Perhaps, one of the best features of modern day banking is the duty of secrecy that financial institutions owe their customers. It is one of the implied terms of contract between the customer and the banker that the former’s account will not be divulged to a third party and transactions conducted through the bank account must be kept private from unauthorised persons. However, this duty of care is not cast in stone as there are situations where the bank will depart from this duty without any accompanying liability provided such departure is within the purview of the Law. These are commonly known as the Tournier’s exceptions which are:
(a) where discourse is under the compulsion by Law.
(b) where there is a duty to the public to disclose.
(c) where the interests of the bank requires disclosure.
(d) where the disclosure is made by the express or implied consent of the customer. As held per Bolaji-Yusuff in Fidelity Bank v Onwuka (2007) LPELR-42839(CA) (PP 48-51, Paras E-E) a Court order forms as an extension to the first requirement. It is on this basis that informs this analysis.
Pursuant to Section 6 and 7 of the Economic and Financial Crimes Commission (Establishment, etc.) Act 2004 (hereinafter referred to as the EFCC Act), the Commission is legally empowered to undertake investigations against any person, corporate body, or institutions regarding all financial crimes including advance fee fraud, money laundering, counterfeiting, illegal charge transfers, futures, market fraud, fraudulent encashment of negotiable instruments, computer credit card fraud, contract scams among others.
Law enforcement agencies, such as for example the EFCC, are creations of the Law. Hence, they must be compelled to operate within the bounds of the laws that created them. S.34 of the EFCC Act expressly states the procedures the Commission should comply with prior to freezing the account of any person who is suspected of keeping illegal funds in a bank account. These have been highlighted as:
(a) the procedure may be made by the Chairman of the Commission or any officer authorized by him.
(b). where it has been satisfied that the money in the account of a person is made through the commission of an offence.
(c). if these two aforementioned requirements are fulfilled, then they can apply to the Court ex-parte for power to issue a freezing order. An ex parte order is one that is made without the other party being made aware of it. (in this instance, the customer).
(d). upon the issuance of such order from the Court, such authorized officers of the commission may then direct the bank or other financial institutions to place a restriction on the said account. (A Post No Debit Order).
Overtime, it is disheartening that the Commission fulfilled other requirements leaving out the third one by issuing directives to banks without waiting to get a valid Court order. The banks, on the other hand, often acted on this directive by freezing the account without getting a Court order. Some financial institutions will not even inform affected customers until such an individual’s credit card got rejected while performing a transaction. Disappointment will then meet frenzy😥. As a defence, the banks often justify their actions by advocating that they do not want to obstruct the investigation by the law enforcement agents since, by virtue of S. 168(2) of the Evidence Act, all the actions of a public officer are presumed to be regular. Such a flimsy defence has been discountenanced by the Courts.
It is important to note that there may be counterarguments by legal writers that the EFCC, in addition to other law enforcement agencies, does not need a Court order before issuing a directive to a financial institution. They are most likely to rely on the use of the modal auxiliary verb ‘May‘ in S.34 of the EFCC Act. The writer humbly submits that this is erroneous. Generally, ‘May‘ in everyday simple language means something that you can choose to do or not. It does not stipulate a mandatory act. However, as stated in Ataye Farms Ltd v Nigeria Agricultural Bank Ltd (2003) FWLR (Pt.172), where the word “may” is used in a statute, the context in which the word appears must be looked into before it can be said to be mandatory or directory. The rationale as given by Per Odilli (JCA) in O.R.L. v. N.C.C is to ensure that justice will not be a slave to grammar. Hence, the context of usage will determine whether ‘May‘ will be interpreted as either mandatory or not. Considering the context in which the word is used in S.34 of the EFCC Act, the word should be interpreted as mandatory in view of the provisions of S. 34(2). The effect of the provision of S.34(2) is that the Chairman or any authorized officer’s discretion in directing the bank to freeze the account is dependent on a prior Court order. Hence, a Court order becomes the foundation in which an EFCC directive to the bank is being built on. This makes ‘May’ mandatory. The absence will automatically lead to a violation of the customer’s rights.
This constant violation of the Law by the Commission came to an head in the 2019 case under review of GTB v Adedamola & Ors (supra) before the Court of Appeal where the Court held that the EFCC has no power to direct the commercial banks to freeze the account of its customers without a valid Court Order. The Court even went further to state that: ”even if the applicant was alleged to have committed a criminal offence, the EFCC cannot, on its own, direct the bank to place a restriction on his accounts in the bank without an order of court. The law allows the EFCC to come to court even with an ex parte application to obtain an order freezing the account of any suspect that has lodgements suspected to be proceeds of crime. No law imposes a unilateral power on the EFCC to deal with the applicant this way”.
In addition, it also held that: “the Economic and Financial Crimes Commission has no powers to give direct instructions to Bank to freeze the Account of a Customer, without an order of Court, so doing constitutes a flagrant disregard and violation of the rights of a Customer. I must add that, the judiciary has the onerous duty of preserving and protecting the rule of law, the principles of rule of law are that both the governor and the governed are subject to rule of law. The Courts must rise to the occasion speak and frown against arrogant display of powers by an arm of Government. It is in the interest of both Government and citizens that laws are respected, as respect for the rule of rule promotes order, peace, and decency in all societies, we are not an exception. Our Financial institutions must not be complacent and appear toothless in the face of brazen and reckless violence to the rights of their customers.
This decision has also been affirmed in the case of Olagunju v EFCC (2019) LPELR -48461 (CA). It is noteworthy that until this decision is reversed by the Supreme Court, it remains the law.
By a way of recommendation, whenever there is a specific provision regulating the procedure of doing a particular act, that procedure must be followed. Thus, while we commend the EFCC for carrying out its duty under the law, we further advise that such duty must stricto sensu follow the provisions of the law. They should not become a law unto themselves cutting down the fabrics of the Rule of Law holding our democracy as a nation.
In conclusion, this analysis pointed out the duty of confidentiality a bank has for its customers and the exceptions. It proceeded further by averring that the enabling power of the EFCC to investigate a crime and the importance of an exparte Court order before an account can be frozen.
Thank you for reading. See you next week and Happy New Month❤.
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