Banks have been ordered by the Central Bank of Nigeria (CBN) to close accounts within their networks of persons or entities involved in crypto-currency transactions.
According to a circular circulated to Deposit Money Banks (DMBs), non-bank financial institutions (NBFIs) and other financial institutions on 5 February 2021, this is the case (OFIs).
The circular signed by Bello Hassan, director for banking supervision, and Musa Jimoh, director of the payment system management department, read, “Further to earlier regulatory directives on the subject, the bank hereby wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited. ”
“Accordingly, all DMBs, NBFIs and OFIs are directed to identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.”
The apex bank alerted local financial institutions against making any crypto transactions or facilitating crypto exchange payments.
In January 2017, CBN reported that, given the anonymity of virtual transactions, digital currencies such as bitcoin, litecoin, and others are largely used in terrorist financing and money laundering.
The bank said that virtual currencies, given the privacy of virtual transactions, are largely used in the financing of terrorism and money laundering.
However, CBN said in an earlier statement that “The attention of bank and other financial institutions is hereby drawn to the above risks and you are required to take the following actions actions pending substantive regulation or decision by the CBN.”
“Ensure that you do not use, hold, trade and/or transact in any way in virtual currencies. Ensure that existing customers that are virtual currency exchangers have effective capital AML/CFT controls that enable them to comply with customer identification, verification and transfer, monitoring requirements.
The Central Bank of Nigeria (CBN) also said in February 2018 that individuals who invest in cryptocurrencies are doing so at their own risk because they are not covered by the law.
Educator, writer and legal researcher at Alafarika for Studies and Consultancy.