Nigeria restricts fintech onboarding to prevent KYC-evading cryptocurrency investors
The Central Bank of Nigeria (CBN) has ordered four fintech companies to stop attracting new customers amid the country’s ongoing efforts to strengthen know-your-customer (KYC) compliance in the cryptocurrency and traditional investment sectors.
According to African publication TechCabal, Nigerian fintech companies OPay, Kuda Bank, Moniepoint and PalmPay have paused the creation of new accounts amid ongoing audits of their KYC processes. The report quoted a person familiar with the situation.
“CBN feels that many cryptocurrency traders are disrupting the Forex (FX) market by leveraging fintech platforms.”
The onboarding restrictions come shortly after Nigeria’s law enforcement agency, the Economic and Financial Crimes Commission (EFCC), blocked 1,146 bank accounts involved in unauthorized foreign exchange transactions.
However, existing customers of the four fintech companies can deposit and transfer funds as usual. One company announced:
“We have temporarily suspended new sign-ups on our platform. This means that new accounts cannot be opened at this time. We apologize for any inconvenience this may cause.”
As a result of analyzing 1,146 blocked bank accounts, it was found that only 10% of the accounts were operated by fintechs, and most of them were commercial bank accounts.
The ongoing government intervention is led by the CBN and closely supported by the National Security Agency (NSA) and the EFCC. In October 2023, Nigerian commercial bank Fidelity Bank blocked all transfers to the same four fintech companies due to KYC issues.
The lack of KYC requirements on the platform has led to fraud cases such as tax evasion and money laundering. An executive representing one of the companies said the disruption in acquiring new customers was ‘temporary’ and the company would resume operations after ongoing audits of its KYC processes.
Related: Nigeria’s central bank rejects claims of freezing cryptocurrency accounts
Cryptocurrency enthusiasts, investors and entrepreneurs have welcomed the appointment of Emomotimi Agama as the new Secretary General of the Securities and Exchange Commission (SEC).
The purpose of this appointment is to regulate capital markets, strengthen investor confidence, and promote economic development. Nathaniel Luz, CEO of over-the-counter cryptocurrency exchange Flincap, expressed his excitement about the appointment in an interview with Cointelegraph.
He said the community is looking forward to the new chairman working with startups to streamline the licensing process for operating cryptocurrency platforms in Nigeria.
Likewise, Lucky Uwakwe, Chairman of the Blockchain Industry Coordinating Council of Nigeria (BICCoN) and founder of SaBi Exchange, described the appointment as a “wise decision.”
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