From the shadow bans in the banking sector to the skepticism of national security agencies, the wild west of crypto has often been viewed more as a threat to be contained than an opportunity to be harnessed.

That narrative shifted today.

The Virtual Asset Service Providers Association (VASPA), a Pan-African industry association, has officially unveiled Project Green-White-Green, a comprehensive whitepaper that aims to do the unthinkable: bridge the gap between the chaotic liquidity of global digital assets and the structured requirements of the Nigerian state.

This isn’t just a policy paper; it is a multi-billion dollar roadmap designed to integrate an estimated $92.1 billion in annual virtual asset volume into the formal economy.

Protecting the Naira: From Restrictions to Dynamic Alignment

Perhaps the most topical issue for Nigerians today is the volatility of the Naira. In a bold move, VASPA’s Market Integrity pillar proposes a dynamic FX alignment  standard. Instead of trying to shut down markets, an effort that often only drives them deeper underground, the framework suggests linking trading spreads to official NAFEM rates.

This coordinated superhighway aims to end the fragmented oversight that sees operators bouncing between the SEC, CBN, and CAC.

By resolving the chicken-and-egg paradox, where the CAC won’t incorporate a business without a SEC license, and the SEC won’t license without incorporation, the project clears the path for indigenous “Web3” startups to flourish legally.

A National Security Asset, Not a Threat

For the security conscious, the whitepaper flips the script on anonymity. Through mandatory integration with the National Identity Management Commission (NIMC), the framework seeks to ensure every participant is a verified, accountable citizen.

“We are no longer waiting for the future of finance to happen to Nigeria; we are architecting it,” said Franklin Peters, executive chair of VASPA and CEO/founder of Boundlesspay. “One of our country-specific, practitioner-led projects for the constructive realignment of the virtual asset sector, Project Green-White-Green is the definitive roadmap for any serious operator or investor who wants a stake in the next decade of our digital economy. While Project Green-White-Green is designed for Nigeria, similar projects will be designed for other key African markets as well. This is because the regulatory landscape is fundamentally shifting. Those who align with this framework will lead in what we consider Nigeria’s most massive growth phase.”

The $1 Trillion Ambition and the Fiscal Opportunity

As the Federal Government pursues an ambitious goal of a $1 trillion economy by 2030, the question of “where will the revenue come from?” looms large. Project Green-White-Green answers this with Pillar III: Fiscal Sovereignty.

The whitepaper reveals that between July 2024 and June 2025 alone, Nigerians conducted over $92 billion in transactions, most of which generated zero tax revenue due to a lack of infrastructure. VASPA’s solution? zero-friction automated taxation.

By proposing an API-driven interface that automates VAT and Capital Gains Tax (CGT) at the point of transaction, the project promises to turn a “grey market” into a sustainable revenue engine for the Federation.

To encourage this shift, the project advocates for a “Clean Slate” regularization, removing the fear of retroactive liability for those who operated during previous periods of regulatory ambiguity.

The Architect’s View

The development of this framework was not just an industry wish-list, but an exercise in deep technical and legal alignment.

“This whitepaper is the culmination of meticulous legal, technical, and economic engineering,” stated Favour Uche, project manager for Project Green-White-Green and Star Associate at Infusion Lawyers. “We didn’t just compile industry feedback, but articulated and aggregated them into the frameworks proposed, ensuring alignment with national interest. We are now fully prepared to take this blueprint to the highest levels of government. The groundwork is officially laid, and the execution phase begins now.”

The Safe Harbor: A Bridge to the Future

Recognizing that you cannot change an entire industry overnight, VASPA has proposed a Safe Harbor Pilot. This acts as a non-punitive protected window where operators can transition into full compliance under the watchful eye of regulators without the threat of immediate penalties.

This pilot includes a 24-Month Sovereign Integration Roadmap, specifically designed to bring global offshore exchanges into the fold as Digital Residents, eventually requiring them to localize operations, pay taxes, and partner with indigenous firms to upskill Nigerian talent.

With the successful exit from the FATF Grey List in October 2025, Nigeria has already proven its commitment to global financial standards.

Project Green-White-Green is the next logical step, a sophisticated, made-in-Nigeria response to the global crypto phenomenon.

As the document moves toward high-level engagements with the CBN, SEC, NFIU, NRS, EFCC, ONSA, the Presidency in Abuja, the message to the industry and the government is clear: The digital economy is no longer a peripheral experiment. It is a sovereign priority.

