Nigerian fintechs recent commitment to regulatory compliance and customer security reflects its ongoing dedication to provide safe and inclusive banking experience to its customers.
On April 29, 2024, four fintech companies were directed by the Central Bank of Nigeria (CBN) to halt onboarding of new customers for security purposes until specific conditions were met.
The suspension was part of a broader initiative by the CBN to enhance the ‘Know Your Customer’ (KYC) processes across the financial sector. The December 2023 directive required all financial institutions to ensure valid identification for all types of accounts, strengthening measures that were initially relaxed to promote financial inclusion.
Following the restriction from the CBN on onboarding new customers, two of the four restricted fintech companies recently announced that onboarding has resumed on its mobile app for users and merchants after meeting the regulators’ requirements.
“We have worked diligently to meet the CBN’s requirements, ensuring that our customers’ data is secure and their accounts are protected from fraudulent activities. The verification of addresses for Tier 3 accounts is a critical step in this process, providing an additional layer of security for our customers,” Musty Mustapha, managing director, Kuda Microfinance Bank (Kuda MfB) said in a statement, disclosing the bank will commence onboarding this week.
He disclosed further that Kuda has made significant strides in meeting the CBN’s mandates. According to him, the bank has updated its account tiers, which now include Tier 1, Tier 2, and Tier 3.
“To open a Tier 3 account, customers are now required to provide a Bank Verification Number (BVN), National Identity Number (NIN), and proof of address, which will undergo verification. This process not only ensures compliance with regulatory standards but also enhances the security and protection of customers’ accounts,” Mustapha stated.
According to stakeholders, this milestone represents fintechs’ ongoing commitment to revolutionise the Nigerian financial services sector by providing seamless, secure, and efficient financial solutions while working assiduously with the apex regulatory body.
“Our commitment to excellence and financial security remains unwavering as we drive financial inclusion. Despite the growing interest in cryptocurrency, PalmPay does not permit cryptocurrency or virtual asset trading on our platform, and this is in line with the Central Bank of Nigeria (CBN) regulations to protect the financial ecosystem,” Chika Nwosu, Managing Director of PalmPay Nigeria, stated.
Nwosu stated further that PalmPay is committed to maintaining a robust KYC and Customer Due Diligence (CDD) systems which help to understand its users and mitigate risks effectively. According to him, PalmPay core mission remains focused on providing a safe and reliable platform for customers’ everyday financial needs.
“We monitor platform activities diligently and take necessary actions, including account closure and reporting to the relevant authorities, for any cryptocurrency or other related transactions,” Nwosu stated.
Accordingly, all new users are required to validate either NIN or BVN when registering to ensure better payment security and regulatory supervision. Also, users are urged to ensure that the information provided on their fintech platforms is up-to-date before commencing registration and to review the terms and conditions in the app and website to onboard.
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