The Central Bank of Nigeria (CBN) on the 5th of February, 2021, gave a restrictive order to all Local banks and Financial institutions regarding accounts with cryptocurrency-related transactions.
The directive covered that, all transactions in cryptocurrency or facilitated cryptocurrency payments are prohibited.
From the said date of restriction, the ban has been effective, and recently all Local bank staff were reminded of compliance with the restrictive order.
The letter issued by the Central Bank of Nigeria to Financial institutions stated that accounts of persons or entities transacting in or operating with cryptocurrency exchanges should be identified and closed down immediately.
The order called up varied reactions but drew more attention to cryptocurrency. Despite the negative effect it had on cryptocurrency transactions especially for the Nigerian crypto market, it fueled peer-to-peer crypto trading.
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According to the compliance reminder which came to the notice of CryptoTvplus, there are over 17 red flags for identifying an account with transactions related to cryptocurrency, where the member staff responsibility is to either:
- Further engage the customer, then report to the compliance team, or
- Escalate to compliance department immediately
Red flags for all accounts that would attract the immediate action of the compliance department
- The Customer’s memorandum of association contains cryptocurrency dealings.
- A larger fraction of a customer’s income is derived from investment in cryptocurrency
- A customer is publicly known for cryptocurrency dealings or related transactions
- Customers who conduct transactions contrary to the expected profile of their business or their profile.
- Any corporate or FinTech accounts with a regulatory payment license, but receives multiple daily transactions
Red flags for all accounts that would necessitate further engagement of customer before being reported to the compliance department
- Any account without the Central Bank of Nigeria license or registration, but operating as a bureau de change
- Transactions involving the use of multiple accounts with no legitimate business explanation
- Significant Inflows and outflow within the same period to multiple beneficiaries
- Inflows from many unrelated wallets relatively in small amounts and subsequent transfers to another wallet
- High daily Inflows from a huge number
- Transfers from microfinance banks and FinTech accounts to individual account
- An account with high volume transactions and no charges
- An individuals’ account uses for business purposes
- A cooperative society conducting huge electronic transaction not consistent with its business profile with no business profile with funds received from multiple deposits
- Customers who settle payments with Cryptocurrencies for their international trades
- Businesses operating as case intensive entities but registered as FinTech, Computer-based, or software development companies.
- Frequent bulk transfers are completed that exceed the limit for a small business operation.
- A customer’s account receives bulk sums from multiple payees all over the country daily.
All Local Banks are to work given the Red flags and comply with the directive as the CBN is strictly monitoring non-compliance to the restrictive order, which is to close down all accounts at fault.
Staff members of the various institutions are to be involved in the monitoring of accounts, customers, and transactions.
Failure to willfully report any account will lead to staff sanction.
Is Nigeria becoming a hostile ground to innovations and to what extent will it affect wealth creation and sustainability? This is a question that will continue to remain in the mind of investors, both foreign and domestic
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