The Central Bank of Nigeria (CBN) has ordered four fintech companies to put on hold the onboarding of new customers until further notice.
The firms under scrutiny are OPay, Palmpay, Kuda Bank, and Moniepoint. They have come under the radar of the regulator because of allegations their accounts are being used for illicit foreign exchange transactions.
There are other allegations that some of their accounts are also used to launder funds as well as financing terrorism. The country’s anti-graft watchdog is currently investigating these.
The Economic and Financial Crimes Commission (EFCC) had obtained a court order for it to freeze over a thousand accounts belonging to individuals and companies for a period of 90 days to enable it carry out its investigations.
Reports say the CBN’s move is connected to an ongoing audit of the Know-Your-Customer (KYC) process of the fintechs. The apex bank had introduced new KYC rules for all financial institutions in November 2023, which appeared to target the fintechs after a few deposit money banks declined to consummate interbank transactions with them.
However, the President of the Bank Customers Association of Nigeria, Uju Ogubunka, supported the CBN’s move to halt new account opening on the affected platforms.
He said, “Anything that can disrupt the system should not be permitted. If the platforms are being used for things that are against the regulations, I think the CBN decision is okay. I don’t see anything wrong with that. It behoves on the companies now to get their KYC right.
“Let them do what they are supposed to do. KYC applies to banks and other financial institutions that deposit money. It should also apply to them so that the regulators can understand what is going on and hold them accountable.”
Fintech financial institutions have undoubtedly aided in deepening financial inclusion in Africa’s biggest economy, facilitating billions of dollars in monthly transactions.
