The Central Bank of Nigeria (CBN) has directed several Nigerian fintech companies, including OPay, Kuda Bank, Moniepoint, and PalmPay, to stop onboarding new customers as part of efforts to enhance Know Your Customer (KYC) compliance within the financial sector. This move was employed out of concerns that crypto traders were exploiting these platforms to disrupt the Forex market, according to a source cited by TechCabal, an African publication.

The regulatory action became effective in the wake of the Economic and Financial Crimes Commission (EFCC) blocking 1,146 bank accounts due to unauthorised forex transactions. Although only about 10% of these accounts were associated with fintech companies, while the majority belonged to traditional commercial banks, yet the regulation is for the fintech. As a result of the directives, affected fintech firms have temporarily suspended new account creation while they undergo an audit of their KYC practices. Existing customers of these fintech companies can however continue to deposit and transfer funds without restrictions during this period.

The ongoing regulatory efforts involve collaboration between the CBN, the National Security Agency, and the EFCC. A previous incident in October 2023 saw Fidelity Bank blocking outgoing transfers to these fintech firms due to KYC concerns.

The scrutiny of these fintech companies stems from reported instances of insufficient KYC procedures, which have allegedly facilitated financial crimes such as tax evasion and money laundering. A representative from one of the affected firms affirmed that the suspension of new account creations is a temporary measure, with normal operations expected to resume after the audit is completed.

Additionally, the appointment of Emomotimi Agama as the new director-general of the Nigerian Securities and Exchange Commission has garnered positive reactions from the financial community. This appointment aims to regulate the capital market effectively, boost investor confidence, and foster economic growth. Industry figures such as Nathaniel Luz, CEO of Flincap, and Lucky Uwakwe, chair of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), have praised the move, citing its potential to streamline licensing processes for crypto platforms in Nigeria.

However, if about 90% of the unauthorized forex transactions were carried out through commercial bank accounts and only about 10% were Fintech accounts, why is the regulation focused on Fintech companies? Should the commercial banks involved be exempted from undergoing similar, if not stricter measures?

Financial crimes such as money laundering and tax evasion have been going on long before the advent of Fintech companies. Regulatory agencies and financial crimes organisations need be wary of giving the impression that they are being biased in the war against corruption and financial crimes.





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