The Central Bank of Nigeria (CBN) has explained its decision to upgrade the operating licences of major financial technology firms and microfinance banks, including Opay and Moniepoint, to national status, citing compliance with regulatory requirements and the nationwide scale of their operations.

The upgrade affects key players such as Moniepoint Microfinance Bank, Opay, Kuda Bank, Palmpay and Paga, whose rapid growth through mobile platforms and extensive agent networks has seen them outgrow their earlier regional licences.

Director of the Other Financial Institutions Supervision Department at the CBN, Mr Yemi Solaja, confirmed the development in Lagos during the annual conference of the Committee of Heads of Banks’ Operations. He noted that although the institutions were previously licensed on a regional basis, their services already cut across the country.

“Institutions like Moniepoint MFB, Opay, Kuda Bank and others have now been upgraded. In practice, their operations are already nationwide,” Solaja said.

He stressed that the national licence framework places greater responsibility on the fintechs, particularly in terms of customer protection and physical presence. According to him, most of their customers operate within the informal sector and require accessible channels for complaint resolution.

“Most of their customers operate in the informal sector. They need a clear point of contact if any issues arise,” he added.

Under the new status, the fintechs are required to meet higher capital thresholds, including a minimum capital base of N5 billion for national microfinance banks, and to maintain offices dedicated to dispute resolution. The CBN said the move is also aimed at strengthening financial inclusion while ensuring stability and accountability in the digital finance ecosystem.

The licence upgrade follows earlier enforcement actions by the apex bank, including penalties imposed in 2024 on Moniepoint and Opay, which were each fined N1 billion for non-compliance with Know Your Customer (KYC) regulations. The sanctions, the CBN noted, underscored its resolve to enforce stricter standards in Nigeria’s fast-growing digital financial services sector.

The CBN said the reforms reflect its broader efforts to align regulation with innovation, while safeguarding consumers and maintaining confidence in the financial system.

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The Economic and Financial Crimes Commission (EFCC) has implicated a new-generation commercial bank, six fintech companies and several microfinance banks in a large-scale financial fraud involving cryptocurrency transactions valued at ₦162 billion.

The disclosure was made on Thursday during a press briefing at the Commission’s headquarters in Abuja by the EFCC’s Director of Public Affairs, Mr. Wilson Uwujaren.

Uwujaren accused the affected but unnamed financial institutions of failing to carry out adequate customer due diligence, thereby allowing fraudsters to launder illicit funds through the financial system during the 2024/2025 financial year. He said the transactions violated established Know-Your-Customer (KYC) and anti-money laundering (AML) regulations.

According to him, EFCC investigations revealed serious weaknesses in internal control systems within the institutions, enabling criminals to convert proceeds of fraud into digital assets and transfer them to undisclosed destinations.

“A total sum of ₦18.1 billion was moved through the financial system without due diligence of customers by the banks,” Uwujaren said. “It is particularly worrisome that cryptocurrency transactions amounting to ₦162 billion passed through a new-generation bank without any form of due diligence.”

He further disclosed that investigators uncovered a case in which a single individual allegedly operated 960 bank accounts within one bank, all linked to fraudulent activities.

Describing the findings as troubling, Uwujaren said EFCC intervention had nonetheless yielded results, with the Commission recovering ₦33.62 million, which has already been returned to some victims.

The EFCC spokesperson explained that ongoing investigations uncovered two major categories of scams linked to the financial institutions.

The first involved an airline ticket discount scheme, in which a syndicate advertised heavily discounted foreign airline tickets. Victims were made to believe payments would be made directly to the airline through a specially designed payment module. However, once payment was completed, the entire funds in victims’ bank accounts were allegedly wiped out.

Uwujaren said more than 700 victims were defrauded under the scheme, with estimated losses of ₦651 million. He added that the operation was allegedly masterminded by a foreign national, while about ₦33 million has so far been recovered and refunded to victims.

The second scheme was linked to a fraudulent investment platform operating as Fred and Farid Investment Limited, popularly known as FF Investment. Uwujaren disclosed that over 200,000 Nigerians were defrauded through the platform, which generated approximately ₦18 billion by offering fake investment packages through multiple companies.

The companies allegedly involved include Credio Banco Limited, Deliberty Rock Limited, Liam Chumeks Global Service, Ngwuoke Daniels Technology, Icons Autos and Import Merchant, Newpace Technology Services Limited, Primepath Ways Ventures Limited, Kaka Synergy Network Limited, and Sunlight Tech Hub Services Limited.

