Frozen account, wrong transfer: what your bank can and cannot do

Two calls we get often.

A business owner opens the banking app on payday and finds the account restricted. There is no court order and no explanation, only a reference to a “fraud report” from another bank. Salaries are due that afternoon.

Someone types one wrong digit and ₦2 million lands in a stranger’s account. The bank says it has written to the other bank. Weeks pass.

What the law says today

Freezing. In March 2025, the Court of Appeal held that a bank may restrict a customer’s account without a court order when fraud or suspicious activity is reported, relying on Central Bank of Nigeria (CBN) guidelines and the account terms the customer signed. In short, a bank can act first and explain later.

Wrong transfers. The CBN’s 2018 regulation on instant bank transfers draws a line many people miss: who made the mistake.

• If the bank’s system got it wrong (a duplicate debit, a wrong amount, a transfer that did not follow your instruction), a reversal can be requested in writing within 14 working days. If the money is still there, the receiving bank should reverse it within one business day, without needing its own customer’s permission. The sending bank is treated as promising to cover the receiving bank for that reversal. If the money has gone, the receiving bank must tell its customer the credit was a mistake.

• If you typed the wrong account number, the bank followed your instruction, so that fast route does not clearly apply. The regulation expects a person who receives money by mistake to tell their bank and agree to a reversal. Honest recipients do. When they do not, most banks will not touch the money without the recipient’s consent or a court order, because they fear being sued by their own customer.

Even errors on the bank side can stall. In 2022, MTN’s MoMo Payment Service Bank went to court against 18 banks over about ₦22.3 billion it said it had credited by mistake. The banks had asked for a court order before reversing.

Our view: the rules point in opposite directions

A bank may freeze a whole account on a fraud report, with no judge involved. Yet when a customer reports an honest mistake within minutes, with the transaction reference in hand, the answer is often “wait” or “go to court”. That is backwards. Three fixes would help, and none of them needs a new Act:

1. A short “mistake hold”. When a sender reports a mistaken transfer quickly and in writing, the receiving bank should be able to hold that amount only, not the whole account, for a few days while it asks its customer to confirm. If the customer shows the money was theirs to receive, the hold lifts. If they ignore the request, the money goes back. Banks already have the power to freeze for fraud. A narrower version for honest mistakes is fair to both sides.

2. A clear safe harbour for bank-side errors. The CBN should state plainly that a receiving bank which reverses within the 14-day window, against the sending bank’s indemnity, is protected from a claim by its own customer. The 2018 regulation already points that way. Banks need it spelt out so that “get a court order” stops being the default answer.

3. Time limits on fraud restrictions. A restriction based on a report, not a court order, should lapse after a short, fixed period unless a court extends it. The customer should be told who made the report and what it covers.

The Court of Appeal’s decision supports quick action against fraud. In our view, it is not a licence to keep an account frozen for weeks without explanation.

What to do in the first 72 hours

If you sent money to the wrong account

• Call your bank at once, then put the complaint in writing the same day.

• Include the date, amount, transaction reference, the wrong account number, the account you meant to pay and a screenshot.

• Ask your bank whether the error was on its side. If it was, point to the CBN’s 14-working-day reversal rule.

• Ask your bank to confirm in writing that it has sent a reversal request to the receiving bank.

• If nothing moves, escalate through the bank’s complaints process and then to the CBN’s consumer complaints channel.

• If the recipient refuses or has spent the money, you may need to go to court. A court can order the banks involved to account for the money and give you the information needed to trace it.

If your account is frozen

• Ask the bank in writing who made the report, whether the whole account or only a specific sum is restricted, and for how long.

• Send documents that show where the money came from: invoices, contracts, payment instructions.

• If the bank will not explain or lift the restriction, a lawyer’s letter often moves it. If it does not, the court can.

• For businesses: keep a second account at a different bank for payroll and critical payments. One disputed payment should not stop your whole operation.