The Central Bank of Nigeria (CBN) has taken a controversial step in its fight against alleged illicit foreign exchange (forex) transactions. The regulatory body has ordered four fintech companies – OPay, Palmpay, Kuda Bank, and Moniepoint – to halt onboarding new customers until further notice.
This move comes amidst an ongoing investigation into accounts suspected of being used for illegal forex activities. While the CBN hasn’t officially commented on the rationale behind targeting fintechs specifically, representatives from two of the affected companies anonymously confirmed to MDB that the directive is connected to these allegations.
Fintechs Dispute Fairness of CBN’s Action
However, the decision has raised concerns about its fairness. Sources from the impacted fintech companies point out a potential discrepancy. They claim that the majority of accounts linked to the illicit forex transactions belong to traditional commercial banks, not fintech platforms. One source estimated that “90% of the implicated accounts are with commercial banks, and only 10% are with fintechs.”
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This raises questions about the CBN’s approach. The sources argue that by solely targeting fintechs, the CBN might be focusing on “the more vulnerable targets” while bigger players potentially escape scrutiny.
Unclear Path Forward
The CBN’s directive has created uncertainty for both the fintech companies and potential customers. While the investigation into illegal forex transactions continues, it remains unclear how long the freeze on new accounts at these fintechs will last. Additionally, whether the CBN will extend similar restrictions to commercial banks remains to be seen.
This situation highlights the ongoing tension between financial regulators and fintech companies. While the CBN aims to maintain financial stability and combat illegal activity, fintechs argue for a level playing field and question the effectiveness of targeting them specifically. The upcoming developments in the CBN’s investigation and potential actions towards commercial banks will be crucial in understanding the full scope of this situation.
