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Nigerian Fintech Companies Face Account Opening Restrictions Amid Fraud Crackdown

The Central Bank of Nigeria (CBN) has reportedly directed fintech firms like Moniepoint, OPay, Kuda Bank, and Palmpay to restrict new account openings. This move comes after the recent freezing of 1,146 bank accounts linked to unauthorized forex transactions, aimed at preventing further illegal activities.

As of the time of writing, attempts to open new accounts with some of these fintechs were met with a message stating, “Sign up is currently unavailable. Please check back later.” However, existing accounts remain operational for incoming and outgoing transactions.

The Nigerian government has intensified its fight against fraud in recent times. On April 26, 2024, a Federal High Court granted an interim order requested by the Economic and Financial Crimes Commission (EFCC) to freeze at least 1,146 bank accounts belonging to individuals and businesses suspected of engaging in illegal foreign exchange transactions. The EFCC’s investigation encompasses money laundering and terrorism financing.

In a similar move last October, Fidelity Bank, a Nigerian commercial bank, restricted transactions to fintechs such as Moniepoint, Kuda, OPay, and PalmPay due to concerns about increased fraud. Additionally, in December 2023, OPay and PalmPay enforced the use of National Identity Numbers (NIN) and Bank Verification Numbers (BVN) before generating wallets, following reports of fraudulent account openings using unsuspecting individuals’ identities.

The CBN has also issued a directive freezing bank accounts not linked to a BVN or NIN by April 2024 to promote financial system stability. Furthermore, the central bank granted Unified Payments Services Limited, a fintech service provider, the country’s second Payment Terminal Service Aggregator (PTSA) license on April 26, 2024, as part of efforts to combat financial crime and market irregularities.

According to the CBN’s Financial Stability Report for June 2022, published in December 2022, 6,047 Bank Verification Numbers (BVNs) were added to the CBN’s watch list for fraudulent transactions, a 13.9% increase from 5,347 in December 2021. Additionally, 11,871 BVNs were identified as belonging to deceased individuals in 2022.

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