*Project Green-White-Green is the primary instrument for VASPA’s upcoming engagements with Nigeria’s top financial and security authorities. The public version is currently available here.

Under his leadership, the firm has become a trusted legal partner for a wide spectrum of clients and was recognized with the Best Blockchain Legal Firm of the Year award at the Africa Crypto Giant Awards (ACGAwards) in 2023, a testament to its influence in Africa’s blockchain and crypto ecosystem.

Senator’s influence extends beyond legal practice into policy advocacy and industry development.

He is the executive chair of the Virtual Asset Service Providers Association (VASPA), an Africa‑focused advocacy organization dedicated to fostering trust, regulatory clarity, and sustainable growth in the continent’s virtual asset sector. Through VASPA, he helps mobilize stakeholders, including innovators, investors, and regulators, to build a trusted, transparent, and inclusive digital asset ecosystem.

A respected voice in technology law and digital finance, Senator is a frequent speaker, author, and contributor to global legal and policy guides (See more here).

In this interview, he looks at Nigeria’s $92.1 billion crypto volume (based on PwC report), especially how the country can turn the high activity into national prosperity

TE: PwC estimates that Nigeria processed $92.1 billion in crypto transactions within a year, positioning the country as Africa’s largest crypto market. What policy, regulatory, and industry steps are needed to convert this scale of activity into measurable economic benefits for Nigerians and the government?

​Senator Ihenyen: To turn $92.1 billion in volume into prosperity, I think that there needs to be a paradigm shift. By this, I mean a shift from the government largely approaching crypto from the limiting point of view of national security risk and quick revenue generation to seeing crypto as a nascent sector that offers a great potential for economic growth if the enabling environment is there.

This way, rather than requiring huge minimum capital requirements from VASPs or immediately introducing crypto taxes after years of banning and restricting it for instance, we will be having conversations about incentives and infrastructures towards developing our local market for global competitiveness. This is how nations invest big in the future, and get their big rewards tomorrow.

If we treat Virtual Asset Service Providers (VASPs) like the pioneers in an emerging financial technology sector with potential economic opportunities, they will become like the traditional fintechs, they hire locally, rent offices locally, pay local vendors, and pay taxes.

But if we largely treat them with suspicion, like a stranger with a bag of national security risks you would rather not bring into your home, we will only end up effectively risking the criminalization and discrimination of innovators who are the new drivers of the future of finance.

We need to on-ramp local innovation. Especially considering Nigeria’s big size in this market, we shouldn’t just be consumers of global protocols. For instance, by providing a clear legal pathway for local startups to build Naira-stablecoins or Tokenized Real World Assets (RWAs), we not only keep the value within our borders, but become globally competitive, attracting more investments.

TE: From an industry and policy standpoint, which sectors of Nigeria’s economy would see the greatest impact if crypto were fully integrated into the formal financial system, especially regarding revenue mobilisation, taxation, and public interest outcomes?

Senator Ihenyen: If by fully integrating crypto into the formal financial system, we mean enacting crypto tax laws and mandating high-capital VASPs licenses, Nigeria does not stand to benefit much. Why? Because the two-pronged formalization steps above do not necessarily develop or safeguard the nascent market, but actually stifle it, so much that it consequently gives back what you put in. No revenue or tax purse is about to blow up.

Market development is key, and should be prioritized, and not just for Nigeria’s maximum benefits, but also the Nigerian people, especially our teeming youth in the country and in the diaspora.

And if I were to identify the three sectors I see as the “low-hanging fruit” for Nigeria, they are payments & remittances, cross-border trade and commerce, and wealth creation. Regarding payments and remittances, we are already seeing costs drop, relative to traditional financial rails. Crypto has become a serious medium of exchange. And this will get increasingly bigger, and it does not have to be legal tender to grow.

Integrating crypto into the formal banking rails can reduce remittance fees from 8–10% to under 1%, putting more money directly into the pockets of Nigerian families. In the area of cross-border trade and commerce, crypto, by virtue of how it works, can bridge the current gap in that space.

Reports already show that Africans are not transacting with Africans enough; and for Nigerians with other Africans, it is even worse. This is because as already fragmented as the continent is, with 54 countries largely running on different currency rails, the fragmentation gets even worse. And here is where crypto as well as crypto-enabled, not necessarily cryptocurrency only but also blockchain-powered, settlements come in.