According to the EFCC, the scheme was orchestrated by foreign nationals working with three Nigerian accomplices, who have been arrested and charged to court. The foreign masterminds are currently on the run, with efforts underway to apprehend them.

Uwujaren called on financial regulators to enforce stricter compliance among financial institutions, particularly in the areas of KYC, Customer Due Diligence (CDD) and Suspicious Transaction Reports (STRs). He urged regulators to suspend and hand over to the EFCC any deposit money banks, fintechs or microfinance banks found to be aiding fraudsters for investigation and possible prosecution.

He warned that negligence and failure to monitor structured or suspicious transactions expose the economy to serious systemic risks and must no longer be tolerated.

As part of its broader anti-corruption drive, the EFCC on Wednesday announced the recovery of ₦1.234 billion from Sujimoto Luxury Construction Limited, which has been returned to the Enugu State Government. The recovery followed a petition by the state government after the company allegedly failed to execute a contract for the construction of 22 smart schools, despite receiving over ₦2.28 billion in advance payments.

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Following CBN’s Directive on strengthening Know Your Customer (KYC) procedures for Tier 1 accounts, fintech company PalmPay is encouraging users who have not yet complied with the requirements to do so promptly.

Since the introduction of the directive last December, PalmPay has launched a new onboarding flow on the app which mandates all Tier 1 users to validate their NIN or BVN. Failure to do so means that the user would not be able to complete their registration on the wallet.

All existing users must also validate their BVN or NIN as follows:

Existing users who have validated their NIN or BVN previously must revalidate their KYC information by January 31, 2024.

Existing users who have not yet validated their NIN or BVN must do so by March 31, 2024.

Defaulting wallets will be frozen by January 31 and March 31, 2024 respectively.

According to Chika Nwosu, PalmPay Nigeria Managing Director, “We are committed to doing our part to foster a secure financial ecosystem. We urge all PalmPay users to update their KYC information on the app as soon as possible in order to ensure smooth continuation of service for their wallets.”

The company has introduced an incentive payment of up to N500 for users who get ahead of the deadline and validate their information. Also, support operations have been beefed up to help its customers through the process.

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Ahead of the January 31, 2024 deadline by the Central Bank of Nigeria (CBN) for existing users of fintech companies to upgrade their wallets, leading fintech company PalmPay has urged its users to upgrade their KYC details.

Fintech users affected by the CBN directive are grouped into three categories.

1. New users are mandatorily required to provide their NIN and or BVN number for Tier 1 wallet opening.

2. Those with an existing Tier 1 wallet but are yet to add their NIN or BVN have until March 1 2024 to do so.

3. All existing users across the three tiers, whose NIN or BVN information does not match, have until January 31, 2024, to revalidate.

In response to the CBN’s recent directive on promoting financial system stability by strengthening the KYC procedures for customers, PalmPay released an updated in-app version that mandates all new users to input their BVN or NIN numbers before a wallet can be created.

To upgrade their wallet KYC level using their BVN and NIN, PalmPay users are required to log into their app and follow the steps.

Chika Nwosu, Managing Director, PalmPay, had earlier welcomed the CBN directive on all existing and new users having BVN or NIN, stating that “We are committed to ensuring compliance and fostering a secure financial ecosystem.

“As a forward-thinking fintech platform, we believe that this measure will enhance the overall security of users’ wallets and the protection of users’ data while providing seamless financial services.

“Through various in-app activities, we have always encouraged our users to link their wallets with their BVN or NIN. We are fully aligned to drive the new Directive.

“In all of this, we believe this measure will reduce fraudulent activities and provide a safe banking environment for all,” Mr Nwosu added, encouraging users to “update their KYC information on the app to ensure compliance with the directive.”

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TECHDIGEST – The House of Representatives has directed the Central Bank of Nigeria (CBN) to stop its directive on the addition of social media handles as part of the `Know Your Customer’ (KYC) requirement for bank customers.

This followed the adoption of a motion by Rep. Kingsley Chinda (PDP-Rivers) and a few others at plenary in Abuja on Tuesday.

He said as laudable as the directive might appear, it would be unnecessary as it was likely to bear pressure on teeming Nigerian masses at this trying period.

