In a move that has sparked concern among bank customers and fintech operators alike, the Central Bank of Nigeria (CBN) has imposed a ban on mobile money operators and fintech firms from onboarding new customers.
This directive, which affects major players like OPay, Palmpay, Kuda Bank, and Moniepoint, has been met with mixed reactions from stakeholders.
The Bank Customers Association of Nigeria has thrown its weight behind the CBN’s decision, citing the necessity to uphold rigorous Know-Your-Customer (KYC) processes to safeguard against money laundering and terrorism financing.
This move follows an ongoing audit of the KYC procedures of fintech companies, with some industry heads reportedly summoned to Abuja for discussions on the matter.
While the CBN has yet to issue a public statement regarding the directive, reliable sources from leading fintech firms have confirmed the development. However, attempts by media outlets to obtain official comments from the apex bank have been unsuccessful.
Coinciding with this directive is a court order obtained by the Economic and Financial Crimes Commission (EFCC) to freeze over a thousand bank accounts allegedly involved in illicit foreign exchange transactions, money laundering, and terrorism financing. The order, granted by Justice Emeka Nwite, allows for a 90-day investigation period.
President of the Bank Customers Association of Nigeria, Uju Ogubunka, has voiced support for the CBN’s actions, emphasising the need for stringent regulations to ensure the integrity of financial institutions. Meanwhile, individuals like Emmanuel Odunsi have welcomed the move, highlighting the imperative for robust KYC processes to combat scams and fraudulent activities.
This latest development comes after concerns were raised in October 2023 when Fidelity Bank blocked transfers to several fintech platforms due to similar KYC issues. Subsequently, the CBN introduced new KYC rules in November 2023, targeting fintech startups.
Fintech companies, which have played a pivotal role in expanding financial inclusion in Nigeria, now find themselves navigating heightened regulatory scrutiny.
The pause in onboarding new customers has raised questions about the potential impact on the CBN’s ambitious target to increase financial inclusion to 95% of the adult population by 2024.
While customers have expressed worries about the safety of their funds on social media platforms, fintech operators are grappling with the directive and awaiting further instructions from regulatory authorities. With the future uncertain, both customers and industry players are closely monitoring developments in Nigeria’s rapidly evolving fintech landscape.
