CBN stops OPay, Palmpay, Kuda Bank, and Moniepoint from onboarding new customers.

The Central Bank of Nigeria (CBN) has issued a directive to four fintech companies, instructing them to halt the onboarding of new customers pending further notice. The affected fintechs being OPay, Palmpay, KudaBank, and Moniepoint have all been linked to allegations of accounts being used for illicit foreign exchange transactions.

In the past year, fintechs have faced increased scrutiny over their account opening processes. Earlier in October 2023, Fidelity Bank blocked transactions to OPay, Palmpay, Kuda, and Moniepoint over concerns that lax KYC processes led to an increase in fraud incidents. One month after that incident, the Central Bank shared new KYC rules for all financial institutions that appeared targeted at fintech startups.

Representatives earlier confirmed that the CBN's order is related to these allegations. However, they noted that the directive might be misdirected, as the majority of the implicated accounts belong to commercial banks, not fintech platforms. As an analysis of the 1,146 accounts blocked by the EFCC shows that only 10% are operated by fintechs, with the majority being commercial bank accounts.

The new directive of The Central Bank of Nigeria (CBN) has caused allot of controversy as many struggle to understand Why the CBN has not extended this directive to the commercial banks and it leaves many questioning that targeting fintechs seems like an unfair focus on the more vulnerable rather than a clear path to solving the problem.