Forex Deals: CBN prevents 4 fintechs from onboarding new clients

The Central Bank of Nigeria (CBN) has issued a directive to four fintech companies, instructing them to stop onboarding new customers pending further notice.

The affected fintechs (OPay, Palmpay, Kuda Bank and Moniepoint) have been linked to accusations of using accounts for illicit foreign exchange transactions. Representatives of two of the companies confirmed to Nairametrics that the CBN order is related to these allegations.

However, they noted that the directive could be misdirected, as most of the accounts involved belong to commercial banks, not fintech platforms. This development was initially reported by TechCabal and can be corroborated by Nairametrics.

• “I can confirm that 90% of the accounts involved in illicit forex transactions are in commercial banks, and only 10% in fintechs. Why then has the CBN not extended this directive to commercial banks? “We are facing a widespread problem and targeting fintech seems like an unfair focus on the most vulnerable targets,” one of the sources explained.

1,146 accounts blocked

Nairametrics previously reported that the Economic and Financial Crimes Commission (EFCC) recently obtained 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 ruling on the ex parte motion filed by the anti-graft agency’s lawyer, Ekele Iheanacho, also approved the commission’s request to complete the investigation within 90 days.
• Although the verdict was issued on April 24, its certified true copy was delivered on Monday. The other crimes investigated by the EFCC involve money laundering and terrorist financing.
• A look at the list of affected accounts shows that, in fact, most of the bank accounts involved are mostly money deposit bank accounts.
• In its application for order to block the accounts, the EFCC revealed that its preliminary investigation revealed that the bank accounts are linked to persons who leverage virtual cryptocurrency exchange platforms to illegally manipulate the value of Naira and launder the proceeds of illegal activities. .

He also cited the need to preserve funds in the identified bank accounts pending the conclusion of the investigation and possible prosecution.

Fintechs on target

Although a copy of the court order blocking the accounts seen by Nairametrics shows that most of the accounts involved in the alleged illegal forex trading were commercial bank accounts, the banks have not been ordered to stop onboarding new clients. .

According to a fintech industry source who did not want to be identified, this shows that there is a better and stronger relationship between banks and the CBN compared to fintechs.

• “In terms of KYC, fintechs are doing better than banks, but all eyes seem to be on fintechs whenever the KYC issue arises.
• “On the issue of payment fraud, fintech is also often seen as the platforms where fraud occurs, but it is an industry-wide issue. In fact, if you see the amount of money banks are losing to fraud, you might be surprised. “No fintech can lose that amount of money and stay in business.” the source said.