Nigerian law recognises circumstances in which a bank may lawfully restrict a customer’s account. Although the relationship between a bank and its customer is primarily contractual, the bank’s power to restrict an account is also shaped by applicable legislation, regulatory requirements and valid court orders. Customers are therefore not without protection: any restriction must have a lawful basis and be exercised consistently with the bank’s contractual and legal obligations.
Recent Court of Appeal decisions such as NPG Event, Gardens & Parks Ltd v. Zenith Bank Plc (2026) and FBN Plc & Anor v. DKN Investment Ltd & Anor (2025) demonstrate that the legality of every account restriction depends on its factual and legal basis.
When a Bank May Restrict an Account
A restriction on an account, commonly a Post-No-Debit (PND), is not unlawful in itself. A bank may restrict an account where:
1. the customer instructs it to do so,
2. it is notified of the account holder’s death,
3. it is served with a valid order of a court with jurisdiction,
4. a statute empowers a regulator or law enforcement agency to require a temporary restriction for investigation (for example, the stop order of not more than 72 hours which the NFIU or the EFCC may place on a suspected account under section 7(6) of the Money Laundering (Prevention and Prohibition) Act 2022, with an order of the Federal High Court needed to block the account beyond that period under section 7(8)), or
5. it acts under a specific CBN regulatory requirement, such as a fraud complaint handled through the industry fraud desk framework or incomplete KYC (including BVN/NIN) requirements, and only within the limits of that requirement.
A bank cannot assume that every complaint, police directive or purported court order automatically justifies freezing an account. In each case the question is the same: what was the basis for the restriction, and was it lawfully exercised?
NPG Event, Gardens & Parks Ltd v. Zenith Bank Plc
Court of Appeal; (2026) 7 CLRN
Facts
NPG Event, Gardens & Parks Ltd held an account with Zenith Bank. Zenith placed a PND on the account for six months after a directive allegedly issued by the Economic and Financial Crimes Commission (EFCC), leaving the company unable to operate the account. It sued at the Federal High Court for declarations that the restriction, imposed without a valid court order, was unlawful and unconstitutional, an order lifting it, and ₦100,000,000 in damages. The Federal High Court dismissed the claim, holding that the EFCC has statutory investigative powers and the bank could comply with its directive pending the investigation. The company appealed.
Reasoning
Zenith relied on the EFCC directive as its basis for the restriction. The Court of Appeal held that this was not enough. A bank cannot claim that it has no duty to ascertain whether an agency’s directive to freeze an account is made pursuant to a court order. Neither a bank nor a law enforcement agency has the legal competence, without a valid court order, to close a customer’s account, seize funds, place a lien on it or otherwise interfere with the customer’s property. Even where an agency may take temporary possession of property in an investigation, it must follow the procedure the law prescribes, because an allegation of crime or a pending investigation does not, without more, take away a person’s right to use and enjoy his property.
Decision
The issue was resolved in the appellant’s favour. The Court held that a bank which complies with an agency’s directive to freeze an account without a court order may be held jointly and severally liable with the agency for the violation of the customer’s fundamental rights, and it awarded ₦5,000,000 in general damages against Zenith Bank.
FBN Plc & Anor v. DKN Investment Ltd & Anor
Court of Appeal, Benin Division; (2025) LPELR-80878 (CA)
Facts
In January 2012, a Chief Magistrate in Benin City ordered that the Commissioner of Police be given access to inspect and copy the ledger and records of DKN Investment Ltd’s account with First Bank, to assist a police investigation. The order did not direct the bank to freeze the account. First Bank nevertheless froze it, relying on the order and on a police directive, and refused to honour the customer’s cheque. The High Court of Edo State found for the customer and awarded ₦10,000,000 in damages for breach of contract. First Bank appealed.
Reasoning
The Court of Appeal accepted that an order of a competent court must be obeyed, but held that no one may act outside the tenor of the order under the pretext of carrying it out. An order permitting inspection of account records did not authorise a freeze. The police have no power to authorise or direct a bank to freeze a customer’s account without a court order, and no person or institution may unilaterally restrict a customer’s account without one.
Decision
The appeal was dismissed. By freezing the account on the strength of the magistrate’s order and the police directive, and refusing the customer’s cheque, the bank had committed a grave constitutional and contractual breach, and the damages stood.
What the Bank Must Do
The two cases show that a bank which restricts an account must be able to point to a lawful basis and must exercise it properly. Accordingly, a bank should
1. Have a clear lawful basis. The restriction must rest on agreed account terms supported by regulation, statutory power, or a valid court order.
2. Verify any order relied on. A bank should check that the order comes from a court with subject-matter and territorial jurisdiction, that it names the right party, and that it is in proper form. A bank that acts within the terms of a facially valid order will ordinarily be protected, but it acts at its own risk where it goes beyond those terms, as First Bank did in DKN. Where an agency asks for a restriction, the bank should confirm the court order or the statutory power and time limit relied on.
3. Notify the customer promptly. Inform the customer of the restriction and its basis, subject to any legal restriction on disclosure, such as the prohibition on tipping off under the anti-money laundering laws. Where disclosure is permitted, failure to notify may expose the bank to a claim for breach of contract or negligence.
4. Keep the restriction temporary and proportionate. Suspicion alone does not justify an indefinite restriction. Review and remove restrictions when the legal basis no longer exists. An administrative stop order, for instance, lapses after 72 hours unless a court order is obtained to continue it.
5. Re-examine the restriction when challenged. Once a customer points to a defect, a bank that leaves the restriction in place does so at its own risk.
A bank's duty to protect the financial system does not erase its contractual and legal obligations to its customers.
What the Customer Can Do, and the Customer’s Rights
If your account is restricted, you are not automatically without a remedy. A customer whose account is restricted is entitled to know why and to insist that the restriction is lawful. Accordingly,
1. Ask for the reason and the authority. Request, in writing, the basis for the restriction and a copy of any court order or regulatory directive relied on.
2. Write to the bank. Point out any defect (jurisdiction, wrong party, no notice, no continuing basis) and demand that the restriction be lifted.
3. Complain to the CBN. If the bank does not resolve a written complaint within two weeks, the customer may escalate it to the CBN’s Consumer Protection Department, with evidence of the complaint first made to the bank.
4. Go to court. A customer may apply to set aside or discharge an ex parte order, and may sue for declarations, an order lifting the restriction and damages for breach of contract or negligence, or, where constitutional rights are engaged, apply under the Fundamental Rights (Enforcement Procedure) Rules 2009. The damages awarded in NPG and DKN show that courts will compensate a customer where a restriction is unlawful.
Underlying these steps are the customer’s rights: the right to be told of a restriction, save where the law forbids disclosure, the right not to be restricted indefinitely on suspicion or on an ex parte order, the right to a restriction that rests on lawful authority, and the right to compensation where the bank acts unlawfully or negligently. The constitutional right to property under section 44 of the Constitution of the Federal Republic of Nigeria 1999 (as amended) is not absolute: section 44(2)(k) permits the temporary taking of possession of property for the purpose of an examination, investigation or enquiry, but, as NPG confirms, only in the manner the law prescribes.
Conclusion
Banks have legitimate powers to protect themselves, their customers and the wider financial system from fraud and other unlawful activity. However, those powers are not unlimited. An account restriction must have a clear legal or contractual basis, be imposed by a competent authority where required, and be applied transparently, proportionately and only for as long as necessary. Where a restriction is founded on an invalid order, imposed without jurisdiction or maintained without adequate communication to the customer, the bank may be liable for breach of contract or negligence and, as NPG shows, jointly with the agency for breach of the customer’s fundamental rights.
