INTRODUCTION
The freezing of bank accounts remains a contentious issue in Nigeria’s banking sector, raising recurring disputes between financial institutions and their customers.[1]
For customers, whether individuals or corporate entities, the consequences of freezing a bank account can be significant. An account restriction may disrupt cash flow, hinder business operations, and cause substantial financial hardship.[2]
The issues were recently considered by the courts in Kuda Microfinance Bank Ltd v. Amarachi Kenneth Blessing[3] and Paulyn O. Abhulimen, SAN v. Zenith Bank Plc & Anor[4], where important decisions were delivered that are expected to shape the legal framework governing the freezing of bank accounts in Nigeria and significantly influence the rights and obligations of banks and their customers going forward.[5]
In light of the foregoing, this article explores the legal framework governing the freezing of bank accounts in Nigeria, examines the circumstances under which such restrictions may be lawfully imposed, and critically analyses recent judicial decisions on the subject. It further considers the implications of these developments for banks, businesses, and account holders, while offering practical insights into navigating the evolving legal landscape.
WHEN CAN BANKS LAWFULLY FREEZE CUSTOMERS’ BANK ACCOUNTS?
Under Nigerian law, a bank cannot unilaterally freeze or restrict a customer’s account unless such action is authorised by law or backed by a valid court order.[6] As the banker-customer relationship is contractual, a bank is generally obliged to honour a customer’s payment instructions where sufficient funds are available.[7] Any unjustified refusal may amount to a breach of contract.[8] However, there are limited statutory exceptions under which a bank may lawfully restrict a customer’s account without first obtaining a court order. These exceptions include:
- Where the account holder expressly instructs the bank to place a restriction on the account.[9]
- Upon notification of the account holder’s death.[10]
- Where the Economic and Financial Crimes Commission (EFCC) directs a temporary 72-hour restriction on an account for investigative purposes, as permitted by law.[11]
- Where the restriction is imposed pursuant to applicable directives, regulations, or instruments issued by the Central Bank of Nigeria (CBN).
RECENT JUDICIAL DEVELOPMENTS: WHAT HAS CHANGED?
In Kuda Microfinance Bank Ltd v. Amarachi Kenneth Blessing, the Court of Appeal was called upon to determine whether a bank may lawfully impose a restriction on a customer’s account without first obtaining a court order. The dispute arose after the sum of ₦5,000,000 was erroneously credited to the respondent’s Access Bank account and subsequently transferred to her Kuda account. Upon receiving notification from Access Bank that the funds had been mistakenly credited, Kuda classified the transaction as suspicious and placed a Post-No-Debit (PND) restriction on the respondent’s account without obtaining prior judicial authorisation.
Aggrieved by the restriction, the respondent commenced an action at the Federal High Court, contending that the bank’s action was unlawful and amounted to a violation of her constitutional right to property. In response, Kuda maintained that its actions were justified under the Terms and Conditions governing the operation of the account, which authorised the bank to restrict accounts in cases involving suspected fraud or suspicious transactions.[12] The bank also relied on the applicable Central Bank of Nigeria (CBN) circulars and regulations. The Federal High Court, however, held that the restriction was unlawful, having been imposed without a prior court order, and consequently entered judgment in favour of the respondent.
On appeal, the Court of Appeal set aside the decision of the Federal High Court, holding that the trial court failed to give due effect to the contractual terms binding the parties and the applicable Central Bank of Nigeria (CBN) regulatory framework. The Court found that Kuda’s Terms and Conditions, read together with the relevant CBN regulations, validly authorised the bank to impose a Post-No-Debit (PND) restriction on the respondent’s account where a transaction was reasonably suspected to be fraudulent or irregular, without the need for a prior court order.[13]
Accordingly, the Court upheld the restriction placed on the respondent’s account and dismissed her claims. The decision is significant as it recognises that, in appropriate circumstances, a bank may lawfully restrict a customer’s account without first obtaining judicial approval, provided such action is supported by the parties’ contractual agreement and the applicable regulatory framework.[14]
Another significant decision in this area is Paulyn O. Abhulimen, SAN v. Zenith Bank Plc & Anor.[15], where the High Court considered the validity of a bank’s reliance on an account restriction order issued by a court without the requisite jurisdiction. The dispute arose after Zenith Bank Plc froze the claimant’s account pursuant to an order obtained by the Nigeria Police Force from the Chief Magistrate Court, Mararaba, Nasarawa State.
