INTRODUCTION
A banker and a customer have an extremely unique relationship that encompasses a number of fiduciary and legal duties. The bank has a duty of care to safeguard the interests of its customers while adhering to the law. However, customers’ duty of care may be disregarded, but, if doing so is compliant with the law. For instance, it is undeniable that the obligation may be legitimately evaded in cases when a customer’s account is put on “caution” by an order from a court of competent jurisdiction. The bank may release itself from the duty of care in this situation without incurring any further liabilities. The consequences of the above has put numerous banks in legal conflict with their clients over the years.
THE LEGALITY OR OTHERWISE OF FREEZING A CUSTOMER’S ACCOUNT WITHOUT A COURT ORDER.
Banks are required to keep a close eye on every customer’s account to make sure that all guidelines and policies are strictly followed. Without first obtaining a legitimate and competent order from a court, banks are not allowed to freeze a customer’s account simply on the order of any government prosecuting agency, such as the Nigerian Police Force, the Independent Corrupt Practices and Other Related Offense Commission (ICPC), or the Economic and Financial Crimes Commission (EFCC).
There are plethora of judicial precedence where the court affirms the above position. Notably, in 1 the case of Guaranty Trust Bank vs Mr. Akinsiku Adedamola the court held:
that where an account is frozen without the appropriate order from the high court is first sought and obtained, the fundamental right of the customer is deemed to be breached and such both the authorizing authority and the bank may be liable.
The above general legal principle is important to note, however, there are specific constitutional circumstances that permit a prosecution or law enforcement agency to freeze an individual’s account. These organizations typically impose limits on accounts when they suspect that they are being used to commit financial crimes.
The following are some provisions of the laws that empowers the law enforcement agency to place a PND on a suspect account:
- Section 34 (1) of the EFCC Act 2004 empowers the Commission to freeze any account suspected of being used for financial crimes. The section stipulates that: “Notwithstanding anything contained in any other enactment or law, the Chairman of the Commission or any officer authorized by him may, if satisfied that the money in the account of a person is made through the commission of an offence under this Act or any enactment specified under Section 7 (2) (a)-(f) of this Act, apply to the Court ex-parte for power to issue an order as specified in Form B of the schedule of this act, addressed to the manager of the bank or any person in control of the financial institution…”
- “Section 6 (5) (b) of the Money Laundering Act provides that “Notwithstanding the provisions of paragraph (a) of this subsection, the Chairman of the Economic and Financial Crimes Commission or his authorized representative shall place a stop Order not exceeding 72 hours on any account or transaction if it is discovered in the course of their duties that such account or transaction is suspected to be involved in any crime.” However, the provision of Section 6 (7) of the same act further provides that “Where it is not possible to ascertain the origin of the funds within the period of stoppage of the transaction, the Federal High Court may, at the request of the commission, or other persons or authority duly authorized in that behalf, order that the funds, accounts or securities referred to in the report be blocked.” Section 6 (8) states that “An order made by the Federal High Court under Sub-section (7) of this section shall be enforced forthwith.”
REMEDIES AVAILABLE TO CUSTOMER WHOSE ACCOUNT IS PLACED ON PND WITHOUTANYVALID COURTORDER.
A customer’s account is both a constitutional and property right by virtue of sections 43 and 44 of 4 the Constitution of the Federal Republic of Nigeria 1999 (As Amended) . A client’s constitutional rights are violated when their account is placed under caution without a legitimate court order. In such cases. The customer may file a claim for damages with any Nigerian High Court, including the Federal and State High Courts. Section 46 of the Federal Republic of Nigeria 1999 5 Constitution (as amended) establishes this position.
CONCLUSION
It is a well-established legal principle that, tin the absence of a legitimate court order, no executive branch of government with prosecutorial authority may put a Post No Debit (PND) on any bank account. This idea aims to prevent these agencies from abusing their authority, which might resort to arbitrary use of power.
This does not, however, imply in any way that these accounts cannot be restricted if these authorities follow the correct process for freezing these accounts used to commit fraud. The most crucial aspect, though, is that these organizations are not the only ones with the authority to impose restrictions on any account without a court’s ruling.
REFERENCES
- (2019) 5 NWLR @ Pg 30.
- Economic & Financial Crimes Commission Act 2004.
- Money Laundering Act 2012.
- constitution of the federal republic of Nigeria 1999 (as Amended).
- ibid
Article by Lawrence Adeshina Esq.
Associate
