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Wednesday, September 28, 2022

Money Laundering: Why CBN moved Against Nigerian Crypto Exchanges

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The Central Bank of Nigeria (CBN) moved to shut out crypto currency exchanges from Nigeria’s banking, financial system and the payments systems that support them, because of fears that they are facilitating money laundering in the country

The CBN in a February 5, circular with reference number: BSD/DIR/GEN/LAB/14/001, signed by Bello Hassan, Director of Banking supervision, ordered all Deposit Money Banks (DMBs), Non-Bank Financial Institutions (NBFIs), Other Financial Institutions (OFIs), to identify persons and/or entities transacting in or operating crypto currency exchanges within their systems and ensure that such accounts are closed immediately.

Sources tell MoneyCentral that the CBN has been looking at the Fintech payment space and firms operating there that seemed to facilitate cryptocurrency trading and settlement in the country as a security threat.

“The CBN has been working to clamp down on crypto firms following the #EndSARS protests when funding left the banking system and moved into crypto currencies, because the CBN got a court order to block accounts of financiers of the protests,” another source said.

Beyond that sources tell MoneyCentral that one or two FinTech payments firms may have also fallen afoul of the CBN laws by facilitating cryptocurrency trading in Nigeria and hence the associated cases of suspected money laundering.

The CBN said it had in an earlier circular to banks with ref: FPR/DIR/GEN/CIR/06/010, on January 12, 2017, warned about the risks associated with transactions in crypto currency.

“Further to regulatory directives on the subject, the Bank hereby wishes to remind regulated institutions that dealing in crypto currencies or facilitating payments for cryptocurrency exchanges is prohibited,) the CBN said.

“Please note that the breaches of this directive will attract severe regulatory sanctions.”

The CBN joins a growing list of global central banks like the Reserve Bank of India (RBI) that have banned the trading of crypto currencies like Bitcoin.

The surge in the crypto asset is helping Nigerian Bitcoin investors dodge Central bank of Nigeria (CBN) Governor Godwin Emefiele’s Opaque Foreign Exchange (FX) regime, sidestep inflation, as well as laugh all the way to the bank as Bitcoin rose by almost 300 percent last year.

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