E-Financial
PalmPay’s Efforts at Curtailing Cyber Fraud: Two Sides of the Same Coin
The financial inclusion rate in Nigeria has improved. Since the country adopted an inclusion strategy in 2012, adult Nigerians with a bank account have increased, and now account for more than two-thirds of the financially included.
According to the 2023 Report on Access to Financial Services in Nigeria, financial inclusion continues to expand and has so far been fueled by marginal growth among the country’s banked population and major gains in non-bank formal adoption.
Although approximately 40 million adult Nigerians remain formally excluded, formal financial inclusion was said to have grown from 56% in 2020 to 64% in 2023.
In the last four years, fintech companies in Nigeria have played a vital role in closing this gap, bringing financial services to the country’s unbanked and driving economic growth. Their successes, however, have not come without challenges.
Following the penetration of digital payment platforms in Africa, a fraud epidemic has plagued the fintech ecosystem in Nigeria, with Mobile, Web and POS being the most exploited channels by fraudsters in the country in 2023.
According to the 2023 NIBSS Annual Fraud Landscape report, incidents of “Fraud loss via Internet Banking increased by 325% between 2022 and 2023.”
The rise of digital payment platforms in Nigeria has increased the potential for cyber fraud, with fintech companies now forced to balance between making payment apps user-friendly and prioritising users’ safety to stem increased cyber fraud.
Fintech Side of the Coin
To address the fraud epidemic, the Fintech Association of Nigeria (FintechNGR) plans to unveil a fraud reporting framework sometime this year, while fintech platforms such as PalmPay continue to take the initiative to reevaluate their in-app safety features to protect their users from the activities of fraudsters.
Since launching in Nigeria in 2019 under a Mobile Money Operator (MMO) licence by CBN, PalmPay has grown to over 30 million users as part of its payment ecosystem.
In building a user-friendly app, PalmPay has also sought to foster a secure financial ecosystem by integrating safety features into its app so that the millions of users who transact with the app do so in a safe and trusted environment.
In general, PalmPay employs a closed-loop risk management system that involves continuous monitoring, analysis, and response to fraud threats and allows it to detect and prevent security risks in real-time and reduce the potential impact of fraud.
In particular, to reduce incidents of fraud, protect their users from fraudsters, and provide a safe banking environment, PalmPay binds their users’ phones to the app and has an auto-logout and biometrics feature to confirm users’ identity.
PalmPay Safety Features
Chika Nwosu, Managing Director, PalmPay, said the reason why the fintech platform has witnessed astonishing growth in four years was because “We prioritise the safety and security of our users.” He said they’ve been able to achieve this by “marrying security and safety with the customer experience to create a balance.”
Because it understands that curtailing fraud is a two-way street, PalmPay runs a Wallet Safety Workshop to teach users of its app and POS machines various security topics covering payment security and common security issues in daily life, such as password management, fraud detection, phishing and risk identification.
The safety workshop underscores PalmPay’s understanding of user security as an important part of curtailing fraud and encourages its users to ensure that they always secure their wallets using the several built-in safety features in its app.
A recent example was a series of campaigns encouraging its users to link their wallets with their BVN or NIN, following the directive by the Central Bank of Nigeria (CBN) for users of fintech platforms to link their wallets with their BVN or NIN.
To encourage the users to meet the CBN deadline of January 31, 2024, PalmPay introduced an incentive payment system where up to N500 was paid to users who got ahead of the deadline and validated their wallet information.
PalmPay users have several options for protecting themselves against fraudsters such as the two-factor verification process that makes it difficult for fraudsters to gain access to users’ apps without spooking them. In the first half of 2023, millions of users linked their secure email addresses to their PalmPay app. With this feature, PalmPay users effortlessly receive OTPs for their in-app login.
The PalmPay app has a device management feature that allows users to manage trusted devices and remove untrusted devices. When logging in on an untrusted device, users complete a comprehensive security verification process that involves inputting an OTP and their PIN to ensure security.
Role of PalmPay Users
While fintech companies play a role in protecting users from cyber fraud, the rising fraud incidents in Nigeria can sometimes be due to poor digital and financial literacy, but most especially the failure of many victims to report an attack.
