May 7, 2024
Nigeria Restricts Fintech Onboarding for KYC Evasion
Latest Cryptocurrency News

Nigeria Restricts Fintech Onboarding for KYC Evasion

The Central Bank of Nigeria (CBN) has instructed four fintech companies to cease onboarding new customers as part of Nigeria’s ongoing initiatives to bolster Know Your Customer (KYC) compliance in both crypto and traditional investing.

According to the African publication TechCabal, Nigerian fintech firms OPay, Kuda Bank, Moniepoint, and PalmPay have suspended the creation of new accounts while an audit of the KYC process is underway. A source familiar with the matter confirmed this development.

“The CBN feels like a lot of crypto traders were leveraging the fintech platforms to disrupt the FX (Forex) market.”

Source: Bitcoin World

Government Intervention Amid Forex Dealing Concerns

The directive coincides with actions taken by the Nigerian law enforcement agency, the Economic and Financial Crimes Commission (EFCC), which recently blocked 1,146 bank accounts involved in unauthorized forex dealings.

However, existing customers of the four fintech firms can continue to deposit and transfer funds without disruption. One of the companies stated:

“We’ve temporarily paused new signups on our platform. This means that you’ll be unable to open a new account at the moment. We apologize for any inconvenience this may cause.”

An analysis of the 1,146 blocked bank accounts shows that only 10% are operated by fintechs, with the majority being commercial bank accounts.

Government-Led Regulatory Efforts and Industry Response

The ongoing regulatory intervention, spearheaded by the CBN and supported by the National Security Agency and the EFCC, follows previous actions taken by Nigerian commercial bank Fidelity Bank in October 2023. At that time, Fidelity Bank halted all outgoing transfers to the same four fintechs due to KYC concerns.

The absence of robust KYC requirements on these platforms has reportedly facilitated fraudulent activities such as tax evasion and money laundering. An executive representing one of the fintech firms assured that the suspension of new customer acquisition is temporary and operations will resume once the KYC audit concludes.

Appointment of New Director-General and Industry Expectations

Emomotimi Agama’s appointment as the new director-general of the Nigerian Securities and Exchange Commission has garnered positive reactions from crypto enthusiasts, investors, and entrepreneurs. Agama’s role aims to regulate the capital market, boost investor confidence, and foster economic growth.

Nathaniel Luz, CEO of Flincap, expressed optimism about the collaboration between startups and regulatory authorities to streamline licensing processes for crypto platforms in Nigeria. Similarly, Lucky Uwakwe, chair of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN) and founder of SaBi Exchange, hailed Agama’s appointment as a prudent decision.

Image by wirestock on Freepik

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