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CBN Granted Order To Freeze Trove, Bamboo, Others Accounts For 180 days

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A federal high court in Abuja has granted the request of the Central Bank of Nigeria (CBN) to freeze accounts of six fintech companies.

The companies include that Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Bamboo Systems Technology Limited OPNS, Chaka Technologies Limited, CTL/Business Expenses, and Trove Technologies Limited.

In a court paper accessed by the News agency TheCable on Tuesday, the apex bank said it is investigating “illegal foreign exchange trading” by the fintech companies.

It sought the court injunction to freeze their account details for 180 days pending the completion of investigations.

In April, the Securities and Exchange Commission (SEC) warned the investing public on the proliferation of unregistered online investment and trading platforms, facilitating access to trading in securities listed in foreign markets according to a report by The whistler.

The regulator had advised capital market operators who work in concert with the referenced online platforms to desi

The Federal High Court sitting in Abuja has granted an exparte motion which sought temporary freezing of bank accounts belonging to certain online investment and trading platforms where Nigerians are transacting business online.

The motion was filed by Chief Micheal Kaase Aondoakaa, SAN, on behalf of the Central Bank Of Nigeria Governor for the purpose of probing the defendants’ financial activities in Nigeria.

Defendants are Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Bamboo Systems Tech. Ltd OPNS, Chaka Technologies Limited, CTL/Business Expenses and Trove Technologies Limited.

The CBN alleged that Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Chaka Technologies Limited, and Trove Technologies Limited were complicit in operating without a license as asset management companies “and utilizing FX sourced from the Nigerian FX market for purchasing foreign bonds/shares in contravention of the CBN circular referenced TED/FEM/FPC/GEN/01/012, dated July 01, 2015.”

Aondoakaa told Justice Ahmed Mohammed that the foreign exchange deals done with the defendants were part of what was making the Naira weaker to the United States dollars, hence, the need to block 15 of their accounts for about 180 days.

Part of the motion reads: “An Interim Order of this Honorable Court empowering the Plaintiff/ Applicant to direct the Head Offices of ZENITH BANK PLC (Churchgate Street, Victoria Island, Lagos), GUARANTY TRUST BANK PLC (Plot 635, Akin Adesola, Victoria Island, STANDARD CHARTERED BANK (142, Ahmadu Bello Way, Victoria Island, Lagos.), ACCESS BANK OF NIGERIA (999c, Danmole Street, Off ldejo Street, Off Adetola Odeku Street, Victoria Island, Lagos), VFD MICROFINANCE BANK (Elephant House. 5, Floor, 214 Broad Street, Marina Island, Lagos), to freeze forthwith all the bank accounts of the Defendants/ Respondents for a period of 180 days pending the outcome of investigation and inquiry conducted by the CBN.”

According to an affidavit filed by a Senior Supervisor of the CBN, Christiana Gyang, the apex bank had reviewed the activities of the defendants to determine their alleged involvement in illegal foreign exchange (FX) dealings.

She stated that the investigation showed that the platforms were violating Nigeria’s trading laws.

It says, “Rise Vest Technologies Limited was Incorporated In October 2018 with objects of technological and business consultancy. The shareholders of the company at incorporation were Eke Eleanya Urum and Rise Vast Technologies Limited (USA). The company partners with companies involved in payments and settlements as well as internal and international remittances.

“However, information on the company’s website indicated that it is an asset management company, which provides a platform for customers to invest in foreign instruments using an app called “Risevest”.

“Our review revealed that the company consummated its asset management activities through its account 1017556580 with Zenith Bank Plc, which recorded a turnover of 1.97 billion between January 1, 2019, and April 27, 2021.

” Inflows to the account were mainly from retail investors through two Payment Service Solution Providers (PSSPe): Flutterwave (588.61 million) and Monnify (N967.58 million).

“Outflows from the account were to a PSSP – Paystack (500 00 million) and cryptocurrency traders Ike BuyCoins (N110.00 million) and Beltlum Venture (N350.00 million). Inquiries on the transactions confirmed that the transfers to Buy coins were for the purchase of cryptocurrency.

“The above is indicative that Rise Vest Technologies Limited traded in cryptocurrencies in contravention of the CBN circular referenced BSD/DIR/PUB/LAB/014/001, dated February 5 2021.”

The motion added that “Bamboo Systems Technology Limited is owned by US-based Bamboo Global LLC (99.99%) and Oluwole Raiph Olugbenga (0.01%).

“The company was incorporated in December 2018 to carry on the business of software design, implementation, development, maintenance and consultancy amongst others. It is related to One Global Med. Technology, BSTL Lambeth and Grag Concepts Limited.

“Further reviews showed that Bamboo Systems Technology Limited operates an online App, “Bamboo”, that provides a medium for investors to buy and sell stocks, exchange-traded funds (ETFs), Index funds and derivatives listed in major exchanges in the U.S.”