In a report last year, Temitayo Oduwole, Head of IT and Payments, PalmPay, observed that customers do not take prompt action in incidents of fraud and that “Only 33 per cent report the same day or take the necessary right action on the same day.”
Effective investigation into incidents of fraud begins when the user reports to their bank that fraud has occurred. However, fraud, if not reported within the hour the crime occurred, allows criminals to move the stolen funds to ‘safe’ places.
Precaution remains the best remedy to protect oneself from cyber fraud. Anti-fraud expert Tosin Adenekan warned fintech users against trusting strangers with their personal information when performing digital transactions.
According to Mrs Adenekan, “Users of fintech platforms owe it to themselves to follow standard safety precautions to avoid being defrauded by cyber criminals.
“Do not allow strangers such as POS operators to handle personal ATM cards. This is because cybercriminals often posing as helpful POS operators can exploit this to observe PIN entries and distract card owners, ultimately swapping ATM cards.”
She urged fintech users to “take steps to reduce incidents of fraud on their wallets by creating strong passwords, enabling the two-factor authentication features on their fintech app, monitoring their wallets for unauthorised transactions, and protecting their personal login information when in public from prying eyes.”
Other steps to take include “regularly updating their apps, setting limits for their wallets, staying alert for phishing attempts, getting the proper financial education, using secure internet connection, being aware of pop-ups and fraudulent emails, and ensuring that operating systems and internet connections are up to date.”
To prevent falling victim to cyber fraud, Mrs Adenekan urged fintech users to adhere to these safety guidelines and “don’t trust everything on the internet.”
Securities and Exchange Commission (SEC) has issued an urgent directive requiring all capital market-regulated entities (CMREs) to immediately subscribe to Nigeria’s Sanctions (NigSac) Alerts system.
Effective immediately, failure to comply with this, or other AML/CFT regulations, may result in severe fines, suspension of operations, or revocation of registration.
This follows fresh designations by both local and international authorities of individuals and Bureau de Change operators for alleged direct involvement in terrorism financing and material support to the Islamic State West Africa Province (ISWAP).
The directive, according to three circulars issued by the apex capital market regulator, requires a mandatory compliance measure with threats of fines, operational suspension, or outright registration revocation for non-compliance.
The directive, pursuant to the implementation of Financial Action Task Force (FATF) statements on high-risk jurisdictions, signals an escalation in Nigeria’s anti-money laundering and counter-terrorism financing regime.
The SEC’s broader circular implementing FATF high-risk jurisdiction statements reflects Nigeria’s heightened exposure to international scrutiny. SEC, in line with directives from Central Bank of Nigeria (CBN), now requires CMREs to terminate all correspondent banking relationships with listed high-risk jurisdictions, business entities and individuals.
“In line with the provisions of the Terrorism Prevention and Prohibition Act (TPPA), 2022, the Nigeria Sanctions Committee (NSC) has designated six (6) Individuals and three (3) Entities as terrorist financiers and subsequently added them to the Nigeria Sanctions List,” SEC stated in circular to all market operators.
The circular mandated all capital market regulated entities and individuals to do the following:
“Immediately, identify and freeze, without prior notice, all funds, assets, and any other economic resources belonging to the designated persons and entities in their possession and report same to the Secretariat of the Nigeria Sanctions Committee;
“Report to the Secretariat of the Nigeria Sanctions Committee any assets frozen or actions taken in compliance with the designation, including attempted transactions;
“Immediately file a suspicious transactions report to the Nigerian Financial Intelligence Unit (NFIU) for further analysis on the financial activities;
“Report as a suspicious transactions report to the NFIU, all cases of name matching in financial transactions prior to or after receipt of this Sanctions List;
“Subsequently prohibit dealings with the designated persons and entities; and continue to check for transactions relating to the designated persons and entities and report findings to the Nigeria Sanctions Committee through [email protected]”, SEC stated.
“Take Note that at all times, any unusual or suspicious transactions shall be promptly reported to the NFIU,” SEC warned.
