The Central Bank of Nigeria (CBN) has instructed four fintech companies, including OPay, Palmpay, Kuda Bank, and Moniepoint, to suspend onboarding new customers until further notice. The directive comes amid concerns over alleged illegal forex dealings.
Sources from two of the fintech companies confirmed that the directive may have been misdirected, as the majority of accounts involved in the illegal forex trading were from commercial banks rather than fintech accounts.
NATIONAL ECONOMY previously reported that the Economic and Financial Crimes Commission (EFCC) secured a court order to freeze 1,146 bank accounts allegedly involved in illegal foreign exchange transactions. Most of these accounts belonged to individuals and companies and were primarily deposit money bank accounts.
The EFCC disclosed that preliminary investigations revealed links between these bank accounts and individuals who exploit virtual cryptocurrency exchange platforms to manipulate the value of the Naira and launder proceeds from unlawful activities.
While the court order primarily targeted bank accounts, fintechs have faced scrutiny in the past over Know Your Customer (KYC) compliance and payment fraud. Despite this, some industry insiders suggest that fintechs maintain stricter KYC measures compared to traditional banks.
However, there remains a perception that fintechs are more vulnerable to fraud, while banks enjoy a stronger relationship with regulatory bodies like the CBN.
“In terms of KYC, the fintechs are doing better than the banks, but all eyes seem to be on the fintechs whenever the issue of KYC occurs. On the issue of payment fraud, fintechs are also often seen as the platforms where frauds happen, but this is an industry-wide problem,” one industry source commented.
