to execute a refund.

CONCLUSION
The introduction of the Electronic Funds Transfer Circular has strengthened the framework for accountability within the financial and Banking system in Nigeria by providing clear regulatory guidelines that facilitate the identification and reconciliation of errors that may arise in the course of daily electronic fund transfer transactions. The advent of the Electronic Funds Transfer Circular has also fostered the growth of transparent and honest error reconciliation in daily transactions. The Circular was designed to ensure that such errors are addressed swiftly and, thereby, promote consumer confidence in the electronic payments ecosystem. However, notwithstanding the efforts of the apex financial institution Central Bank of Nigeria to ensure the effective implementation of these regulatory provisions, the practical operation of the system in Nigeria remains considerably rigid. In many instances, financial institutions still insist on the production of a court order before rectifying certain transaction errors. This requirement not only delays the resolution process but also appears to undermine the spirit and objectives of the regulatory framework governing
electronic fund transfers.

6 CA/EK/48/2024 – Dec 27, 2024.
7 ETF S.10.4