Jitters were apparent recently as Kuda Bank, Moniepoint, OPay, and Palmpay temporarily halted new account openings for customers. According to a source within one of the affected banks, the decision came in response to a directive from the Central Bank of Nigeria (CBN).
The CBN’s move was linked to an ongoing audit of the Know-Your-Customer process of the Fintechs, which have been under scrutiny in recent months over concerns about money laundering and terrorism financing.
It was gathered that the CBN had summoned some of the heads of Fintechs to Abuja to discuss issues around KYC last week. The Explainer learnt that the suspension of new accounts opening for the identified Fintechs follows closely on the heels of the Economic and Financial Crimes Commission (EFCC) taking action against 1,146 bank accounts involved in unauthorized forex trading.
The Explainer attempted to open new accounts on the affected fintech apps but encountered difficulties. However, there have been no disruptions reported in other banking services provided by these platforms.
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On its part, Moniepoint has officially announced a temporary suspension of new sign-ups through a message posted on their platform. The message reads: “Hello! We’ve temporarily paused new sign-ups on our platform.”
Additionally, upon attempting to sign up, users encountered a notification stating: “Thank you for downloading Moniepoint. Signup is currently unavailable. Please check back later.” Similarly, Palmpay users were met with a similar message on the app, which reads: “Thank you for downloading Palmpay. Sign-up is currently unavailable. Please check back later.”
Also, OPay users were met with a similar message on the app, which reads: “Thank you for downloading OPay. Sign-up is currently unavailable. Please check back later.” Recent concerns have been raised regarding cryptocurrency traders leveraging fintech platforms to disrupt the foreign exchange market.
Additionally, there have been suggestions that commercial banks hold a stronger regulatory relationship compared to fintech companies, potentially influencing regulatory actions. However, official statements from regulatory authorities regarding the directive have not yet been released.
This medium earlier reported that OPay clarified the new CBN directive and reassured customers, saying that OPay remains committed to working closely with the Central Bank of Nigeria (CBN) and other regulatory bodies to fight money laundering, fraud, terrorism financing, and other illegal financial activities.
The Fintech said, “As a regulatory-compliant institution, OPay follows the rules set by the CBN and other regulators to ensure the financial system’s integrity. To achieve this, we have closed non-compliant accounts, implemented strict security measures, and educated customers to help combat fraud.
“Customer satisfaction is our top priority, and we are committed to promoting financial inclusion and economic growth as key players in Nigeria’s financial ecosystem.”
In an interview with The Explainer, a public affairs analyst and economist, Hussein Suleiman, canvassed the view that banning fintech companies from onboarding new customers is not really what Nigeria needs now. He said some of that energy can be channelled towards taming the inflationary pressures affecting the economy.
“I think that’s not really what Nigeria needs now.
“We still have people on a large scale excluded from accessing financial services; the CBN ought to be encouraging financial inclusion and not the other way around.
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“But I suspect it could be the traditional banks indirectly fighting the Fintech.
“I think the CBN, as a regulatory body, should look critically at the operations of these Fintechs and examine their impacts. Those violating their regulatory provisions should be sanctioned while those operating accordingly should be encouraged.
Speaking further, he said: “As a beneficiary of these Fintechs, I like them a lot. Moniepoint helped me raise capital for my business.
“I started hustling as an ordinary POS operator to a provision store owner; I think the Fintechs are providing the opportunities the banks have failed to do.
“As a POS operator, I was saving 50 naira per transaction on my terminal; you can’t believe it, but I raised over 2m last year from that. I was able to pay my rent, fix my shop, and also buy goods and other expenses.”