Nigeria's financial regulator is halting new account openings for fintech startups
Fintech customers in Nigeria have gone into panic and are currently reconsidering their banking options as the country's central bank has issued a directive to ban mobile money operators, including fintech firms, from registering new customers.
This new development would affect many top fintech companies in the country, such as Kuda Bank, Moniepoint, Opay, and Palmpay, as they would not be able to onboard new customers until further notice.
According to Nigeria's central bank, this directive was set into motion because it was discovered that many of these companies did not have a standard Know Your Customer (KYC) process, increasing their chances of being linked to laundering and terrorism financing.
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It also coincides with the court order that the Economic and Financial Crimes Commission (EFCC) obtained to freeze at least 1,146 bank accounts owned by various individuals and companies allegedly involved in illegal foreign exchange transactions.
The Central Bank of Nigeria (CBN) has always been known to enforce constant regulations on fintech companies in Nigeria, going back in history. Before this, it banned fintech companies at the start of the year from engaging in money transfer services internationally, citing that it wanted to liberalize the Nigerian foreign exchange market.
From all indications, the CBN may be trying to trace fraudulent transactions through these means, especially as fintech companies are usually the go-to banks for perpetrators of these acts.