He said the directive by the CBN was in conflict with the provision of Section 37 of the Constitution of the Federal Republic of Nigeria, 1999 on the right to privacy of citizens.

He said banks in the country already had the names, telephone numbers, passport photographs, emails, National Identification Numbers (NIN), Biometric Verification Numbers (BVN), utility bills and other basic requirements to identify, know and monitor customers.

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He said there were better means of monitoring money laundering, terrorism financing, and proliferation financing, such as the Nigeria Police Force (NPF), Nigeria Financial Intelligence Unit (NFIU).

Others include the Economic and Financial Crimes Commission (EFCC), intelligence and crime tracking agencies, amongst others.

He said if the directive took effect, Nigerians who were not on social media, with large turnovers from their businesses and trades, would be compelled to or systematically excluded from formal banking systems.

Chinda added that this would come with its attendant negative effects and implications.

He expressed worry about the untold hardships the directive would cause millions of Nigerians, especially the illiterate, or semi-literate business owners, traders and entrepreneurs living in the villages.

According to him, implementing the CBN’s directive at this point may clearly be unnecessary as it is likely to bear a lot of pressure on the teeming Nigerian masses.
Adopting the motion, the house stressed the need to revisit and halt the Central Bank of Nigeria directive to reduce the hardship and pain faced by Nigerians.

The house mandated the Committee on Banking and Currency (when constituted) to investigate the matter and report back within three weeks for further legislative action.

The house also mandated the Committee on Legislative Compliance (when constituted) to ensure implementation.

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TECHDIGEST – The Socio-Economic Rights and Accountability Project (SERAP) threatened to sue the Central Bank of Nigeria (CBN) if it doesn’t withdraw a recently published regulation, ‘the Customer Due Diligence Regulations 2023′ released on Friday, June 23, 2023.

“All financial institutions — including banks, credit unions, and savings and loan organisations — must collect and verify customers’ social media handles”.

CBN stated that the reason for the new policy is to increase compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) provisions.

READ ALSO: CBN Directs Banks to Obtain Customers’ Social Media Handles, Digital IDs

CBN further explained that this information will be combined with other Know Your Customer (KYC) data, like legal names, addresses, contact information, and identification documents, to create a comprehensive customer profile.

SERAP claims that the regulation violates Nigerians’ rights to privacy and freedom of expression.

SERAP stated that since banks and other financial institutions already collect these information, asking for a customer’s social media handles or addresses serves no legitimate purpose.

Because of this, SERAP asked that the CBN repeal the law three days after its receiving and/or publishing its letter or it could sue the apex bank.

Failure to do so would allow SERAP to pursue all available legal remedies to compel the CBN to abide by its request in the public interest.

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TECHDIGEST – The Central Bank of Nigeria (CBN) has directed banks to social media handles and digital ID of bank customers a mandatory requirement for the Know Your Customer (KYC) policy in the financial industry going forward.

A digital ID is an electronic representation of personally identifying information that may be used to verify the identity of a person.

The move, the apex bank said, is aimed at strengthening the fight against financial crimes.

This was contained in the CBN’s Customer Due Diligence Regulations 2023 report, which was posted on its website and addressed to all banks and other financial institutions.

The regulation, signed by the CBN Director, Financial Policy and Regulations Department, Chibuzo Efobi, was aimed at bolstering compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) provisions while aligning with international best practices.

Under the Social Media Handles Under Section 6 (IV) of the new regulation, financial institutions operating under the regulatory purview of the CBN are now obligated to collect and verify customers’ social media handles as part of their KYC process.

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 This requirement applies to both individuals and legal entities and seeks to enhance the accuracy and depth of customer identification.

According to the new regulation, financial institutions will leverage the information responsibly and strictly adhere to data privacy and protection regulations.

It also stated that the inclusion of social media handles in KYC requirements will also enhance the accuracy and depth of customer identification.

By obtaining this additional information, financial institutions can gain valuable insights into customers’ online presence and activities, enabling better assessment of potential risks associated with money laundering, terrorism financing, and proliferation financing.

The apex bank noted that it is now mandatory for financial institutions to collect and verify customers’ social media handles as part of their KYC requirements.

This new regulation, which complements the existing provisions outlined in the CBN’s Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction in Financial Institutions Regulations of 2022, was designed to fortify the fight against money laundering, terrorism financing, and proliferation financing.

