Growing concerns over the poor Know-Your-Customer (KYC) implementation by some financial technology companies (Fintechs) during customer onboarding and issuing Point of Sales (PoS) machines, formed the major reason the Central Bank of Nigeria (CBN) directed four fintech startups to halt customer registration, Techeconomy can report.
Although, reports on social media suggest that these fintech startups – Moniepoint, OPay, PalmPay and Kuda, were asked, by the CBN, to halt customer onboarding due to alleged foreign exchange related fraudulent transactions, but sources confirmed to Techeconomy that the latest directive was largely KYC-related.
CBN’s directive on KYC
On December 1, 2023, the CBN set January 31, 2024 deadline for existing users of fintech companies to upgrade their KYC details.
Our sources who preferred anonymity, confirmed that the Office of the National Security Adviser (ONSA) had ordered the heads of the fintech startups to Abuja last week where the issue of the KYC was discussed, “and stakeholders agreed that there was need to urgently tighten the rope and ensure poor KYC does not open the fintechs’ doors to fraudsters.”
“So, we were shocked by the news making rounds on social media that the fintech companies were asked to stop customer onboarding due to forex market manipulations.
“I think the right information should have come from the CBN or ONSA. I wouldn’t know why CBN allowed the misinformation to fly this long. Probably, some reporters mistook the court injunction granting EFCC’s prayers to freeze about 1,146 [bank] accounts belonging to individuals and companies, as same directive from the CBN. There is confusion, actually.
“They [ONSA] ordered the heads of fintechs to come to Abuja for a meeting. So, from the stakeholders’ meeting it was agreed that due to poor KYC the affected fintech companies should stop customer onboarding for now”.
“For those saying it was based on forex, how come the commercial banks whose customers were involved in the forex related fraud or manipulations, were not asked to stop customer onboarding? Currency speculators are also been linked to the commercial banks, but they are still onboarding customers.
Another source said: “We are not configured to disobey our regulators. So, many customers were downgraded and barred due to the CBN’s directive on KYC. We are still on this process because we understand the negative impact of fraud on the economy.
“Everybody is working with the authorities to tackle fraud, because when fraud happens it does not only affect the government; the customer is involved, the fintech company is affected and investors are concerned.
“I believe it is temporal; otherwise it will be seen as a vendetta against the Fintechs. Commercial banks also suffer massive eFraud, but unlike the fintech they have never been asked to stop customer onboarding”, the source said.
EFCC obtain court order to freeze accounts
Recall that earlier today, a Federal High Court in Abuja granted an interim order requested by the Economic and Financial Crimes Commission (EFCC) 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 decision on the ex-parte motion presented by the anti-graft agency’s lawyer, Ekele Iheanacho, also approved the commission’s request to complete the investigation within 90 days.
Though the verdict was issued on April 24, its certified true copy was granted on Monday.
The other offenses under investigation by the EFCC involve money laundering and terrorism financing.
Meanwhile, efforts to reach Hakama Sidi Ali, the acting head of communications for the Central Bank of Nigeria (CBN), proved abortive.