Furthermore, Aondoakaa told the judge that the CBN was worried about how monies were going out of the country.

“We need to write the Embassy, we need to go to the Foreign Affairs….the Minister will serve the US to seek assistance so that we can block these linkages,” the lawyer added.

In his ruling, Justice Ahmed said “having listened to senior counsel to the applicant, on the motion Exparte filed in August, it is granted as prayed”

He said that any person who feels aggrieved about the freezing order is entitled to approach the court within the period so as to seek redress.

He then adjourned the matter to February 20, 2022, for hearing.

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Nigeria Sees 31% Increase in POS Fraud Amid Rising Terminal Adoption

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Moniepoint

The prevalence of fraud and forgery in Nigeria’s payment system has shown a significant shift in the first quarter of 2024, with Point-of-Sale (POS) transactions experiencing the highest increase in fraudulent activities.

According to the “Fraud and Forgeries Report in Nigerian Banks” for Q1 2024 by the Financial Institutions Training Centre (FITC), POS fraud cases surged by 31.12%.

In Q4 2023, there were 2,683 reported cases of fraud associated with POS terminals. However, this number escalated to 3,518 cases by Q1 2024.

POS fraud cases made up 30.67% of the total fraud cases (11,472) recorded in the quarter under review.

Financial Impact of POS Fraud

While there was a rise in fraud cases, the amount of money involved in POS fraud declined. In Q4 2023, the total amount involved in POS fraud was NGN604.91 million.

This amount decreased by 37.74% to NGN376.59 million by Q1 2024.

Also, the amount of money lost to POS fraud saw a significant decline, falling from NGN14.62 million by 68.34% to NGN4.63 million on a quarterly basis.

The decrease in financial losses may indicate improved detection and prevention measures, but the overall rise in fraud cases highlights the need for continued vigilance.

Adoption of POS Terminals

The rise in POS fraud cases is attributed to the widespread adoption of these terminals by merchants and consumers alike.

As a cash-driven Nigerian economy, the convenience and efficiency of POS transactions have made them a popular choice.

However, this widespread adoption has also made them a target for fraudsters seeking to exploit vulnerabilities in the system.

In Q1 2023, the number of registered POS terminals increased by 218,475, from 2,318,947 in January 2023 to 2,537,422 by March 2023.

By the same quarter in 2024, the number of registered POS terminals had increased by 289,154, from 3,441,287 in January 2024 to 3,730,441 by March 2024.

Overall, between the end of Q1 2023 and Q1 2024, Nigeria witnessed an additional 1,193,019 POS terminals, marking a 47.02% increase.

Despite this increase in the number of registered POS terminals, the first quarter of 2024 saw POS transaction volumes reach 314 million, which is a significant drop of 73.81 million, or 19.03%, from the 387.81 million transactions recorded in the first quarter of 2023.

Regulatory Measures and Industry Response

The Corporate Affairs Commission (CAC) recently stated that POS agents of major fintechs in Nigeria, including OPay, Palmpay, and Moniepoint, among others, must have registered their businesses by July 7, 2024.

However, it extended the deadline by 60 days, giving operators until September 5, 2024. The CAC said the registration is aimed at safeguarding the businesses of fintechs and customers, as well as strengthening the economy.

Meanwhile, the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) condemned the mandated registration, describing it as an attempt to tax more Nigerians to generate revenue for the government.

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PalmPay Issues July 7 Deadline for POS Operators to Submit CAC Certificates

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PalmPay

PalmPay has announced a firm deadline of July 7, 2024, for all Point of Sale (POS) operators using its platform to register with the Corporate Affairs Commission (CAC) or submit their CAC certificates.

This mandate aims to ensure compliance with Section 863 (1) of the Companies and Allied Matters Act 2020 and the 2013 Central Bank of Nigeria (CBN) guidelines on Agent Banking.

In a statement released on Thursday, PalmPay emphasized the importance of adhering to these legal requirements.

“Following CAC’s directive for POS operators to register and submit their CAC details on or before July 7, 2024, PalmPay is encouraging its business users who have not yet complied with the directive to do so promptly,” the statement read.

This initiative comes in the wake of a two-month registration deadline issued by the Federal Government through the CAC, mandating POS companies to register their agents, merchants, and individuals.

The directive is part of broader efforts to bring regulatory compliance and transparency to Nigeria’s burgeoning fintech sector.

To facilitate the registration process, PalmPay has integrated the CAC registration portal into its Business App.

This integration allows operators to seamlessly register their businesses and submit the required documents, ensuring a smoother compliance process.

Umuteme Enakeno, Head of Marketing and Communication at PalmPay, reiterated the company’s support for the CAC directive.

“PalmPay fully supports the CAC’s directive. We provide 24/7 customer support and conduct weekly meetings to guide operators through the process,” Enakeno stated.