According to the capital market apex regulator, the circular takes immediate effect and failure to comply with the directives constitutes a violation of the Investments and Securities Act, 2025, and the SEC AML/CFT Rules and Regulations and such failure would attract appropriate regulatory sanctions, including fines, suspension of operations, or revocation of registration.
The directive implies that capital market operators should immediately audit their AML/CFT technology stacks to ensure NigSac Alerts subscription and automated flagging capability.
CMREs are required to file suspicious transactions reports with the Nigerian Financial Intelligence Unit (NFIU) for any name matching with designated individuals and entities, whether such matches occur pre- or post-transaction.
The obligation extends to reporting all funds frozen and actions taken in compliance with designations to the NSC Secretariat via [email protected].
The designations also create secondary compliance obligations: CMREs must now maintain watchlists that incorporate designations from both the NSC and US Treasury, as regulatory expectations implicitly track international sanctions coordination.
For institutional investors and fund managers, this translates to enhanced due diligence on counterparty relationships, particularly where transactions flow through informal financial infrastructure or jurisdictions flagged under FATF increased monitoring status.
The Africa Finance Corporation (AFC) has raised CHF350 million, about $430 million, through a five-year digital bond, marking a major step in the use of regulated digital financial infrastructure by an African institution.
The transaction is the first time an African institution has issued a digital bond that is listed, traded and settled on a regulated digital exchange. It is also the largest digital bond ever issued in the Swiss franc market, according to AFC.
The deal strengthens AFC’s access to international investors as the Lagos based development finance institution seeks to diversify its sources of funding and raise more long-term capital for infrastructure and industrial projects across Africa.
The bond carries a coupon of 1.4925 percent and forms part of AFC’s wider $500 million benchmark funding programme issued in June 2026. Despite a difficult global environment marked by geopolitical tensions, the transaction attracted strong investor demand.
AFC is rated A with a positive outlook by S&P Global Ratings and A3 with a stable outlook by Moody’s Ratings, giving the institution an investment grade profile in international debt markets.
Swiss investors accounted for about 90 percent of demand, while international investors made up the remaining 10 percent. Banks and other financial institutions accounted for 57 percent of the order book, followed by asset managers at 37 percent and hedge funds at 6 percent.
“This transaction is about far more than achieving competitive pricing. It marks another significant milestone in AFC’s funding journey and underscores the confidence global investors continue to place in our strategy, credit strength, and development impact,” Samaila Zubairu, President and Chief Executive Officer of AFC, said.
Zubairu said continued diversification and innovation in AFC’s funding strategy would be important to mobilising the long term capital needed to support Africa’s industrialisation and economic transformation.
The transaction is AFC’s fourth and largest Swiss franc denominated issuance. It follows a CHF150 million green bond issued in 2020, which was the corporation’s first green bond transaction.
Banji Fehintola, Executive Board Member and Head of Financial Services at AFC, described the latest issuance as an important milestone for the corporation’s funding programme.
“Pricing the largest digital bond ever issued in the Swiss Franc market reflects not only the strength of AFC’s credit but the depth of trust that Swiss and international investors have placed in our strategy over time,” Fehintola said.
The bond was issued under AFC’s $5 billion Global Medium Term Note Programme and is structured as a tokenised security using distributed ledger technology. Ownership is recorded on a regulated digital register, while settlement takes place through regulated digital market infrastructure.
The notes are listed and admitted for trading on the SIX Swiss Exchange and deposited with SIX Digital Exchange. Clearing and settlement are handled through SIX SIS AG.
The structure gives AFC access to an alternative form of capital markets infrastructure while showing how distributed ledger technology can be used in institutional debt markets under established regulatory standards.
The proceeds will be used for AFC’s general funding needs, supporting its capacity to finance infrastructure and industrial projects across Africa.
Commerzbank AG acted as technical lead for the transaction, while Deutsche Bank AG London Branch, through its Zurich branch, also participated in arranging the deal.
For AFC, the issuance adds to a series of capital markets transactions designed to broaden its funding base and reduce dependence on a narrow group of financing sources.
