The Central Bank of Nigeria (CBN) has instructed four fintech firms to halt the onboarding of new customers as part of efforts to strengthen know-your-customer (KYC) compliance within both the cryptocurrency and traditional investment sectors.
According to a report by African publication TechCabal, Nigerian fintech companies OPay, Kuda Bank, Moniepoint, and PalmPay have paused the creation of new accounts while undergoing audits of their KYC procedures. Sources familiar with the matter cited the CBN's concerns over cryptocurrency traders exploiting fintech platforms to disrupt the foreign exchange market as a key factor behind the entry restrictions.
This directive follows actions by Nigeria's Economic and Financial Crimes Commission (EFCC), which recently froze 1,146 bank accounts involved in unauthorized foreign exchange transactions. Despite the halt on new registrations, existing customers of the four fintech companies can still conduct deposit and fund transfer activities as usual, with one company publicly announcing the temporary suspension of new account openings.
An examination of the 1,146 frozen bank accounts revealed that only a small fraction—10%—were associated with fintech firms, with the majority belonging to business bank accounts. The ongoing government intervention, spearheaded by the CBN and supported by agencies like the National Security Agency and EFCC, underscores the regulatory scrutiny facing the fintech sector.
In a move reflecting broader concerns about KYC compliance, Nigerian commercial bank Fidelity Bank previously ceased all transfers to the four fintech companies in October 2023. Such actions are prompted by the observed lack of stringent KYC requirements on these platforms, which are seen as enabling fraudulent activities like tax evasion and money laundering.
Despite the temporary pause in new customer acquisitions, fintech executives emphasize their commitment to compliance and express optimism about the future regulatory landscape. Cryptocurrency industry stakeholders view the appointment of Emomotimi Agama as the new Director-General of the Nigeria Securities and Exchange Commission as a positive step toward regulatory clarity and economic development. They anticipate collaborative efforts between regulatory authorities and startups to streamline licensing processes and foster a conducive environment for cryptocurrency platforms in Nigeria.
