CBN Imposes Temporary Ban on Fintechs in Nigeria, Causes Panic Among Bank Customers

Following a recent directive by the Central Bank of Nigeria (CBN), imposing a temporary ban on several key players in the fintech industry from onboarding new customers, panic has spread among bank customers in the country.

The affected fintech firms, including OPay, Palmpay, Kuda Bank, and Moniepoint, are in the spotlight due to the CBN’s rigorous audit of their Know-Your-Customer (KYC) processes, aimed at preventing money laundering and terrorism financing.

Reliable sources within these fintech companies, who chose to remain anonymous, confirmed the directive as part of a broader effort to align fintech operational standards with traditional banks and microfinance banks, enhancing the integrity and stability of Nigeria’s financial system.

The recent summons of fintech heads to Abuja for discussions on KYC-related issues signals a heightened regulatory oversight in the rapidly expanding fintech sector.

The President of the Bank Customers Association of Nigeria has expressed support for the CBN’s decision, emphasizing the need for strict regulatory compliance by all financial institutions.

Emmanuel Odunsi on X (formerly Twitter) welcomed the move, highlighting the importance of robust KYC processes to combat scams and fraudulent activities.

Fidelity Bank‘s previous concerns led to a block on transfers to major fintech platforms, prompting the CBN to introduce new KYC rules in November 2023, specifically impacting fintech startups.

Financial inclusion targets in Nigeria may be affected by the temporary ban on new customer onboarding, with significant implications for fintech companies that have played crucial roles in deepening financial access in the country.

A senior representative of PalmPay confirmed a CBN directive for fintechs to review their KYC procedures, causing a pause in new customer onboarding until further instructions are provided.

Customers have taken to social media platforms expressing concerns about the safety of their funds, with some suggesting transferring funds out of the affected platforms temporarily until the regulatory issues are resolved.