CBN Cracks Down on Fintech Startups.
The Central Bank of Nigeria (CBN) has intensified its scrutiny of fintech startups.
Fining two of Nigeria’s most prominent unicorns, Moniepoint and OPay, ₦1 billion each in the second quarter of 2024.
This move is part of the CBN’s efforts to enforce regulatory compliance in the rapidly growing fintech sector.
CBN’s Regulatory Checks and Compliance Issues.
The penalties followed a routine CBN audit of the fintech sector, which revealed compliance issues.
According to sources familiar with the process, these regulatory checks are a standard procedure for banks and financial institutions under CBN oversight.
At least four other fintech companies were similarly penalized, though the details of these fines remain unknown.
CBN’s Increased Reliance on Fines.
The CBN has increasingly relied on fines to enforce regulatory compliance.
In 2023, Nigerian banks paid a combined ₦678 million in penalties.
In October 2024, the central bank and the Securities and Exchange Commission (SEC) imposed a ₦15 billion fine on ten commercial banks, including Zenith and GTBank, for various infractions in the first half of the year.
Nigeria’s rapidly growing fintech sector largely operated without CBN interference.
However, the rapid expansion of fintechs like OPay and Moniepoint, which now serve millions of users, has invited greater scrutiny.
OPay, for instance, claims a customer base of around 40 million, while Moniepoint, which processed 5.2 billion transactions in 2023, does not disclose specific customer numbers but is similarly largely.
As these fintech giants have grown in influence, so too have concerns over their regulatory frameworks.
A significant issue is that many fintechs, including OPay and Moniepoint, still operate under microfinance bank licenses.
Originally intended to support micro, small, and medium enterprises, these licenses have allowed the companies to expand rapidly and service millions of customers.
However, with that expansion has come heightened concern that the current licensing framework is inadequate to safeguard customers effectively, according to one source.
Concerns Over Regulatory Frameworks.
As fintech giants like OPay and Moniepoint have grown in influence, concerns over their regulatory frameworks have also increased.
Many fintechs, including OPay and Moniepoint, still operate under microfinance bank licenses, which have allowed them to expand rapidly and service millions of customers.
However, with that expansion has come heightened concern that the current licensing framework is inadequate to safeguard customers effectively.
Beyond licensing, the CBN has also expressed concerns about the fintechs’ compliance with Know Your Customer (KYC) processes.
In April 2024, the central bank imposed a two-month ban on customer onboarding for several fintech companies, including Kuda Bank and Palmpay, citing non-compliance with KYC standards.
The ban forced fintechs to overhaul their onboarding procedures and commit to improving their compliance measures.
Moniepoint’s Quest for a Commercial Banking License.
In a bid to overcome the restrictions of its microfinance bank license, Moniepoint is working to secure a commercial banking license from the CBN.
This move would enable Moniepoint to expand its product offerings across Nigeria, including international transactions and treasury operations.
A commercial banking license would also allow Moniepoint to open physical branches, building trust in Nigeria’s historically low-trust banking environment.
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