To enhance and deepen its cross-border infrastructure, the Pan-African Payment and Settlement System (PAPSS) could enable this integration.

Crypto can enable wealth creation for millions of Nigerians leveraging opportunities in the emerging Web3 industry, from community management to content writing; from compliance roles to marketing roles; from blockchain development to blockchain and crypto education; and of course, crypto trading.

All that Nigeria needs is all-round, open, and genuine engagement with the nascent crypto sector.

TE: With the new Nigeria Tax Act coming into effect, how can government balance revenue generation from crypto without discouraging innovation or pushing activity back into informal channels?

Senator Ihenyen: The Nigeria Tax Act 2025 was a milestone, but implementation is where it gets tricky. Perhaps, first and foremost, the Nigeria government should not see crypto as a cashcow, as it appears to now do.

The stark reality is that current market and business data in the country tells a story of an industry that is struggling to breathe, especially locally, no thanks to years-long misunderstandings, misconceptions, and misgivings.

Also, Nigeria should be mindful of the applicable tax rates. For instance, if we set personal income tax on crypto gains too high (some suggest up to 25%), we will see a “brain drain” and a “capital flight”, possibly back to P2P shadow markets.

I think a capped Capital Gains Tax (CGT) of 10% is the sweet spot. The government should work with licensed exchanges to automate tax reporting. If a user has to fill out 20 forms to pay tax on a $50 profit, they simply won’t do it.

Also, I think innovators can benefit from special tax incentives at this early stage, especially considering that the Nigeria crypto industry has not only had a chequered and hostile history with the government, regulators, and law enforcement agencies but also because it is still a nascent industry. Nigeria could also offer tax rebates to VASPs that invest in blockchain literacy programs or “sandbox” innovations that solve local problems.

Today, Nigeria does not have enough big local players yet, if any. Where well applied, tax can be a creative tool of sowing seeds for the future trees that will sustainably bear the fruits of revenue. If otherwise, taxes can kill growth.

TE: Beyond taxation, what long-term economic benefits, such as jobs, skills, or investment, can crypto unlock for Nigeria: Regulation, Licensing & Market Structure?

Senator Ihenyen: While I understand that taxes on capital gains provide immediate revenue, there are long-term, ‘hidden’ benefits that are far more transformative for Nigeria’s macro-economy, such as job creation and skills acquisition. Beyond trading, a regulated ecosystem fosters a demand for blockchain developers, smart contract auditors, business development managers, senior marketers, compliance officers, legal experts, and more. This shifts Nigeria from being a consumer of technology to a hub for Web3 talent in Africa.

Also, crypto-related ​Foreign Direct Investment (FDI) is a long-term benefit Nigeria should be positioning for. When rules are clear and certain for operators, they become green light for global venture capital. When Nigeria provides a predictable business and legal climate, it attracts foreign fintechs to set up local operations, bringing in capital and technical transfer. For the country to achieve this, it needs to invest in building trust more with the crypto industry, not merely policing it.

Essentially, my point is that the shift toward a regulated crypto climate in Nigeria can no longer be just about preventing illicit activity or enforcing taxes; it should, at this stage, be about building a sustainable digital economy. In 2026, the focus has to move toward creating what I call a virtuous cycle of innovation, trust, and growth.

TE: What concrete steps are currently being taken to license and regulate Virtual Asset Service Providers (VASPs) in Nigeria, and how critical is this to market confidence?

Senator Ihenyen: ​From lack of legal recognition of crypto a few years ago, Nigeria has gradually transited to a legal formalization of registration and licensing processes. This has, at least comparatively, improved the level of market confidence, and only to some extent. The difficult journey started in 2022 with the recognition of VASPs as financial institutions for compliance purposes under the Money Laundering Act 2022.

A year later, the National Blockchain Policy, which was officially adopted by the Federal Government, was also a key milestone, providing a policy direction to the country.

Significantly, when by January 2024 the CBN rightly lifted what I still believe is a misguided crypto ban, some respite came to the industry. But the level of market confidence hardly changed, especially following the very unfortunate Binance episode in the country since 2024. This remains a matter I strongly believe Nigeria could resolve differently, by the way.