The claimant challenged the restriction, contending that the Magistrate Court lacked the jurisdiction to issue such an order. Upholding the claimant’s argument, the Court held that the order was a nullity, having been made without jurisdiction, and described it as a clear instance of judicial overreach. The Court further held that the bank ought not to have acted on an order that was patently invalid, particularly as disputes relating to the banker-customer relationship[16] fall outside the substantive jurisdiction of a Magistrate Court.
In addition, the Court found that the bank breached its duty of care by failing to promptly notify the claimant of the restriction placed on her account. According to the Court, the omission amounted to negligence and a failure to exercise the requisite standard of due diligence expected of a financial institution.
PRACTICAL IMPLICATIONS FOR BANKS AND BUSINESSES AND KEY TAKEAWAYS
- Restrictions at the Customer’s Request or Upon the Customer’s Death: A bank may lawfully restrict the operation of an account upon the express instruction of the account holder or the authorised signatories, in fulfilment of its contractual obligation to comply with lawful customer instructions. Similarly, a bank may freeze or suspend transactions on an account without a court order upon receiving notice of the account holder’s death, pending access by the deceased’s duly authorised personal representatives.
- EFCC Directives and Court Orders: As a general rule, any directive issued by the Economic and Financial Crimes Commission (EFCC) under section 34(1) of the EFCC Act requiring the restriction of a customer’s account must be supported by a valid court order. In the absence of such judicial authorisation, a bank may decline to comply and could incur liability if it enforces the directive unlawfully. However, the EFCC may lawfully direct a bank to impose a temporary restriction on an account for up to 72 hours for investigative purposes.[17] Any restriction extending beyond this period must be authorised by a court order; otherwise, it may be challenged by the affected customer.[18]
- The applicable Central Bank of Nigeria (CBN) regulations and circulars[19]: This empower banks to restrict a customer’s account where there are reasonable grounds to suspect fraud or other suspicious activity.[20] Accordingly, where a bank imposes an account restriction in compliance with these regulatory instruments, it is unlikely to incur liability for wrongful restriction, as such compliance constitutes a valid legal justification and provides a strong defence to any claim brought by the affected customer.[21]
- Contractual Authority to Restrict Accounts: A bank may lawfully restrict a customer’s account where such power is expressly provided in the account Terms and Conditions, particularly in cases of suspected fraud or suspicious activity. Customers and businesses should therefore carefully review these terms, as they may authorise account restrictions without prior court approval in specified circumstances.
- Compliance with Court Orders: While the Paulyn decision suggests that banks may incur liability for complying with account restriction orders issued by courts without jurisdiction, binding appellate authorities maintain that court orders must be obeyed unless and until they are set aside. Banks should therefore exercise caution and seek legal guidance where the jurisdiction of the issuing court is in doubt.[22]
CONCLUSION.
Historically, the prevailing legal position was that banks could only freeze a customer’s account pursuant to a valid court order. Recent judicial decisions, however, indicate that this position is evolving, particularly where the restriction is authorised by the contractual terms governing the account or by applicable regulatory instruments. In light of these developments, banks should exercise caution before imposing account restrictions, ensure that any such action is supported by lawful authority, and verify that any court order relied upon has been issued by a court of competent jurisdiction. Similarly, customers should carefully review the terms and conditions governing their accounts, as these may, in certain circumstances, empower banks to impose restrictions without prior judicial approval.
[1] The term “Financial institutions” in this article refers mainly to Banks.
[2] The consequences of freezing a bank account can be far-reaching. For businesses, an account restriction may disrupt operations, impede cash flow, and result in the breach of contractual payment obligations, thereby exposing the customer to legal claims and financial liability. For individual account holders, the inability to access funds can lead to severe hardship, particularly in situations involving urgent financial commitments, medical emergencies, or other pressing personal needs.
[3] (2024) LPELR-80643(CA). Judgment delivered on the 27th of December 2024.
[4] Suit No: FCT/HC/CV/2194/2024 judgement delivered on 16 July 2025 by Hon. Justice S. U. Bature of the FCT High Court.
