The Central Bank of Nigeria, CBN, has fined three banks for failing to comply with the directive to block customers from transacting in cryptocurrencies.
The penalties are part of efforts by the CBN to ensure commercial lenders implement a February 2021 order to block trading in cryptocurrencies because of the threat that it said they pose to Nigeria’s financial system.
All three Nigerian banks (UBA, Stanbic IBTC Bank, and Access Bank) that violated the CBN’s regulation were fined a combined N800 million.
One of the two-tier 1 banks was fined N500 million for failure to close customers’ crypto accounts while another was fined N100 million for digital- currency transactions by a customer, and the third bank was fined N500 million for two accounts alleged to have been used for crypto transactions.
The Chief Executive Officer of one of the affected banks, while confirming the story, said that the CBN was able to detect the relevant transactions using an “advanced capability” that Nigerian lenders do not have access to, and they have asked the central bank to share the technology.
The bank executive said, “It doesn’t seem that they are going to entertain a refund, but they are now sharing intelligence with us to be able to kind of deter clients.”
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.”
Before the circular in February 2021, CBN had in January 2017 said digital currencies such as bitcoin, litecoin, and others are largely used in terrorism financing and money laundering, considering the anonymity of virtual transactions.
The bank said virtual currencies are largely used in terrorism financing and money laundering, considering the anonymity of virtual transactions.