Commendably, the SEC introduced its Accelerated Regulatory Incubation Program (ARIP) in June 2024, following its VASPs framework for the capital market. Essentially, the ARIP has been a gateway for VASPs to operate under provisional licenses while the SEC monitors their compliance, ensuring innovation isn’t stifled by rigid, day-one requirements.

In 2025, the ​Investments and Securities Act (ISA) 2025 became the landmark legislation that provides the statutory backbone officially recognizing virtual assets as securities.

Though I think this blanket classification by our lawmakers overlooks key statutory nuances, potentially stifling the growth of crypto innovations that should really have no business with our security and investment laws.

Recently, the SEC further increased capital thresholds for VASPs, particularly Digital Asset Exchanges (DAXs) and Custodians. While the apparent reason is to ensure only financially resilient players enter the market and Nigeria gets to reduce the risk of fly-by-night operators, it’s also worth considering if there are no other prudential ways of ensuring market confidence that can help to reasonably minimize capital burdens in a nascent sector.

But Nigeria seriously needs to consider unblocking the crypto websites Nigeria authorities blocked in the country’s cyberspace since 2024. I believe this will demonstrate the country’s genuine readiness for business, especially with foreign direct investors in the sector.

All in all, I believe Nigeria can generally do better with improving market confidence.

The most common way is to premise market confidence on capital resilience and enforce compliance with sanctions. But taking the common route isn’t always the most effective one. For me, building market confidence, sustainably, requires a tougher but smarter approach: fostering genuine collaboration among industry players and engaging multiple stakeholders through mutual trust and respect. This drives Nigeria’s market development and global competitiveness.

TE: How will proper licensing help protect consumers while also attracting institutional and foreign investment into Nigeria’s crypto ecosystem?

Senator Ihenyen: Proper licensing acts as both a shield and a magnet. When licensing mandates segregation of assets (keeping customer funds separate from company funds) and regular independent audits, it is all about consumer protection and investor safety. When the rules requires a “No Objection” clearance from SEC for tokens listed on an exchange, it is primarily targeted at protecting retail investors from “rug pulls” and fraudulent schemes.

With a regulated crypto market, large-scale investors (banks, pension funds, and insurance companies) will not be necessarily legally barred from the market. A license provides the compliance stamp these potential investors need. It transforms crypto from a speculative retail hobby into a legitimate institutional asset class, potentially deepening the liquidity of the Nigerian market.

TE: What lessons can Nigeria learn from other jurisdictions that have successfully operationalised crypto through clear licensing frameworks?

Senator Ihenyen: Nigeria isn’t innovating in a vacuum. There are some key lessons the country can draw from other jurisdictions.

First, the European Union’s (EU) Markets in CryptoAssets (MiCA) demonstrates the importance of a unified “passporting” system where a license in one region is recognized across others. I see a similar model across Africa being vital for African Continental Free Trade Area (AfCFTA) alignment.

Second, in the United Kingdom, the effectiveness of a “Test-and-Learn” approach by way of sandboxes is worth our attention. While Nigeria’s Regulatory Incubation and ARIP are similar applications,

Third, one of the lessons we can take from the United States is the need for clear definitions, Security vs. Commodity, for instance, to avoid what is called regulation by enforcement, a plague that stifles innovation or drives it underground. Nigeria must avoid one-size-fits-all, blanket approaches. These only end up dwarfing ambitions or sending innovators on exile, and consequently producing stunted markets.

Lastly, particularly in a nascent sector powered by new and emerging technologies, Nigeria should formally leverage self-regulatory organizations (SROs) or industry associations and bodies more.

In jurisdictions like Singapore and Hong Kong for example, SROs operated by industry players themselves have become partners-in-progress to regulators, law enforcements, and governments.

Back in Nigeria for instance, the Virtual Asset Service Association (VASPA) with the Blockchain Industry Coordinating Committee of Nigeria (BiCCoN) collaborated with the EFCC on fighting crypto-related financial crimes in the country. Similarly, VASPA was one of the bodies invited by the Nigeria Financial Intelligence Unit (NFIU) as an SRO towards helping to safeguard the virtual asset industry and keeping Nigeria out of the FATF “grey list”.

Similarly, regulators like CBN and SEC, alongside crypto industry bodies, should collaborate more to balance innovation with regulation in the country. No man is an island, especially in a community-driven economy like crypto.

