Nigeria Boards Fintech to Stop Crypto Investors Evading KYC

Nigeria's central bank has directed four fintech companies to stop onboarding new customers as part of Nigeria's efforts to strengthen Know Your Customer (KYC) compliance in crypto and traditional investments.

Nigerian fintech companies OPay, Kuda Bank, Moniepoint and PalmPay have temporarily suspended the creation of new accounts amid an ongoing audit of the KYC process, African publication Tekkabal has reported. The report quoted a person familiar with the situation as saying:

“CBN feels that many crypto traders are using fintech platforms to disrupt the FX (Forex) market.”

The ban came after Nigeria's law enforcement agency, the Economic and Financial Crimes Commission (EFCC), froze 1,146 bank accounts involved in illegal foreign trade.

However, existing customers of the four fintech companies can deposit and transfer money as usual. One of the companies announced the following.

We have temporarily suspended new registrations on the platform. This means you cannot open a new account at this time. We apologize for any inconvenience this may cause.

An analysis of 1,146 blocked bank accounts showed that only 10% were managed by fintech, and the majority were commercial bank accounts.

The ongoing government intervention is led by the CBN and closely supported by the National Security Agency and the EFFC. In October 2023, the commercial bank of Nigeria, Fidelity Bank, blocked transfers to the same four fintechs due to KYC concerns.

Lack of KYC requirements on platforms has given rise to fraudulent activities such as tax evasion and money laundering. An executive representing one of the companies said the pause in acquiring new customers is “temporary” and the company will resume operations once the ongoing KYC process is audited.

RELATED: Central Bank Of Nigeria Forced To Deny Claims Of Crypto Account Closure

Crypto enthusiasts, investors and entrepreneurs have welcomed the appointment of Imomotimi Agama as the Director General of the Securities and Exchange Commission of Nigeria.

This appointment aims to regulate the capital market, increase investor confidence and promote economic development. Speaking to Cointelegraph, Nathaniel Luz, CEO of FlinkCap – a free-to-use crypto exchange – expressed his excitement about the appointment.

He said the community is looking forward to the new chairman working with start-ups to streamline their licensing process to operate crypto platforms in Nigeria.

Similarly, Blockchain Industry Coordinating Committee of Nigeria (BICcoN) chairman and Sabi Exchange founder Lucky Uwakwe described the appointment as a “wise decision”.

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