The Central Bank of Nigeria’s (CBN) has directed four leading fintech companies, OPay, Palmpay, Kuda Bank, and Moniepoint to halt the onboarding of new customers pending further investigation.
This directive, issued by the apex bank, comes in the wake of allegations linking these fintech giants to illicit foreign exchange transactions.
The move has sent ripples across Nigeria’s burgeoning fintech landscape, raising questions about regulatory oversight and the evolving dynamics of financial technology in the country.
Representatives from two of the affected companies confirmed the CBN’s order, shedding light on the gravity of the situation.
While acknowledging the allegations, they highlighted potential misdirection, emphasizing that the majority of implicated accounts are affiliated with commercial banks rather than fintech platforms.
“I can confirm that 90% of the accounts implicated in the illicit forex transactions are with commercial banks, and only 10% are with fintechs. Why then has the CBN not extended this directive to the commercial banks? We face a widespread issue here, and targeting fintechs seems like an unfair focus on the more vulnerable targets,” one source explained.
This revelation underscores a broader concern regarding regulatory asymmetry within Nigeria’s financial ecosystem.
Despite fintechs demonstrating robust Know Your Customer (KYC) practices, they find themselves under intense scrutiny while traditional banks seemingly evade similar directives.
The controversy deepened with recent revelations from the Economic and Financial Crimes Commission (EFCC), which secured a court order to freeze over 1,100 bank accounts allegedly involved in illegal foreign exchange transactions.
Justice Emeka Nwite’s decision, issued on an ex-parte motion, underscores the urgency to address financial malfeasance within the country.
However, scrutiny seems disproportionately directed towards fintechs, leaving industry insiders perplexed.
“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,” a source revealed.
This regulatory imbalance raises critical questions about the evolving role of fintech in Nigeria’s financial landscape.
Despite their innovative solutions and customer-centric approach, fintechs face a regulatory framework that appears skewed against them, favoring traditional institutions.
As Nigeria strives to maintain financial integrity and stability, stakeholders must address these regulatory discrepancies to ensure a level playing field for all participants.
The outcome of this saga will not only shape the future of fintech regulation but also define Nigeria’s approach to combating financial crime in an increasingly digitized economy.