The session, facilitated by the NFIU, spotlighted critical regulatory expectations—from Know Your Customer (KYC) protocols to transparency in Ultimate Beneficial Ownership (UBO) and the timely reporting of suspicious transactions.

These topics addressed operational gaps that have historically drawn international scrutiny and aimed to close compliance loopholes across the financial services ecosystem.

Designed to steer Other Financial Institutions (OFIs) toward full regulatory alignment, the intensive workshop brought together compliance officers, regulators, and key industry stakeholders. Discussions focused on evolving global trends in anti-money laundering (AML), counter-terrorism financing (CTF), and financial intelligence—supporting Nigeria’s ongoing efforts to exit the Financial Action Task Force (FATF) Grey List.

This move is considered crucial in restoring global financial confidence and credibility.

Amid rising global scrutiny on data integrity and financial transparency, eTranzact seized the opportunity to underscore its proactive compliance posture.

With secure, scalable systems and a strong internal governance framework, the fintech continues to position itself as a resilient leader in Nigeria’s digital financial landscape.

Addressing staff and participants at the session, Niyi Toluwalope, MD/CEO eTranzact Plc, made the company’s stance clear:

“Compliance is not an afterthought—it is woven into the very architecture of our operations. As Nigeria works its way off the FATF Grey List, we see this not just as a national priority, but a shared responsibility that begins at the institutional level.”

For eTranzact, the timing was apt as the company has already advanced key upgrades across its compliance infrastructure, deploying an automated anti- money laundering (AML) transaction monitoring system and intensifying oversight on high-risk customers, including Politically Exposed Persons (PEPs).

Edward Onyenweaku, chief risk and compliance officer eTranzact Plc, emphasized the operational backbone behind these measures.

“Our systems are built for adaptability and scalability,” he explained. “We are leveraging both technology and policy to ensure that regulatory shifts don’t catch us off guard. This training only sharpens that edge,” he said

As Nigeria races to meet international anti-financial crime benchmarks, firms like eTranzact are proving that regulatory compliance and digital innovation can go hand in hand.

The fintech’s presence at the CBN-led training wasn’t just symbolic—it was an active statement that security, transparency, and

infrastructure agility are not optional in today’s financial environment. In an industry where reputations rise and fall with compliance lapses, eTranzact isn’t just staying afloat—It’s setting the pace, proving that in fintech, security isn’t an added layer. It’s the infrastructure itself.

Flip to January 2025, the Nigerian government, through the efforts of the National Information Technology Development Agency, (NITDA) and the Nigerian Financial Intelligence Unit, (NFIU) have kick-started an initiative that would ensure the exclusion of the country from the FATF Grey List by May 2025.

This initiative was a directive of the President to the request of the NFIU to develop and implement an Anti-Money Laundering/Counter Financial Terrorism/Counter Proliferation of Firearms Data Management Framework and Platform in collaboration with NITDA.

A fintech expert who is familiar with the FAFT grey list told Techeconomy that Nigeria had late last year submitted over 50 per cent of the list required to exit the list.

At the inaugural technical session to kick start the process at the NITDA Headquarters in Abuja, on Friday, Kashifu Inuwa, the director general of NITDA, disclosed that the technical session meeting would mark a “remarkable mile in the country’s journey to exit from the From the Financial Action Task Force Grey List the nation has been enlisted into since February 2013.

He said the enlistment of the country into the Grey List was occasioned by seven issues among which are the rising capital inflows into the country, the shortcomings in combating money laundering, the shortcomings in combating arms financing and the shortcomings in combating terrorism financing.

According to him other factors include “the nation’s deficiencies in anti-money laundering regime, counter-terrorism financing regime and counter arms proliferation financing regime.”

He noted that the desire of the President to combat corruption and financial crime through innovation and technology necessitated his directive to NITDA to work with NIFU to build a system that would help NFIU to better manage financial data and compliance in the country.

He said,

“Today we are kick starting a meeting to start that project that will take us out of the Grey List and build that robust system. The main objective of the system is to help us with global compliance; to help Nigeria position itself as a key player in the global effort to combat financial terrorism and other crimes. This will help us to create visibility in Nigeria as well as improve our global reputation and relationship in the financial market.”

While maintaining that the initiative will help in improving national security because of its capability to see any financial transaction inflow into the country, NITDA boss maintained that it will also help to “track any illicit flow as well as empower us to highlight or identify criminal network in our financial sector.”

