Nigerian authorities are intensifying oversight of cryptocurrency transactions, instructing fintech companies to report all crypto-related trades to relevant regulatory bodies. This move is part of heightened efforts to curb illicit financial activities and maintain market integrity.
Multiple fintech firms have already notified their customers about this new directive, citing its connection to the recent freezing of 105 accounts across nine fintechs suspected of unauthorised foreign exchange dealings, money laundering, and terrorism financing. The Economic and Financial Crimes Commission (EFCC) secured an interim court order on April 24, 2024, to freeze these accounts for 90 days while investigations continue.
In the aftermath of the account freezes, several fintechs, including OPay, Moniepoint, PalmPay, and Kuda Bank, were instructed to temporarily suspend the opening of new accounts pending the Central Bank of Nigeria’s evaluation of their Know Your Customer (KYC) processes.
The frozen accounts are part of a broader EFCC probe into 1,146 bank accounts suspected of manipulating the foreign exchange market through cryptocurrency platforms. Authorities believe that the owners of some of these accounts exploited cryptocurrency platforms to manipulate the foreign exchange market.
Regulators are adopting a stringent stance on cryptocurrency transactions. In a recent notification, Moniepoint informed customers that it would close accounts engaged in crypto or other virtual asset transactions and share the details with relevant authorities. Paga echoed this stance, warning its customers that accounts found to be in violation of this regulation would be blocked.
During the Duale, Ovia, and Alex-Adedipe, TMT Business Law breakfast series 2024, on Thursday, May 2, 2024, Tosin Eniolorunda, founder and CEO of Moniepoint, urged crypto peer-to-peer (P2P) participants to cease their activities due to its prohibition in the financial sector.
“If you are a peer-to-peer market player, you better stop it because it is prohibited in the financial sector, and you can get into trouble,” he cautioned.
Eniolorunda’s comments come amid recent regulatory actions in the fintech space. He linked these actions to the prevalence of fraud in fintech apps and the renewed focus on KYC and anti-money laundering (AML) compliance for fintechs. He alleged that some P2P crypto activities were a potential factor in the naira’s manipulation.
Sources familiar with the situation informed me that these directives are industry-wide and concern national security. Some fintech operators recently met with the Office of the National Security Adviser, who emphasised the national interest behind these actions.
This new directive is part of a broader government crackdown on crypto platforms, particularly Binance, which began in February 2024. The crackdown forced Binance to halt naira operations and led to the arrest of two executives who visited Nigeria for discussions with authorities.
Authorities blame crypto platforms for aiding currency speculation and fueling the rapid devaluation of the naira. Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), recently stated that $26 billion flowed through Binance Nigeria in a year from unidentified sources.