From Business Idea to Registered Company: The Legal and Regulatory Steps for Starting a Business in Nigeria
October 27, 2026BANKING AS AN INSTITUTION: ITS LOOPHOLES AND RECOMMENDATIONS
November 10, 2026By OKEKE CHINASA REGINA
1.0. INTRODUCTION
Money deposited in a bank is often the product of years of labour, sacrifice and careful financial planning. The expectation that such money will remain secure is fundamental to the relationship between a bank and its customer.
Yet, what happens when this expectation is shattered by a transaction the customer neither initiated nor authorized? What legal protection is available when a person’s account is debited without consent, and what responsibility does the law impose on the institution entrusted with safeguarding those funds?
Unauthorized Bank transactions present a significant challenge to the security of electronic banking and the protection of consumers in Nigeria. As banking services increasingly rely on digital, the convenience of transferring funds and accessing accounts remotely has also brought concerns about frauds, compromised banking credentials, system vulnerabilities and disputed electronic transactions.
For affected customers, the consequences may extend beyond the immediate loss of money to financial hardship, emotional distress, and a prolonged struggle to obtain reimbursement or refund of the unauthorized debit.
More importantly, the occurrence of an unauthorized transaction raises questions of law that cannot be resolved by technology alone. It calls for an examination of the duties owed by banks to their customers, the circumstances in which liability may arise and the legal avenues through which affected persons may seek redress.
Accordingly, this article examines the legal remedies available to customers who suffer unauthorized Bank transactions in Nigeria, with a view to clarifying their rights, identifying the responsibilities of financial institutions, and assessing the effectiveness of the existing legal framework in securing justice for victims.
1.1. THE CONCEPT OF UNAUTHORIZED BANK TRANSACTIONS
Unauthorized Bank transactions are electronic financial activities in an account, such as withdrawals, charges, transfers; conducted without the account holder’s permission.
Unauthorized bank transactions may also be explained as financial operations initiated, processed or executed through a customer’s bank account without the customer’s valid consent or other lawful authority, resulting in an unauthorized debit, transfer, withdrawal, or other disposition of funds.
Such transactions may arise from fraud, identity theft, compromised banking credentials, security breaches, or failures in a bank’s transaction authentication and security systems.
This can also be termed “Transaction Fraud”.
The goal of the fraudster is typically to steal money and obtain goods and services without paying for them. This act can affect individuals, businesses, financial institutions, leading to financial loss and reputational damage.
2.0. LEGAL FRAMEWORK GOVERNING UNAUTHORIZED BANK TRANSACTIONS IN NIGERIA, AND THE REMEDIES AVAILABLE TO CUSTOMERS
Section 37(1) (A), (2) and (3) of Cybercrime (Prohibition and Prevention Etc) Act 2015 provides thus:
A Financial institution shall –
(1) Verify the identity of its customers carrying out Electronic Financial Transactions by requiring the customers to present documents bearing their names, addresses and other relevant information before issuance of ATM cards, credit cards, debit cards, and other related electronic devices;
(b) Apply the principle of know your customer in documentation of customers, preceding execution of customers electronic transfer, payment, debit and issuance orders;
(2) Any official or organization who fails to obtain proper identity of customers before executing customer electronic instructions in whatever way commits an offence and shall be liable on conviction to a fine of ₦5,000,000.00
(3) Any financial institution that makes an unauthorized debit on a customer’s account shall upon written notification by the customer, provide clear legal authorization for such debit to the customer or reverse such debit within 72 hours.
Any financial institution that fails to reverse such debit within 72 hours, shall be guilty of an offence and liable on conviction to restitution of the debit and a fine of ₦5,000,000.00.
Also, the Central Bank of Nigeria Consumer Protection Regulation 2019, provides an important framework for addressing unauthorized bank transactions in Nigeria.
Firstly, regulation 5.4(1-6) of Central Bank of Nigeria Consumer Protection Regulation 2019 provides for Data Protection and Privacy of Consumers while regulation 6.3 (1-8) serves as an extension of regulation 5.4 (1-6).
Under the Consumer Protection Regulation, the consumer can:
1.Report the disputed transactions to the bank and request an investigation. (Regulation 6.3)
2. Obtain acknowledgement and complaint tracking number. (Regulation 6.3.2)
3. Request a refund of the unauthorized debit, together with applicable interest where legally required. (Regulation 6.3.7)
4. Seek further redress if the bank fails to resolve the complaint within the prescribed period.
In the case of Boniface Ben Kendan v United Bank for Africa Plc, Suite No. NICN/MKD/64/2017, decided by the National Industrial Court of Nigeria, Makurdi Judicial Division, on 26th April 2023, per Hon. Justice I. J Essien, the claimant was employed by UBA as a bulk teller at its Gboko branch.
The dispute arose after the bank discovered that ₦941,000 had been withdrawn from a deceased customer’s account through transactions processed by the claimant. The claimant alleged that the bank confined him, forced him to return the money and placed a lien on his account (a lien is a hold the bank places on a specific amount in your account, so that sum cannot be spent while the rest of your balance stays usable).
The claimant sought the return of the money and damages of ₦50 million.
UBA denied coercing him and maintained that he had processed fraudulent withdrawals. The bank also counter-claimed for ₦3,637,000 allegedly withdrawn fraudulently from other customers accounts.
The National Industrial Court dismissed the claimant’s claim. It held that the actions of the claimant amounted to fraudulent withdrawals. The court also refused to order repayment of ₦941,000 and dismissed the claimant’s claim for damages.
However, the court entered judgment for UBA on its counter-claim, awarding ₦3,637,000 and ₦500,000 in general damages against the claimant.
2.1. CONCLUSION
In conclusion, unauthorized bank transactions in Nigeria are a serious concern that should not be treated lightly, considering the financial loss and inconvenience they cause customers.
Although Nigerian laws provide various remedies for customers whose accounts have been wrongfully debited, the availability of these remedies is not enough if they are not effectively enforced.
Banks must therefore take their responsibility to protect customers’ funds seriously by ensuring proper security measures, prompt investigation of customers complaints and taking appropriate steps to resolve disputed transactions.
Also, the Central Bank of Nigeria must continue to ensure that financial institutions comply with existing consumer protection regulations.
Customers, on their part, should be encouraged to report unauthorized transactions promptly and make use of the remedies available to them.
Finally, the protection of bank customers should be a priority, as public confidence in the banking system depends largely on the assurance that their money is safe and that justice can be obtained whenever their right is violated.