Inuwa averred that the system will strengthen the nation’s law enforcement and the economy because it will tame crime in the economy which will encourage investment into the country.

In her remarks, the NFIU Chief Executive Officer, Barrister Hafsat Abubakar Bakari described the project as a “game changer” because it will not only help the country to exit the grey list as directed by the president but improve the Data Integration Management System for Anti-Money Laundering and Combating the Financing of Terrorism, (AMLCFT.)

While acknowledging the introduction of technology in the way things are now being done at the NFIU, she called on Nigerians to support the initiative of not only the exiting of the grey list but to sustain the gains that the country has made from it.

She said,

“The Grey List is not just a one-off project, it is a continuous project. The next cycle of evaluation will be done in the year 2027 and we do not want a situation where we exit from the Grey List and another evaluation is conducted by the FITF, and we find ourselves back on the grey list again.”

Barrister Bakari added that “this is why we have decided that the use of technology will give credibility to every statistic that we have, not just to our domestic stakeholders, but also to our international partners. Everything should be done in real time and accessible, credible, and factual, and that is the project that we are doing today.”

While expressing her gratitude to NITDA and the Director General for their contributions to the project and other national service, she noted that she believes in local content initiative and that was why the NFIU made submission to Mr. President that NITDA should drive the process which he “graciously approved.”

“So, congratulations, NITDA, for the confidence that the NFIU has in you, and for the confidence that Mr. President has in you to drive this project,” she noted.

Adedeji Olajide, the chairman, House Committee on Information and Communication technology and Cyber Security, who also graced the event assured both NITDA and NFIU of legislative support in their quest to secure the country against illicit financial flow and other vices.

While acknowledging that it was a welcome development to see the executive and the legislator working together to achieve common goals in our country Honourable Olajide said “You can be sure of it that you have all of the legislative support to get whatever you need done, and we will make sure there are no stumbling blocks in your way.”

He said it has become imperative to “change the narrative” and position Nigeria to its rightful place among the comity of nation, adding that he understood all the benefits and values the introduction of technology will bring to NFIU operations.

He said,

“Nigeria is going to take its rightful place as the giant of Africa. We are going to lead the way in cutting-edge technologies to make sure that Nigeria has all of the right people, the right processes, and the right technology to move the country to the next level which is also in line with the agenda of Mr. President Ahmed Bola, who is also a technology person.”

The objective of the AML/CFT/CPF Data Management Framework/Platform are; to achieve FATF compliance, to enable Nigeria’s removal from the Grey List and restore international confidence, to enhance NFIU’s operational capacity through automation, intelligence integration, and scalability, establish a robust and sustainable framework to ensure long-term operational and financial independence and to position Nigeria as a global leader in financial intelligence and AML/CFT practices, setting benchmarks for other nations

The development and implementation of this platform are imperative to addressing the identified gaps, strengthening Nigeria’s financial integrity, and securing its place as a trusted partner in the global financial ecosystem.

The ever-changing regulatory climate necessitates the need for prudent risk management and compliance, particularly within the fintech ecosystem where the regulatory picture continues to evolve to protect both businesses and consumers.

The Central Bank of Nigeria (CBN) which is the apex regulator of all financial services, continues to establish more licenses and frameworks for operating across several areas of fintech.

Therefore, entrepreneurs need to stay abreast of these regulations to avoid compliance issues and ensure proper risk management.

These days, fintech companies operate across several jurisdictions, each with peculiar risk and compliance expectations. In addition, each subsector of fintech such as payments, switching & processing, mobile money operation (MMO) and blockchain, to name a few, comes with its own set of rules and regulations. Nonetheless, there are six key risks that all fintechs must consider in spite of sector or geographical location.

These are fraud risks, merchant and third-party risks, anti-money laundering (AML) and terrorist financing risks, consumer risks, credit risk and operational risks, and finally, cybersecurity and data privacy risks.

The great news is that management of these set of risks can be achieved through a combination of risk management and compliance tactics. Because these risks can be cumbersome for budding fintechs that just want to focus on perfecting their products, it is critical to onboard a competent Chief Compliance Officer (CCO), an experienced Chief Risk Officer (CRO) and Chief Administrative Officer (CAO). The CCO is responsible for ensuring that the organisation complies with all applicable laws, regulations, policies and procedures, while the CRO focuses on the identification and mitigation of all risks that could be a threat to profitability and productivity.