[5] https://www.templars-law.com/app/uploads/2025/11/Freezing-Bank-Accounts-in-Nigeria.pdf
[6] Diamond Bank v. Unaka & Ors (2019) LPELR-50350 (CA)
[7] Allied Bank (Nig) Ltd v. Akubueze (1997) 6 NWLR (PT 509) 374 and First Africa Trust Bank Ltd V. Partnership Investment Company Ltd. (2003) 12 SC (PT 1) 90.
[8] Guaranty Trust Bank Plc v. Adedamola (2019) 5 NWLR (Pt. 1664) 30, where the 1st Respondent’s accounts with the Appellant Bank were frozen on the directive of the Economic and Financial Crimes Commission (EFCC) based on Section 34 of the EFCC Act, without any subsisting Court order, the Court held that Section 34(1) of the EFCC Act expressly requires the Commission to obtain an order of Court before directing that any account be frozen.
[9] This position was reaffirmed by the Court of Appeal in UBA Plc v. Antai (2018) LPELR-49786 (CA), where the Court held that a bank has no authority to unilaterally freeze, close, or place restrictions on a customer’s account unless it is acting pursuant to a valid court order or upon the express instruction of the account holder or the authorised signatories to the account.
[10] Diamond Bank v. Unaka & Ors(supra), the Court held that a bank cannot unilaterally freeze or restrict a customer’s account or deny access to funds without lawful authority. The only recognised exception is where the bank has been notified of the customer’s death, in which case it must suspend transactions until the deceased’s duly appointed personal representatives are authorised to operate the account.
[11] NPG Properties & Construction Works Ltd v. Zenith Bank Plc (2023) 15 NWLR (Pt. 1908) 423, the Court affirmed that the Economic and Financial Crimes Commission (EFCC) may, pursuant to section 7(6) of the Money Laundering (Prevention and Prohibition) Act, 2022 (formerly section 6(5)(b) of the 2011 Act), direct a temporary 72-hour restriction on a customer’s account for investigative purposes. However, the Court made it clear that any restriction beyond the initial 72-hour period must be supported by a valid court order. This position was reaffirmed in Ipinloju Damola Femi v. EFCC & Ors. (2024) LPELR-61914 (CA).
[12] The Terms and Conditions constitute the contractual agreement executed by a customer upon opening a bank account. They form part of the binding contract between the bank and the customer and apply equally to accounts maintained with both traditional banks and digital banks.
[13] Paragraph 3 of the CBN Circular on the Establishment of Industry Fraud Desks, issued on 11 June 2015, which empowers Banks to impose a PND on a Bank customers’ account on allegations of fraud without recourse to Court orders, available at https://www.cbn.gov.ng/out/2015/bpsd/circular%20on%20the%20establishment%20of%20industry%20fraud%20desk.pdf Accessed on 29 July 2026
[14] Regulation 10(3) of the CBN Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services in Nigeria issued on 13 July 2018, which makes reference and adopts the provisions of the CBN Circular on Industry Fraud Desk, available at https://www.cbn.gov.ng/out/2018/bpsd/regulation%20on%20instant%20payment.pdf Accessed on 29 July 2026
[15]Supra. It should be noted, however, that this decision is that of a High Court and, therefore, has only persuasive authority. It is also subject to appellate review and may be affirmed, varied, or overturned on appeal.
[16] Under section 251(1)(d) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended), the Federal High Court and the State High Courts exercise concurrent jurisdiction over disputes arising from the banker-customer relationship. This position was reaffirmed in Access Bank Plc v. Okpu (2021) 6 NWLR (Pt. 1773) 563, where the Court held that both courts are competent to adjudicate matters involving transactions between a bank and its customer.
[17]Section 7(6) of the MLA
[18] Supra NPG Properties & Construction Works Ltd v. Zenith Bank Plc.
[19] The CBN Circular on the Establishment of Fraud Desks, (ibid), and the CBN Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services in Nigeria, (ibid).
[20] Paragraph 3 of the CBN Circular on the Establishment of Fraud Desks, 2015
[21]Supra. Ipinloju Damola Femi v. EFCC & Ors; Supra. Kuda Microfinance Bank Ltd v. Amarachi Kenneth Blessing.
[22] Supreme Court decision in Ngere v. Okuruket XIV (2014) 11 NWLR (Pt. 1417) 147