He also highlighted that operators can seek assistance through PalmPay’s customer support channels, including phone, email, or in-person visits to any of the 36 state offices across Nigeria.

PalmPay has urged all its business customers to submit or register their CAC details before the deadline.

“Register your business via the PalmPay Business App: Ensure that all necessary documents and information are provided accurately before submitting your application. Update your PalmPay account once you get the certificate to reflect your new corporate status,” Enakeno advised.

Failure to comply with the CAC registration requirement will result in the freezing of PalmPay accounts, the company warned.

This stringent measure underscores PalmPay’s commitment to aligning with national regulatory standards and fostering a compliant fintech ecosystem.

Meanwhile, the Association of Mobile Money and Bank Agents in Nigeria, representing POS operators, has indicated plans to challenge the mandatory CAC registration in court, questioning its legality and potential impact on their operations.

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Digital Payment Boom in Nigeria Driven by Sub-N10,000 Transactions

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Money Transfer - Investors King

Nigeria’s electronic payment landscape is undergoing a significant transformation, fueled by a surge in micro transactions, defined as transfers below N10,000.

This boom underscores the increasing adoption of digital channels in everyday life, according to a recent analysis by BusinessDay.

The prominence of these micro transactions gained momentum following the Central Bank of Nigeria (CBN)’s cashless policy initiative.

The policy, announced in October 2022 by then CBN Governor Godwin Emefiele, included a naira redesign to bolster monetary policy, promote digital alternatives like the eNaira, and enhance the currency’s integrity.

By January 2023, the scarcity of physical naira notes prompted many Nigerians to embrace digital payment channels.

Data from the Nigeria Inter-Bank Settlement System (NIBSS) revealed that cashless transactions rose by 45.41% year-on-year to N39.58 trillion in January 2023.

This upward trend continued throughout the first quarter of 2023, with cashless transactions increasing by 44.84% to N126.73 trillion compared to the same period in 2022.

By the end of 2023, total cashless transactions had surged to over N600 trillion from N395.38 trillion in 2022, as more Nigerians adopted digital payment methods.

The trend persisted into 2024, with transactions growing by 88.09% to N237 trillion in the first quarter.

However, this substantial increase in e-payment transactions has not translated into higher government revenue through the Electronic Money Transfer Levy (EMTL).

In the first quarter of 2024, the government collected N66.35 billion from EMTL, the same amount as in the corresponding period of 2023.

This stagnation is primarily because most transactions were less than N10,000 and thus not subject to the tax.

The EMTL, introduced in the Finance Act 2020 as an amendment to the Stamp Duty Act, is a single, one-off charge on electronic receipts or transfers of money deposited in any bank or financial institution on any account for sums of N10,000 and above.

Despite higher e-payment volumes, the government’s expected increase in revenue has not materialized due to the prevalence of micro transactions.

“Payment methods have become easier, faster, and better, and people are using them for everyday things,” said Adedeji Olowe, founder of Lendsqr. “Everyone from small kiosks to supermarkets now accepts transfers. If I go downstairs where I live, I can buy something worth N1,000 and pay with transfers.”

This shift signifies a maturing payment space where real-time transfers are becoming more acceptable in an economy striving to reduce reliance on physical cash.

Africa had the highest real-time share of electronic payments in 2023 at 40%, with Nigeria leading the region, according to ACI Worldwide.

Experts in the payment space note that most transactions in the country are below N10,000.

“The range below N6,000 makes up about 45% of transfer transactions. Some in the range of N10,000 is around 25%,” an industry source commented.

“The boom in micro transactions began when the cashless policy was implemented. People started moving away from cards and focusing more on transfers as a means of payment,” said Nosa Oyegun, VP of product and innovation at Kuda.

This shift has led to the rise of new fintech companies like PalmPay, Opay, and Moniepoint, with point-of-sale withdrawals increasingly conducted via transfers rather than cards.

The micro transaction growth is also enhancing financial inclusion by drawing more individuals into the digital financial system.

“It is good for them because there is now more access to financial services,” an industry source noted.

While it may not result in higher tax revenue for the government, experts argue that the boom in micro transactions supports the government’s digital inclusion and economic growth plans.

“It is fostering a national policy… I don’t think it is lost revenue for the government because it is like the gold. I don’t think you can tax it,” an industry expert said.

The growth of micro transactions also reflects the general economic downturn, with Nigerians grappling with double-digit inflation.

“People are struggling today due to economic downturn. Incomes have been strained and most people go for things that are affordable, which are usually cheaper than N10,000,” said Ike Ibeabuchi, a macro economy analyst.

The Federal Government has outlined plans to generate N483.73 billion from EMTL over three years in the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper.

However, the significant increase in micro transactions suggests a shift in Nigeria’s digital payment landscape, highlighting the role of small-scale transfers in driving the e-payment boom.

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