Nigeria Halts Fintech Platform Onboarding Amid KYC Process Audits

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Key takeaways:

  • In the midst of Nigeria’s continuous attempts to tighten KYC compliance in crypto investing, the CBN instructed fintech companies to cease onboarding new customers.
  • The EFCC banned 1,146 bank accounts linked to illicit foreign exchange transactions after the onboarding limit was put in place.

In the midst of Nigeria’s continuous attempts to tighten Know Your Customer (KYC) compliance in cryptocurrency and traditional investing, the Central Bank of Nigeria (CBN) instructed four fintech companies to cease onboarding new customers. 

According to the African website TechCabal’s report, Nigerian fintech companies OPay, Kuda Bank, Moniepoint, and PalmPay have stopped opening new accounts in the midst of an ongoing assessment of the KYC procedure. A source acquainted with the circumstances was cited in the report:

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

The Economic and Financial Crimes Commission (EFCC), a Nigerian law enforcement organisation, banned 1,146 bank accounts linked to illicit foreign exchange transactions just after the onboarding limit was put in place.

Nonetheless, current clients of the four fintech companies can continue to deposit and move funds normally. Among the companies, one declared:

“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.”

Of the 1,146 bank accounts that were frozen, just 10% were run by fintechs; the bulk of the accounts were commercial bank accounts.

CBN is in charge of the current government intervention, which has strong backing from the EFCC and the National Security Agency. Due to KYC concerns, Fidelity Bank, a commercial bank in Nigeria, prohibited all outward transfers to the same four fintechs in October 2023.

The absence of KYC procedures on the platforms facilitated fraud instances, including money laundering and tax evasion. One of the firm’s executives stated that the company will resume operations once the ongoing audit of its KYC procedure is finished and that the halt on acquiring new customers is “temporary.”

The selection of Emomotimi Agama as the next director-general of the Nigerian Securities and Exchange Commission (SEC) was well-received by investors, entrepreneurs, and cryptocurrency aficionados.

The objectives of this position are to foster economic growth, improve investor confidence, and control the capital market.

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