Central Bank of Nigeria (CBN) has issued a directive to four fintech companies, instructing them to halt the onboarding of new customers pending further notice.

The affected fintechs—OPay, Palmpay, Kuda Bank, and Moniepoint—have been linked to allegations of accounts being used for illicit foreign exchange transactions.

Representatives from the companies confirmed that the CBN’s order is related to these allegations.

However, they noted that the directive might be misdirected, as the majority of the implicated accounts belonged to commercial banks, not fintech platforms.

“I can confirm that 90% of the accounts implicated in the illicit forex transactions are with commercial banks, and only 10% are with fintechs. Why then has the CBN not extended this directive to the commercial banks? We face a widespread issue here, and targeting fintechs seems like an unfair focus on the more vulnerable targets,” one of the sources explained.

The Economic and Financial Crimes Commission (EFCC) recently secured a court order to freeze at least 1,146 bank accounts owned by various individuals and companies allegedly involved in illegal foreign exchange transactions.

Justice Emeka Nwite, in a decision on the ex-parte motion presented by the anti-graft agency’s lawyer, Ekele Iheanacho, also approved the commission’s request to complete the investigation within 90 days.

Nigerian banks lost a total of N2.09 billion to frauds in Q4 2023 with mobile emerging as the top channel through which the largest amount was lost, according to report by Nairametrics.

This was revealed in the latest Fraud and Forgeries report released by the Financial Institutions Training Centre (FITC).

According to the report, the N2.09 billion loss recorded in Q4 was a 77.58% increase compared with N1.18 billion lost by the banks in Q3 2024.

FITC in the report also revealed that a total of 12,405 cases of fraud were recorded in Q4 2024. When compared to the 12,066 cases recorded in Q3, this shows a 2.81% increase.

“The data for the last quarter of 2023 indicates that computer/web fraud, mobile fraud, and POS-related fraud were the three most prevalent types of fraud, continuing the trend observed all year round in 2023,” the report added.

However, in terms of the actual loss through the channels, FITC said mobile fraud accounted for the highest loss at 17.039% with a value of N356.57 million, while suppression of cash entries accounted for 3.75%, totaling N78.45 million.

The report noted that there was an overall increase in the amount lost across all channels except for Bank Branch which recorded a decline and Van and Agents which didn’t record any fraud cases, while the amount lost via the web, bank branch, and PoS channel decreased.

“In their order of magnitude, the amount lost through the ATM channel grew by 711.15%, raising the value to 40.47 million from N4.99 million in Q3. POS fraud also witnessed a surge in the amount lost by 95.01% from N7.5 million to N14.6 million.

“For Web fraud, the amount lost increased significantly by 50.49%, rising from N19.12 million to N28.77 million. However, bank branch-related frauds saw a decline of 59.73%, with the amount lost shrinking from N884.96 million in the previous quarter to N356.34 million in Q4 2023,” it said.

Strengthening security in banks

Advising the banks to respond adequately to the rising cases of fraud, FITC said Nigerian banks will need to invest heavily in upgrading and fortifying their digital infrastructure. This, it said, involves implementing cutting-edge cybersecurity measures, robust identity verification systems, and real-time transaction monitoring.

According to the organization, regular security audits and penetration testing are essential for promptly identifying and addressing system vulnerabilities.

“Furthermore, banks should prioritize customer and employee education to raise awareness about prevalent fraud schemes and promote effective prevention practices. Collaborating closely with law enforcement agencies is crucial to enhancing the capacity for investigating and prosecuting fraud cases.

“Regulatory compliance should be a top priority, requiring banks to stay current with evaluating regulations related to fraud prevention and data security.

Compliance not only ensures adherence to legal standards but also demonstrates a commitment to safeguarding customers’ financial assets,” FITC advised.

It added that following these recommendations would empower Nigerian commercial and merchant banks to better protect themselves and their customers against fraud and forgeries in the current situation.

Nigerians have more trust in Bitcoin-based systems than in traditional alternatives such as banks and government, a new report by Elastos, an open-source blockchain website, has stated.

According to its inaugural BIT Index (Bitcoin; Innovation & Trust), emerging markets are driving the adoption of Bitcoin, with Nigeria and the UAE leading the charge.

The report revealed that 66 per cent of Nigerian respondents and 35 per cent from Brazil had more confidence in Bitcoin-based systems than alternatives like banks or national governments, compared to just 16 per cent in Germany and 21 per cent in the UK.

The survey also revealed that 20 per cent of Nigerian consumers use Bitcoin to conduct transactions at least once a day, while 67 per cent would have more trust in Bitcoin to protect their life savings than traditional services like banks, local governments, and cash.

According to the platform, the research was compiled from online interviews conducted with 1,407 self-defined ‘tech savvy’ respondents in Brazil, Germany, Nigeria, South Korea, the UAE, the UK, and the US.

It stated that the interviews were completed by a third party, a registered market research company, between March 30 and April 4, 2024.

“When it comes to ensuring the integrity of online transactions, emerging market respondents also revealed their relative confidence in Bitcoin compared to alternatives,” it indicated.

According to the report, 66 per cent of Nigerian respondents and 35 per cent of Brazil have more confidence in Bitcoin-based systems than alternatives, such as banks or national governments, compared to figures of just 16 per cent (Germany) and 21 per cent (UK) who feel the same.

Meanwhile, Jonathan Hargreaves,  Elastos’ global head, Business Development & ESG, described the BIT Index’s inaugural findings as indicative of the role the ‘global south’ was playing in the adoption of decentralised currencies such as Bitcoin.

“The BIT Index offers a fascinating and sobering insight into the industry. The fact that over two-thirds of Nigerian consumers and a third of their counterparts from the UAE and Brazil would feel more confident entrusting their life savings to Bitcoin rather than traditional financial instruments speaks volumes about the protagonism these regions are already playing.

“In many instances, the driving factor is the absence of viable, accessible alternatives to, for instance, conduct cross-border transactions or mitigate the impact of inflation,” he said.

According to Chainalysis, a cryptocurrency research firm, Nigeria’s crypto transaction volume grew year-over-year to $56.7bn in 2023.

It stated that the country’s crypto economy continued to grow despite market turmoil in the space.

On the contrary, the government has been taking strong measures to restrict and clamp down on cryptocurrency exchanges and platforms operating in the country.