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The Central Bank of Nigeria (CBN) has directed OPay, Palmpay, Kuda Bank, and Moniepoint to stop onboarding new customers until further notice over alleged illegal forex dealings.
Recall that a Federal High Court in Abuja had earlier approved an interim order requested by the Economic and Financial Crimes Commission (EFCC) to freeze at least 1,146 bank accounts owned by various individuals and companies allegedly involved in illegal foreign exchange transactions.
“We’ve temporarily paused new signups on our platform. This means that you’ll be unable to open a new account at the moment. We apologise for any inconvenience this may cause,” read a notice on the website one of the affected fintech startup.
In the past year, fintechs have faced increased scrutiny over their account opening processes.
In October 2023, Fidelity Bank blocked transfers to OPay, Palmpay, Kuda, and Moniepoint over concerns that lax KYC processes led to an increase in fraud incidents.
One month after that incident, the Central Bank shared new KYC rules for all financial institutions that appeared targeted at fintech startups.
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Meanwhile, last week’s directive to halt account opening is linked to an ongoing audit of the KYC process of these fintechs, one executive at an affected fintech claimed.
Though, the same person described the pause as “temporary.”
The CBN’s proactive stance aims to align the operational standards of fintechs with those of traditional deposit money banks and microfinance banks, ensuring the integrity and stability of Nigeria’s financial system.
The President of the Bank Customers Association of Nigeria, has expressed support for the CBN’s decision, emphasizing the necessity of strict regulatory compliance by all financial institutions.
