BANK LIABILITY FOR WRONGFUL ACCOUNT FREEZING AND E-FRAUD: ANY LEGAL REMEDY?

The digitalization of banking services in Nigeria has exponentially increased the incidences of electronic fraud (e-fraud) and the regulatory responses thereto, including the freezing of customers' accounts. While banks have a statutory and contractual duty to protect the financial system from fraud under the Banks and Other Financial Institutions Act (BOFIA) 2020, the Central Bank of Nigeria (CBN) Regulatory Framework for Bank Verification Number (BVN), and various anti-money laundering directives, this duty often collides with the customer's constitutional right to property and the contractual duty of a banker to honour its customer's mandate. This article examines the legal basis and extent of a bank's liability for wrongful freezing of a customer's account and for losses arising from e-fraud. It interrogates the tension between a bank's duty of care, duty to obey regulatory directives, and its fiduciary obligations. Using doctrinal and analytical methodologies, the paper reviews some Nigerian case laws as well as CBN's Regulation on Instant Electronic Payments, the Cybercrimes Act 2015 (as amended), and the NDIC framework. The study finds that while banks enjoy qualified immunity when acting pursuant to a valid court order or clear CBN directive, indiscriminate freezing of accounts based on mere suspicion, internal PND (Post No Debit) without due process, or failure to deploy adequate cyber security measures amount to breach of contract and negligence, attracting damages. The paper advocates for a stricter liability regime, statutory timelines for account unfreezing, and mandatory compensation for wrongful freezing.