The Central Bank of Nigeria (CBN) has ordered Kuda Bank, OPay, Palmpay, and Moniepoint to prevent more customers from onboarding their services, as scrutiny continues in the Nigerian financial sector.
- The directive has been made to allow the auditing of the four Fintechs as financial regulators intend to evaluate whether they have adhered to set of guidelines set by the Central Bank last year.
- CBN introduced a series of ‘Know Your Customer (KYC)’ rules that mandated financial institutions to demand a customer’s Bank Verification Number and National Identification Number (NIN) before opening an account.
- The KYC rules were set to be implemented in April this year as a deterrent to fraudulent activity in the sector, covering all financial players including Fintechs which have always simplified their account-opening services.
“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 apologise for any inconvenience this may cause,” one of the Fintechs announced.
CBN, working closely with the National Security Agency (NSA) and the Economic and Financial Crimes Commission (EFCC), has cracked down on possible avenues of fraud and tac evasion since last year.
The volatile state of the Naira has prompted the Nigerian government to believe that ‘notorious’ cryptotraders were manipulating the forex market, using difficult-to-regulate Fintechs to accomplish financial gains. In December last year, Nigeria Inter-Bank Settlement System (NIBSS) ordered banks to restrict customer deposits through licensed Fintechs only.
The EFCC is also investigating more than 1,000 bank accounts suspected of dealing in Forex without authorization. About 10% of these accounts belong to financial wallets of Fintechs.
The four mentioned Fintechs were barred from completing transactions with Fidelity Bank in October last year because they did not institute security measures to prevent fraud. Since that time, they have been on the spotlight of anti-fraud authorities.
Being Africa’s most populous nation with the highest GDP, Nigeria has been at the firestorm of innovation within its financial sector. Fintechs and Cryptocurrency have found an abundant market aiding financial inclusion through easy access of forex trading and accounts opening. However, the government has realized that many financial activities remain unregulated, luring fraudsters in the system.
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