The CAO has a more general role of managing day-to-day operations which encompasses government relations, human resources, finance, compliance and more. A culture of compliance within the organisation must be built from the top down.

Auditors also have a key role to play when it comes to risk and compliance. Internal auditors investigate potential risks and weak points within the company’s systems and processes, while external auditors inspect financial statements to rule out fraud. Internal audit reports are used by management, while external audit reports are used by external stakeholders such as investors, creditors and the public.

The two roles are complementary as both are essential for the effective risk governance of an organisation. However, it is vital that the two functions maintain clear boundaries and preserve their independence.

The diagram below serves as a guide for risk management and compliance within the fintech space:

The compliance and risk management frameworks in a fintech firm should outline the control and oversight structures to manage multiple stakeholders present in evolving fintech operating models. The framework should take into cognizance, the compliance requirements at each stage of product development and the customer life cycle. 

Similarly, risk management frameworks should address the potential exposures created by fintech disruption, innovation, partnerships and ongoing regulatory and financial market developments.

Early last year, United Services Automobile Association (USAA) bank was fined a whopping $60 million by the United States Treasury Department for not complying with the agency’s Bank Secrecy Act regulations. The USAA bank failed to submit reports on suspicious banking transactions in a timely manner, which exposed the inadequate risk management framework of the bank.

In addition to the fine, USAA was issued a cease-and-desist order and required to take immediate corrective actions.

This occurrence supports the notion that without robust risk management and compliance practices, organisations will fall short in predicting potential risks, and therefore would not be able to take the appropriate steps to address them on time.

Information Security is one aspect of risk management which is often ignored but has an almost immediate impact on survival. In plain terms, information security refers to the technologies, procedures and methods designed and operated by organisations in order to prevent their networks, devices and data from security breaches such as unauthorized access, malware, data thefts or hacking. Information Security Risk Management is important because it helps to easily identify any vulnerabilities that could lead to data breaches or other security incidents. It also serves to prioritize the severity of each vulnerability based on its likelihood and impact.

Fortunately, there are many ways by which fintechs can improve their posture in Information Security Risk Management. Some of these are regular password change for customers and employees, regular IT security audit, the use of Artificial Intelligence (AI) and Machine Learning (ML) to track suspicious transactions, safety-oriented application testing, and so much more.

This comes at a crucial time as a 2022 study by Statista revealed that the average cost per data breach in financial services is now as high as US$ 5.97 million per breach.

Fintech start-ups face a higher risk of data breaches than legacy banks because their human and capital resources are not as robust as incumbents. Therefore, fintechs need to take extra steps for risk mitigation.

To succeed, regulators must perceive that risk management is part of the fintech company’s self-governing mechanisms. This means that the fintech must have identified risk, taken measures to assess it and mitigate against it.

The cost of non-compliance is not limited to monetary fines alone – often, it also results in the depletion of consumer trust which can be detrimental to start-up growth. With a robust risk management and compliance framework in place, fintechs can better navigate through occasionally ambiguous regulations, rather than waste productive time and resources dealing with all sorts of risk and compliance issues.

In your opinion, what are the greatest risks facing the fintech industry? How can the compliance culture of fintechs be built further? Comment below and let’s keep the conversation going.

Some existing regulations are: Risk-Based Cybersecurity Framework and Guidelines for Deposit Money Banks and Payment Service Providers by the Central Bank of Nigeria (CBN), Guidelines on Minimum Requirements for Data Protection in the Nigerian Telecommunications Industry by Nigerian Communications Commission (NCC), Guidelines for Data Protection Compliance in Nigeria by National Information Technology Development Agency (NITDA), Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Regulations by Nigerian Financial Intelligence Unit (NFIU).

In our next series on Building Resilience in Fintech Business, we will take a closer look at Ethics, Values and Accountability.

…Continue Reading HERE.

During  the year, FintechNGR ‘s work was driven by the need to work with the members and the fintech ecosystem as a whole to leverage the spate of opportunities that came with the ‘new normal’ and translate that into encompassing growth and progress for the entire industry through  activities, projects and programmes listed below: 

Nigeria Fintech Census Mapping Report –This is a report targeted at providing crucial data on fintechs in Nigeria to aid players in the space in making informed decisions and drive comprehensive growth, done in partnership with Ernst & Young was launched in the second quarter.

