Nigeria's Central Bank Halts New Customer Registration for Four Fintech Firms Amid KYC Audit
Summary:
Nigeria's Central Bank (CBN) has compelled four fintech firms - OPay, Kuda Bank, Moniepoint, and PalmPay - to pause new customer enrollments amid an ongoing audit of Know Your Customer (KYC) processes. This development came as the Economic and Financial Crimes Commission (EFCC) froze several bank accounts implicated in unauthorized forex activities. However, the existing customers of the aforementioned firms can perform transactions as usual. In other news, Emomotimi Agama has been appointed as the new Director-General of the Securities and Exchange Commission (SEC) in a move to regulate the capital market and foster economic growth.
Under the directive of Nigeria's Central Bank (CBN), four financial technology companies have temporarily halted the registration of new clients. This is a facet of Nigeria's ongoing commitment to enforce stronger Know Your Customer (KYC) protocols within crypto and conventional investing communities. Tech firms OPay, Kuda Bank, Moniepoint and PalmPay have suspended the addition of new user accounts while the KYC methods are being audited, reports African media outlet TechCabal. The anonymous source cited in the report stated:
"CBN is concerned that many cryptocurrency traders have been using these fintech platforms to manipulate the forex market."
The Economic and Financial Crimes Commission (EFCC), a Nigerian law enforcement body, had recently frozen 1,146 bank accounts involved in unauthorized forex activities before this halt in new customer registrations came to light. However, current users of these four fintech companies remain unaffected and can conduct fund deposits and transfers as normally. A statement from one of the affected companies read:
"We've put a hold on new account registration for now. This means that opening a new account at this time isn't possible. We regret any inconvenience this might cause."
Upon evaluating the 1,146 bank accounts that were frozen, it was seen that only 10% were operated by fintechs. The larger share was operated by commercial banks. This government action is spearheaded by the CBN with support from the National Security Agency (NSA) and the EFCC. Nigerian commercial bank, Fidelity Bank had blocked all outbound transfers to the same fintech companies in October 2023, due to issues surrounding KYC. The lack of KYC provisions on the platforms was a catalyst for fraudulent activities like money laundering and tax evasion. A representative from one of the fintech firms commented that the hold on registration of new clients is for a "short duration" and the company will be back in business once the KYC process audit ends.
An additional development in the Nigerian financial space saw the appointment of Emomotimi Agama as the new Director-General of the Securities and Exchange Commission (SEC). His appointment is expected to regulate the capital market, increase investor trust, and elevate economic growth. Nathaniel Luz, CEO of Flincap—an over-the-counter crypto exchange—expressed optimism about the appointment. He said the community hopes the new SEC chair would assist startups streamline their licensing procedures to operate crypto platforms in Nigeria. Also, Lucky Uwakwe, chair of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN) and founder of SaBi Exchange, referred to the appointment as a "judicious choice.
Published At
5/1/2024 11:00:34 AM
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