Nigeria’s Central Bank Directs Fintech Firms to Halt New Account Openings Amid Crypto Compliance Audit

The Central Bank of Nigeria (CBN) has issued directives to four prominent fintech companies — OPay, Kuda Bank, Moniepoint, and PalmPay — to suspend the creation of new accounts. This move comes in the midst of an ongoing audit of their Know Your Customer (KYC) processes, reflecting Nigeria’s efforts to reinforce KYC compliance within both traditional and crypto investing realms.

According to reports from TechCabal, the CBN’s decision aims to curb the alleged use of fintech platforms by cryptocurrency traders to disrupt the forex market. This directive closely follows the Economic and Financial Crimes Commission’s (EFCC) action to block over 1,100 bank accounts involved in unauthorized forex dealings.

While the onboarding of new customers is temporarily halted, existing customers can continue to deposit and transfer funds as usual. However, this pause reflects concerns over lax KYC requirements within these fintech platforms, which have been associated with incidents of fraud, tax evasion, and money laundering.

A closer look at the blocked bank accounts reveals that only a small fraction — about 10% — are linked to fintechs, with the majority belonging to commercial banks. Despite this, the CBN’s scrutiny extends to fintech firms, underscoring the regulatory pressure within Nigeria’s financial landscape.

The relationship between fintech firms and regulators like the CBN appears strained, with the latter favoring traditional banks due to their established rapport. This dynamic is further exacerbated by the CBN’s attribution of the naira’s decline to cryptocurrency traders, particularly implicating platforms like Binance.

In response to these regulatory measures, the affected fintech companies have assured that the freeze on new account openings is temporary, pending the conclusion of the ongoing KYC audit. However, the exact duration of this pause remains uncertain, contingent upon regulatory feedback and compliance requirements.