Membership Growth & Ecosystem Development –FintechNGR saw over 24% growth in membership, with Facebook and Fairmoney joining the Association as strategic members.

Some of the members like OPay, Flutterwave also gained Unicorn status in 2021.  

In terms of ecosystem representation, FintechNGR was part of various Government and Regulators’ committees set up by African Continental Free Trade Area (AfCFTA), the Nigerian Communications Commission (NCC), the National Information Technology Development Agency (NITDA), and played a major consultative role in the evolution and launch of eNaira by the Central Bank of Nigeria (CBN) and deepening knowledge on Central Bank Digital Currency(CBDC) by various presentations and organisation of training for various organs of the government.

Some of the regulatory contributions made by the Association include: setting up internal working committees that help with thoughts on engaging Regulators across various issues such as the Crypto transaction bans, account freezing, startup bills, and the NITDA bill.

Establishment of FACT – Led by the Fintech Association of Nigeria (FintechNGR) which serves as the secretariat, Fintech Alliance Coordinating Team, FACT, was established in the second quarter to provide a more collaborative approach to policies and regulatory interventions by Fintech stakeholders with Blockchain Nigeria User Group (BNUG), Cryptography Development Initiative of Nigeria (CDIN), Financial Services Innovators (FSI), Stakeholders in Blockchain Technology Association of Nigeria (SiBAN), and, Innovation Support Network – Hubs, (ISN Hubs), as founding members.

DigiStuds Project – The Digital Academy Project aimed at equipping 500,000 students of public tertiary institutions in Nigeria with  relevant digital skills in a bid to serve as a bridge to provide the industry with  innovative individuals, ready to take on the fast-changing world of technology and organisations that require such talents, as well as produce  digital entrepreneurs and startups during the process was formally launched and graduated its maiden cohort of 200 students across Nigerian public universities. 

Reguvators Forum –A Forum of regulators and players in the fintech space to bridge the gap and drive engagement on salient matters pertinent to balancing innovation and regulation and co-create solutions to challenges facing the ecosystem formally took off and held every quarter of the year.

The Forum had representatives from CBN, SEC, NITDA, NAICOM, NCC, NFIU, NDIC, and NIPC.

Events –The 5th edition of the flagship event, Nigeria Fintech Week, organised by FintechNGR and Fintech Associates Limited with the theme “Sustainability and Ecosystem Building” held between October 25 and 29, 2021.

NFW21 had over 8000 participants spread across online and physical attendance from 20 countries, with 72+ Speakers, featuring tech talks such as #CapTech, emerging tech, #Femtech, regulatory engagements, and an Ecosystem Hour with global partners. 

The Intercontinental Webinar themed “Central Bank Digital Currency, CBDC & Cross Border Payment: Interoperability, Technology & Regulation” and supported by Sterling Bank also held, with speakers such as John Rolle, Governor, Central Bank of The Bahamas, Serey Chea, Assistant Governor, National Bank of Cambodia, Sopnendu Mohanty, Chief Fintech Officer, Monetary Authority of Singapore, Abubakar Suleiman, CEO, Sterling Bank. It also organised webinars on topics like Startup Funding, Cyber Alertness and the New Normal, Business & Financial Recovery Post-COVID, Agriculture & Insurance, with speakers from across different industries- AFEX, NGX, Future Africa, Interswitch, Deloitte and more. 

It is also important to note that FintechNGR partnered with the Singapore Fintech Festival, SFF, to host the well-attended World Fintech Festival in Nigeria on the 13th November 2021.  

In addition, the association’s Social Meet tagged “The Making of Indigenous Unicorns” and the Annual General Meeting, AGM, held in Q1 & Q3 respectively.

Asides from the Intercontinental webinar, there were also four other webinars during the year.

The Association participated in more than 50 events organised by partners across the globe.

Training – The Association deepen digital education across the divides such as Digital 201, a digital insurance training, held in partnership with Nigerian Insurers Association, NIA, training on Anti-Money laundering, Non-Fungible tokens, NFTs and DigiWomen, a digital empowerment training for women in career and business, held in partnership with WIMBIZ, supported by Sterling Bank.

Looking Forward to 2022

Various initiatives are in the pipeline aimed at maximizing FintechNGR’s impacts and breaking new horizons in 2022 as can be seen in its 2022 calendar here.

Your organisation can also be part of the moving train!

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