Connect with us


Panic As CBN Bans Opay, Palmpay, Others’ New Accounts



Panic As CBN Bans Opay, Palmpay, Others’ New Accounts

Following the Central Bank of Nigeria (CBN) directive imposing a temporary ban on mobile money operators including prominent fintech firms from onboarding new customers, some bank customers have taken to their social media page to express panic.

This regulatory move, backed by the Bank Customers Association of Nigeria, directly affects key players in the industry such as OPay, Palmpay, Kuda Bank, and Moniepoint.

The directive, confirmed by reliable sources within major fintech companies who spoke to Punch on condition of anonymity, comes as part of the CBN’s rigorous audit of the Know-Your-Customer (KYC) processes employed by these firms.

CityMirrorNews reports that recent scrutiny has raised concerns over potential loopholes that could be exploited for money laundering and terrorism financing.

Last week, the heads of several fintech firms were summoned to Abuja to discuss KYC-related issues, signalling intensified regulatory oversight in this rapidly growing sector.

The CBN’s proactive stance aims to align the operational standards of fintechs with those of traditional deposit money banks and microfinance banks, ensuring the integrity and stability of Nigeria’s financial system.

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

“The strict regulations that govern deposit money banks must also apply to fintechs and microfinance banks to ensure the integrity of the financial institutions,” Ogubunka stated.

He said, “Anything that can disrupt the system should not be permitted. If the platforms are being used for things that are against the regulations, I think the CBN decision is OK. I don’t see anything wrong with that. It behoves the companies now to get their KYC right.

“Let them do what they are supposed to do. KYC applies to banks and other financial institutions that deposit money. It should also apply to them so that the regulators can understand what is going on and hold them accountable.”

On the other hand, Emmanuel Odunsi on X (formerly Twitter) welcomed the move, citing the need for better KYC processes to prevent scams and fraudulent activities.

“Their KYC isn’t that great. Lots of scammers are using their apps to defraud people. Most of the accounts were created by mining phone numbers, with subscribers’ permission. Almost every phone number has been linked to an account,” Odunsi said.

In October 2023, Fidelity Bank blocked transfers to OPay, Palmpay, Kuda, and Moniepoint due to concerns around KYC processes.

In response, the CBN introduced new KYC rules for all financial institutions in November 2023, which appeared to target fintech startups.

A source from Moniepoint said the company had complied with the directive, effectively halting new account creation on their platform. However, the source denied having anything to do with KYC.

It’s just a regulation from the CBN, and we’ve complied. The real question is, why are fintechs always targeted,” the source argued.

“It has nothing to do with KYC; I am aware that the CBN communicated, but this particular issue dwells on accounts related to cryptocurrency transactions,” the source revealed.

The CBN has an ambitious target to increase overall financial inclusion to 95 per cent of the adult population by 2024.

With the new order, the target may be affected, as the company processes about 100 new accounts every day.

The source argued that fintechs had played significant roles in deepening financial inclusion in the country.

The company had deployed robust and reliable digital payment infrastructure that has facilitated an average monthly transaction value of $12bn for about 1.6 million businesses, it said last year.

A senior employee of PalmPay confirmed that there was a CBN directive for fintechs to reassess their KYC processes.
This is causing a temporary pause in onboarding new customers, the source stated.

She clarified that the KYC review was a collaborative effort with the CBN, and fintechs were awaiting further instructions without a specified timeline for resolution.

Another source at OPay, who also declined to be named, said they were following the CBN’s directive and could not comment further.

“We don’t really have anything to say. It’s just a directive that we are following. The CBN has issued their directive.”

Fintech companies have faced increased regulatory scrutiny over their account opening processes.

However, some customers have also used social media, both on X (formerly Twitter) and Facebook, to express their worries and opinions on the matter.

Some customers are anxious about the safety of their funds, with Warisenibo Jumbo suggesting it’s best to transfer their money out of Opay.

Oye Niran wondered if their Moniepoint account was safe, stating, “Hope my Moniepoint account is safe.”

Larry Leanz questioned the rationale for keeping money on these platforms.

“But is it still safe to keep money there? Lanz questioned.