The Central Bank of Nigeria has halted account opening for new customers for four fintechs, including Kuda Bank, Moniepoint, OPay, and Palmpay. Following the Economic and Financial Crimes Commission’s move to block 1,146 accounts connected to unauthorised FX dealings, the directive prohibits the fintechs from onboarding new customers.

The companies provided notices to their users, stating the temporary closure of additional signups on their platforms. However, the current statement does not impact customer deposits, or banking activities for users. At the time of the announcement, the CNB did not respond to the request for comment.

The Central Bank of Nigeria’s KYC directives Throughout 2023, fintech companies faced scrutiny due to their account opening processes. For example, in October 2023, Fidelity Bank stopped transfers to OPay, Palmpay, Kuda, and Moniepoint due to concerns over inappropriate Know Your Customer (KYC) procedures and an increase in fraudulent occurrences. Shortly after, the CNB imposed additional KYC regulations for all financial institutions that were targeted at fintech startups.

The current directive, which includes the temporary closure of account opening, is related to an ongoing audit of the KYC processes of the four fintechs, as per the information provided by TechCabal. The same source mentions that the directive is connected to the EFCC’s investigation into bank accounts involved in authorised FX dealings. According to an analysis of the 1,146 accounts blocked by the authority, only 10% of them are operated by fintechs, while the majority are commercial bank accounts. Furthermore, the CNB imposed in December 2023 that all financial institutions are required to collect ID cards before creating accounts.

This comes as a contradiction to a 2013 regulation developed to assist financial inclusion and enable Nigerians to open accounts without being demanded to provide identity cards. Following this, the Nigeria Inter-Bank Settlement System (NIBSS) required banks and mobile money operators to delist unlicenced fintechs from accepting consumer deposits directly. The fintech landscape in Nigeria Supported by increased internet penetration, the emergence of ecommerce, as well as the rising population growth, Nigeria’s financial sector has been evolving, with fintech companies contributing to this expansion by providing consumer-focused products and solutions, including payments, mobile money, digital banking, lending, savings, and investments, among others.

Additionally, the growth can be attributed to the CNB’s National Financial Inclusion Strategy (NFIS), which was developed to increase the financial inclusion rate to 95% via policies like the cashless one. .