The strong demand also points to continued investor appetite for African development finance institutions with established credit profiles, particularly those capable of accessing international markets while using new financial technology within regulated frameworks.
KudiWave Technologies Limited has raised questions over the transfer of N750,369,439.04 from its account with PalmPay Limited, seeking clarification on the timing, destination and circumstances surrounding the transaction.
In a statement, on Tuesday, KudiWave said the disputed debit was recorded on July 15, 2026, under the narration “Judicial Adjustment”.
The company said it was not notified of, or did not authorise, the transaction.
According to KudiWave, it had already approached the Federal High Court in Lagos to challenge an earlier order affecting its account.Politics News Service
The company said its application, filed on July 3, sought to set aside the June 29 order and stay its execution.
“The motion was heard on July 13 and adjourned for ruling. Two days later, the N750.37 million was transferred out of the account,” the company said.
KudiWave further stated that PalmPay had been served with the application before the July 15 transaction and did not file a counter-affidavit opposing the application.
The company also raised questions about an earlier movement of funds on July 11, which it said became apparent after access to the account was restored.
According to KudiWave, its account records showed that the funds were moved on July 11 and returned the same day before another transfer was recorded on July 15.
“PalmPay moved the money on July 11 and sent it back that same day. They then took it out again on July 15. When the account was opened, we saw how the money had been moved around while the account was frozen and we were not aware of it,” the company said.
The dispute followed an ex parte order obtained by the Inspector General of Police through officers of the Police Special Fraud Unit in Ikoyi, which placed restrictions on accounts belonging to several parties, including KudiWave, pending investigation.
The restriction was subsequently implemented on KudiWave’s account with PalmPay.
Further proceedings were filed under Suit No. FHC/L/CS/795/2026 before Justice Ibrahim Ahmad Kala of the Federal High Court, Lagos Judicial Division, in relation to funds standing to KudiWave’s credit.
KudiWave said the court granted an application on June 29.
The company subsequently challenged the order, arguing that it had not been properly served with the processes leading to the decision and had not been effectively brought before the court when the application was heard.
According to KudiWave, Justice Kala considered the company’s subsequent application on July 22 and set aside, vacated and discharged the June 29 order.
The company said the court also directed that the restrictions placed on its account be removed.
KudiWave further stated that the court examined the circumstances surrounding the purported service of the processes and raised questions about whether leaving documents at a gate, without sufficient indication of the company’s specific address, amounted to effective service.
The company quoted the court as describing the circumstances surrounding the service as “very curious”.
KudiWave also said the ruling recognised the court’s inherent power to set aside its own decision where circumstances justify such intervention.
The July 22 ruling came after the July 15 transfer.
KudiWave, however, said the transaction should be considered in the context of the fact that the June 29 order was already being challenged and that its application had been argued before the court two days earlier.
The company has also questioned the destination of the funds.
According to KudiWave, its understanding of the June 29 order was that the identified funds were to be transferred to a designated Police Recovery Account associated with the Police Special Fraud Unit.
The company said its account records instead indicated that the N750,369,439.04 was transferred to an Access Bank business account.
KudiWave said it wants clarification on the identity of the beneficiary, the instruction that authorised the transfer and the basis for the July 11 movement of funds.
“The issue for us is simple. If the order identified a particular account for the funds, there must be a clear explanation of why our records show the money going elsewhere and who ultimately received it,” the company said.
KudiWave said it was seeking a reconciliation of transactions carried out on its account during the restriction period and was considering further legal and regulatory steps in relation to the disputed transactions.
The company also said that, during earlier efforts to resolve the restriction, Barrister Prince Oko, its Company Secretary, met with officers of the Police Special Fraud Unit.
KudiWave alleged that a request for N50 million was made in connection with efforts to remove the restriction and said the company rejected the request.
The allegation has not been independently established and has not been determined by a court.
KudiWave maintained that its concerns do not relate to compliance with lawful court orders but to whether the transactions involving its funds were carried out in accordance with the terms of the relevant judicial directive.
The company said it wants clarification on the July 11 transactions, the subsequent N750,369,439.04 transfer on July 15, the destination of the funds and the circumstances surrounding the transactions.
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