The Central Bank of Nigeria (CBN) has directed four fintech companies—OPay, Palmpay, Kuda Bank, and Moniepoint—to stop onboarding new customers until further notice. This directive comes in the wake of allegations linking these fintechs to accounts involved in illicit foreign exchange transactions.
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The order follows the Economic and Financial Crimes Commission’s (EFCC) recent blocking of 1,146 bank accounts connected to unauthorised forex dealings. While the affected fintechs have complied with the CBN’s directive, representatives from two of the companies have pointed out that the majority of the implicated accounts belong to commercial banks, not 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 of the sources explained.
This latest development is part of an ongoing scrutiny of fintechs’ account opening processes. In October 2023, Fidelity Bank blocked transfers to the same four fintechs over concerns about lax KYC processes leading to increased fraud incidents. A month later, the CBN introduced new KYC rules for all financial institutions, which appeared to target fintech startups specifically.
According to an executive at one of the affected fintechs, the current directive to pause account opening is linked to an ongoing audit of their KYC processes and is considered “temporary.” On April 26, the CBN and the National Security Agency (NSA) held discussions with representatives of the affected fintechs regarding the matter.
“The CBN feels like a lot of crypto traders were leveraging the fintech platforms to disrupt the FX market,” another person with knowledge of the conversations said. “The banks also have a better relationship with the regulator while fintechs are yet to build that type of relationship and help their perception with the CBN.”
The Economic and Financial Crimes Commission (EFCC) recently secured a court order to freeze at least 1,146 bank accounts owned by various individuals and companies allegedly involved in illegal foreign exchange transactions.
Justice Emeka Nwite, in a decision on the ex-parte motion presented by the anti-graft agency’s lawyer, Ekele Iheanacho, also approved the commission’s request to complete the investigation within 90 days.
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