The Central Bank of Nigeria (CBN) has issued a temporary ban on several mobile money operators, including prominent fintech firms such as OPay, Palmpay, Kuda Bank, and Moniepoint, from onboarding new customers.
This move comes amidst growing concerns over potential vulnerabilities in Know-Your-Customer (KYC) processes, which could potentially be exploited for money laundering and terrorism financing purposes.
The decision was made following discussions held in Abuja, where heads of fintech firms were summoned to address KYC-related issues.
This development signals an increase in regulatory oversight within Nigeria’s fintech sector.
The Bank Customers Association of Nigeria has voiced its support for the CBN’s decision, emphasizing the importance of strict regulatory compliance in safeguarding the integrity of the financial system.
Additionally, some individuals have welcomed the move, highlighting the need for enhanced KYC processes to combat scams and fraudulent activities effectively.
The ban comes on the heels of Fidelity Bank’s decision to block transfers to these fintech firms due to similar KYC concerns, prompting the introduction of new KYC rules by the CBN.
Consequently, the directive has resulted in a pause in onboarding new customers, impacting the ability of these companies to achieve their financial inclusion targets.
Despite facing regulatory challenges, fintech firms argued that they have played a crucial role in expanding financial inclusion in Nigeria, particularly through their contributions to digital payment infrastructure. In response to the CBN directive, fintechs are reassessing their KYC processes in collaboration with the regulatory authority, awaiting further instructions.
Meanwhile, customers have expressed apprehension regarding the safety of their funds on these platforms, with some contemplating transferring their money elsewhere or questioning the rationale for keeping their funds within these fintech platforms.
