Subscribe to our Newsletter to receive the latest updates on our content. By tapping the “Subscribe” button you will be redirected to subscription page. Subscription is free.
In the landmark decision of Kuda Microfinance Bank Ltd v. Amarachi Kenneth Blessing, CA/EK/48/2024, the Court of Appeal, Ekiti Division, held that banks in Nigeria can lawfully freeze customer accounts without first obtaining a court order, provided there is a report of fraud or suspicious activity, and the customer has agreed to such terms.
27 May 25
Other Insights:
The case involved an NGN 5 million transfer made in error to an Access Bank account, which the recipient moved to her Kuda account immediately upon receipt. Kuda Microfinance Bank (Kuda) restricted the account upon notice of the mistake by Access Bank. The Federal High Court had ruled that the restriction violated the customer’s constitutional right to property under Section 44 of the Constitution of the Federal Republic of Nigeria.
However, the Court of Appeal reversed this decision, holding that:
- The banker-customer relationship is contractual, and parties are bound by the agreed terms.
- Kuda’s terms and conditions, along with the Central Bank of Nigeria’s (CBN) circulars, permit account restrictions in cases of reported fraud.
- As a financial institution regulated by the CBN, Kuda is required to comply with the CBN regulations and circulars that allow for the restriction of a customer’s account where fraud is reported.
- The constitutional right to property is not absolute—temporary restrictions during investigations are lawful.
Should you have any questions on this legal alert, please do not hesitate to contact Oludare Senbore or Funmilayo Otsemobor.