Customers panic as CBN bans Opay, Palmpay, others’ new accounts

The Central Bank of Nigeria has prohibited mobile money providers, including fintech companies, from onboarding new clients, which has caused some bank customers to become alarmed.

The Bank Customers Association of Nigeria, however, supported the CBN order.

Fintech businesses including OPay, Palmpay, Kuda Bank, and Moniepoint will be impacted by the new directive and will not be able to open new accounts until further notice.On Monday, it was informed of the development by credible sources from three prominent fintech companies, who asked not to be named because they were not allowed to speak publicly.

The CBN’s action was related to a continuous audit of the fintech companies’ Know-Your-Customer procedures. These companies have been under investigation in recent months due to worries about money laundering and financing of terrorism.

It was reported that last week, the CBN called a few of the leaders of fintech companies to Abuja to talk about KYC-related concerns.Concerning the directive to the fintech companies, the CBN has not yet made any public remarks. Several calls made to the telephone line of the CBN spokesperson, Hakama Ali Sidi, were not responded to as of the time of filing this report.

The directive also came at the same time as the court order that the Economic and Financial Crimes Commission (EFCC) was able to secure, freezing at least 1,146 bank accounts belonging to different people and businesses that were allegedly engaged in unlawful foreign exchange transactions.

The 85-page court order (document), which listed the bank account details suspected to be involved in illicit activities, was obtained on Monday.In granting the ex-parte motion filed by Ekele Iheanacho, the anti-graft agency’s attorney, Justice Emeka Nwite also approved the commission’s request to wrap up the investigation in ninety days.”That the applicant’s (EFCC) application is hereby granted as prayed,” stated a portion of the court document.

“That an order of this honorable court is hereby made freezing the bank accounts stated in the schedule below, which accounts are owned by various individuals who are currently being investigated in a case involving the offenses of unauthorised dealing in foreign exchange, money laundering, and terrorism financing, to the extent that the investigation will be for a period of 90 (ninety) days.

”The EFCC, in the motion marked FHC/ABJ/CS/543/2024 dated and filed April 24 by Iheanacho, was heard by the judge the same day in the interest of national interest.

“The motion was brought pursuant to Section 44(2) and (K) of the 1999 Constitution; Section 34 of the EFCC Establishment Act 2004; Section 7(8) of the Money Laundering Prevention and Prohibition Act, 2022; and under the inherent jurisdiction of the court.”Uju Ogubunka, President of the Bank Customers Association of Nigeria, supported the Central Bank of Nigeria’s decision to halt the opening of new accounts on the impacted platforms.

He reported that in order to protect the integrity of financial institutions, fintechs and microfinance banks must adhere to the same stringent rules that govern deposit money banks.He said, “Anything that can disrupt the system should not be permitted. If the platforms are being used for things that are against the regulations, I think the CBN decision is OK.

I don’t see anything wrong with that. Now, businesses must ensure that their KYC is correct.”Let them carry out their assigned tasks. Banks and other financial institutions that accept deposits are subject to KYC. In order for the regulators to comprehend what is happening and hold them responsible, it should also apply to them.

However, Emmanuel Odunsi on X (formerly Twitter) applauded the decision, pointing out that improved KYC procedures are necessary to stop fraud and scams.Their KYC is not very good.

Their apps are being used by a lot of con artists to trick people.With the consent of the subscribers, the majority of the accounts were generated through phone number mining. Nearly all phone numbers are associated with an account, according to Odunsi.

In November 2023, the CBN responded by introducing new KYC regulations that seemed to specifically target fintech startups and apply to all financial institutions.According to a Moniepoint source, the business complied with the directive, thereby stopping the creation of new accounts on their platform. The source disclaimed any involvement with KYC, though.It is merely a CBN regulation, and we have followed it.

The true inquiry, according to the source, is why fintech companies are constantly attacked.“It has nothing to do with KYC; I am aware that the CBN communicated, but this particular issue dwells on accounts related to cryptocurrency transactions,” the source revealed.

By 2024, the CBN hopes to reach a lofty goal of 95% of adults being financially included overall.Given that the business opens roughly 100 new accounts every day, the new order might have an impact on the goal.According to the source, fintechs have contributed significantly to the nation’s increased financial inclusion.

According to what the company stated last year, it had implemented a strong and dependable digital payment infrastructure that has enabled an average monthly transaction value of $12 billion for roughly 1.6 million businesses.It was informed by a senior PalmPay employee that fintech companies were required by CBN to review their KYC procedures.

This is causing a temporary pause in onboarding new customers, the source stated.She made it clear that the CBN and fintechs were working together on the KYC review, and that the companies were waiting for more instructions without a deadline for completion.

Another unnamed OPay source said they were carrying out the CBN’s instructions and were unable to provide any additional comments.

Really, we have nothing to say. We are just adhering to a directive. The directive has been released by the CBN.Regulators are paying more attention to fintech companies’ account opening procedures.