Court Freezes Bank Accounts Over ₦5.7 Billion Keystone Bank Transfer Error

A Nigerian court has frozen several bank accounts after a major system glitch at Keystone Bank led to unauthorized withdrawals amounting to ₦5.7 billion. The Federal High Court in Lagos, presided over by Justice D.E. Osiagor, issued the order on February 18, 2025, instructing banks to halt transactions on the affected accounts until further notice. This decision comes as investigators work to unravel how the funds were moved and who was involved.

The accounts impacted by this ruling are spread across multiple financial institutions, including Opay, Providus Bank, Sterling Bank, Access Bank, Zenith Bank, TAJ Bank, GTBank, First Bank, Moniepoint, Fidelity Bank, and United Bank for Africa (UBA). According to court filings, these accounts collectively hold the disputed funds.

The problem began between February 1 and February 12, 2025, when Keystone Bank discovered that a technical glitch had inflated balances in several naira-denominated accounts. This error allowed account holders to withdraw funds that did not legitimately belong to them. Keystone Bank explained in an affidavit that the issue was uncovered during a routine review of account balances. The investigation revealed that ₦5.7 billion had been funneled through 21 accounts before being transferred to secondary recipients.

This court action highlights growing concerns about the security of banking systems in Nigeria. Analysts have warned that outdated technology and weak oversight could leave banks vulnerable to errors and fraud. However, a banking insider described such glitches as “highly unusual,” emphasizing that they represent only a small fraction of total transactions.

The case has drawn attention to how Nigerian banks handle transfer errors and interbank settlements. This is not the first time such an incident has occurred. In January 2025, Guaranty Trust Bank (GTBank) secured a court order to recover ₦1.9 billion mistakenly credited to customer accounts following a system failure in October 2024.

In this latest case involving Keystone Bank, investigators are mapping out how the funds were moved and identifying the roles of various banks in the process. Typically, first-level beneficiaries receive the initial transfers, while second-level beneficiaries receive funds that have been further dispersed. This layering makes it harder for investigators to trace the money trail.

Keystone Bank has not commented publicly on the matter yet. However, this incident comes at a challenging time for the bank. Just weeks earlier, the Federal Government officially took control of Keystone Bank following a court ruling related to corporate governance breaches by its previous management. Despite these challenges, both Keystone Bank and the Central Bank of Nigeria (CBN) have assured customers that the bank remains safe and operational.

The Court freezing accounts over Keystone Bank glitch underscores both the risks posed by technical errors and the importance of robust safeguards in banking systems. As transaction volumes continue to grow in Nigeria’s financial sector, incidents like this raise questions about whether existing infrastructure can keep up with demand.

For now, all eyes are on further court proceedings as investigators work to recover the funds and determine accountability. The case serves as a reminder of how even minor technical issues can spiral into significant financial disruptions when not promptly addressed.

This situation has sparked widespread discussion about improving banking technology and oversight in Nigeria. While incidents like this may be rare, they highlight vulnerabilities that could undermine trust in the financial system if not adequately addressed.

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