The Central Bank of Nigeria (CBN) has announced that the ban on new account openings for leading fintechs, including OPay, Moniepoint, Kuda, PalmPay, and Paga, has been lifted.
This decision comes after a period of suspension in April 2024, where the CBN directed these digital banks to halt onboarding new customers to tackle fraudulent activities within the industry.
The CBN’s decision has influenced efforts to comply with Know Your Customer (KYC) standards.
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CBN’s freezing of forex trading accounts
The Central Bank and the National Security Agency (NSA) engaged in discussions with representatives of the affected fintechs on April 26, centred on concerns related to crypto traders using fintech platforms to disrupt the FX market.
The CBN froze over a thousand bank accounts associated with unauthorised forex transactions in the same month. Subsequently, in May, representatives from the neobanks, alongside officials from the National Security Adviser (NSA), the Economic and Financial Crimes Commission (EFCC), and the CBN, convened to discuss the possibility of lifting the ban on new customer onboarding.
To align with regulatory directives, authorities mandated neobanks to impose restrictions on peer-to-peer crypto transactions and to update customer details, including requiring bank verification or national identity numbers for all tiered accounts. These measures stem from a December 2023 directive aimed at bolstering KYC processes, initially relaxed to promote financial inclusion.
Read also: Moniepoint, Paga threaten account blockage over Crypto transactions
Opay, PalmPay, and Kuda introduce strict measures
In response, neobanks like PalmPay and Kuda have introduced stringent verification methods, including facial recognition and physical visits to verify merchant addresses. OPay has similarly implemented physical address verification for merchants, emphasising the importance of security consciousness in preventing fraud.
Meanwhile, affected banks have begun announcements on their platforms indicating the CBN’s removal of the ban.
While lifting the ban provides respite for digital banks, operational disruptions during the suspension period underscore ongoing concerns within Nigeria’s regulatory landscape.