CBN Sends Warning Message To OPay, Palmpay, Others Over Customers Accounts

Information reaching the OsunReporters News confirmed that the Central Bank of Nigeria (CBN) has issued a directive to four fintech companies, instructing them to halt the onboarding of new customers pending further notice.

,,,,””””””_____It should be recalled that the affected fintechs OPay, Palmpay, Kuda Bank, and Moniepoint have been linked to allegations of accounts being used for illicit foreign exchange transactions.

However, the directive came two days after the EFCC blocked 1,146 bank accounts involved in unauthorised forex dealings.

,,,,,,,“We’ve temporarily paused new signups on our platform. This means that you’ll be unable to open a new account at the moment. We apologise for any inconvenience this may cause,” read a notice on the website of a prominent fintech startup.

……..”””””””Representatives from two of the companies confirmed to Nairametrics that the CBN’s order is related to these allegations.

However, they noted that the directive might be misdirected, as the majority of the implicated accounts belong to commercial banks, not fintech platforms. This development was initially reported by TechCabal which Nairametrics can corroborate.

____””””””“I can confirm that 90% of the accounts implicated in the illicit forex transactions are with commercial banks, and only 10% are with fintechs. Why then has the CBN not extended this directive to the commercial banks? We face a widespread issue here, and targeting fintechs seems like an unfair focus on the more vulnerable targets,” one of the sources explained.

”'”””_____,In the past year, fintechs have faced increased scrutiny over their account opening processes. In October 2023, Fidelity Bank blocked transfers to OPay, Palmpay, Kuda, and Moniepoint over concerns that lax KYC processes led to an increase in fraud incidents. One month after that incident, the Central Bank shared new KYC rules for all financial institutions that appeared targeted at fintech startups

______::::::;;Last week’s directive to pause account opening is linked to an ongoing audit of the KYC process of these fintechs, one executive at an affected fintech claimed. The same person described the pause as “temporary.”

….!!!:::;On April 26, the Central Bank and the National Security Agency (NSA) held talks with representatives of the affected fintechs on Friday, a person with knowledge of the meeting told TechCabal.

“The CBN feels like a lot of crypto traders were leveraging the fintech platforms to disrupt the FX market,” another person with knowledge of the conversations said. The banks also have a better relationship with the regulator while fintechs are yet to build that type of relationship and help their perception with the CBN.”

_______An executive at one of the affected fintechs told TechCabal that the directive is linked to the EFCC’s ongoing investigation into bank accounts involved in unauthorised FX dealings.

…..!!!An analysis of the 1,146 accounts blocked by the EFCC shows that only 10% are operated by fintechs, with the majority being commercial bank accounts.

,,,,”””””;;;______An NSA spokesperson denied any link with the directive to stop opening new accounts. The CBN did not immediately respond to a request for comment.