Under the new regime, financial institutions are required to establish internal processes and procedures for conducting customer due diligence measures for both potential and existing customers, including occasional customers.

The banks must identify customers, whether individuals or legal entities, and obtain specific information such as legal names, addresses, contact details, identification documents, account types, nature of banking relationships, and signatures, the framework further specified.

Moreover, the regulations emphasised the need to identify politically exposed persons (PEPs).

The Guidance Notes on Politically Exposed Persons Financial Policy and Regulation Department June 2023, clearly stated that to verify customer identities, financial institutions must rely on reliable and independent source documents, data, or information.

For individuals, the process involves confirming the date of birth, residential address, contact details, and the validity of official documentation.

In the case of legal persons or legal arrangements, financial institutions are required to undertake searches on public registries or databases, review annual reports or relevant financial statements, and examine board resolutions.

The regulation also emphasised the importance of record-keeping and maintaining up-to-date customer information.

Under the regulation, financial institutions must retain records obtained through customer due diligence measures, account files, business correspondence, and analysis results for at least five years after the termination or cessation of a business relationship or an occasional transaction.

Regular reviews of existing customer records are required based on risk categories, with high-risk customers requiring annual reviews, medium-risk customers requiring reviews every 18 months, and low-risk customers requiring reviews every three years.

The CBN’s decision to include social media handles as a mandatory KYC requirement recognises the growing influence and prevalence of social media platforms in individuals’ and businesses’ daily lives.

The apex bank pointed out that social media can provide valuable information about customers’ professional networks, affiliations, and potential sources of income.

Thus, financial institutions will be required to establish internal processes and procedures to collect and verify customers’ social media handles accurately.

The information will be used alongside other KYC data, such as legal names, addresses, contact details, and identification documents, to create a comprehensive profile of the customer.

Essentially, the addition of social media handles to the KYC requirements reflects the CBN’s commitment to keeping pace with technological advancements and evolving risks in the financial sector.

By adapting regulations to include digital footprints, the CBN aims to ensure that financial institutions have a more holistic understanding of their customers, promoting enhanced due diligence and risk mitigation, the apex bank stressed.

This development serves as a reminder to individuals and businesses to be mindful of their online presence and activities.

Customers should also ensure that the information shared on social media platforms aligns with their stated profiles and remains consistent with their financial transactions.

The CBN stated that the objective of the guidance was to assist FIs in the identification and management of risks associated with PEPs in the course of business relationships.

According to the CBN, “Financial institutions in the ordinary course of their businesses, establish business relationships with Politically Exposed Persons (PEPs) who may be vulnerable to corruption and thus may portend reputational and financial crime risks to the FI.

“PEPs pose a high risk of money laundering, financing of terrorism, and proliferation financing (ML/FT/PF) due to the possibility that individuals holding such positions may misuse their power and influence for personal gain or advantage to themselves, close family members, and/or associates.

“Such individuals may also use their families or close associates to conceal illicit funds and assets. In addition, they may also seek to use their power and influence to gain representation and/or access to or control of, legal entities for similar purposes,” the apex bank added.

The apex, as a result, mandated financial institutions to comply with the provisions of the CBN Anti-Money Laundering, Combating Financing of Terrorism and Countering Financing of Proliferation of Weapons of Mass Destruction (AML/CFT/CPF) Regulations, 2022 to mitigate the potential risks posed by PEPs.

“Amongst these obligations is the requirement to apply a risk-based approach to identifying Politically Exposed Persons (PEPs) and to apply appropriate Enhanced Due Diligence (EDD) measures when dealing with those that pose higher AML/CFT/CPF risks.

“In view of the corruption levels in Nigeria, domestic PEPs are rated highly vulnerable to financial risks, therefore, by default, most domestic PEPs are considered high risk. Foreign PEPs and PEPs with prominent functions in international organizations should be categorized based on the level of risk as assessed by financial institutions.”

In addition, it said: “Consequently, the CBN issues this Guidance in line with CBN AML/CFT/CPF Regulations 2022, FATF Recommendations, FATF Guidance on PEPs (2013) and Wolfsberg Guidance on PEPs (2017), to assist FIs in the identification and management of risks associated with PEPs.

“This guidance provides minimum standards for FIs in their relationships with PEPs and does not limit measures to be taken by FIs to meet their statutory obligations. The Guidance Notes will be revised from time to time, as necessary,” CBN added.

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