The Central Bank of Nigeria has fined four commercial banks – Access bank, Stanbic IBTC bank, United Bank of Africa and Fidelity Bank, a total of N814.3 million ($1.96 million) for failing to comply with regulations prohibiting cryptocurrency transactions in the country.
According to a Bloomberg report, “the penalties are part of efforts by the central bank to ensure commercial banks implement a February 2021 order to block trading in cryptocurrencies because of the threat that it says they pose to Nigeria’s financial system.”
The apex bank in its order, reminded the financial institutions of the circular dated January 12, 2017 that cautioned the financial institutions and the public of the risk associated with transactions in cryptocurrency. The circular stated that virtual currencies such as Bitcoins, Monero, Ripples, Litecoin, Dogecoin, Onecoin, e.t.c and other similar products were not legal tender in Nigeria, thus any bank or institution that transacts in such businesses did so at its own risk.
Access Bank, the biggest bank by asset size, was fined N500 million ($1.2 million), the largest, for failure to close customers’ crypto accounts.
Stanbic IBTC, the domestic unit of Standard Bank Group was fined N200 million ($481k) for two accounts alleged to have been used for crypto transactions, according to Wole Adeniyi, CEO during an investor conference call on Tuesday in Lagos. He said that though Stanbic IBTC bank followed the Central bank directive, the said transactions might have passed through its system undetected. The CEO said that the apex bank was able to detect the relevant transactions using an “advanced capability” that Nigerian banks don’t have access to, and they’ve asked the central bank to share the technology.
United Bank for Africa was penalised N100 million ($240.5k) for digital currency transactions carried out by one of its customers while Fidelity Bank was fined N14.3 million ($34,398).
CBN told banks in a February 2021 circular to close accounts of persons or entities involved in cryptocurrency transactions within their systems.
“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,” the circular signed by Bello Hassan, director for banking supervision, and Musa Jimoh, director of the payment system management department, read.
“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 bank said virtual currencies are largely used in terrorism financing and money laundering, considering the anonymity of virtual transactions.
Nigeria accounts for the largest volume of cryptocurrency transactions outside the US.’ according to Paxful, a bitcoin marketplace.
