CBN Freezes Fintech Accounts

Proshare

Wednesday, August 18, 2021 / 5:55 PM / by CSL Research/ Header Image Credit: thisdaylive

 

In a clean swoop that took the Nigerian investing community by surprise yesterday, the Central Bank of Nigeria (CBN) obtained and implemented an order of the court to freeze for 180 days the account of Financial Technology (FINTECH) Companies in the country. For the short term of their existence, these brokers have driven significant investment in foreign securities for Nigerians. The action is at the back of the receipt of an injunction, following the CBN's allegations of infractions in Foreign Exchange (FX) dealings contrary to the extant provisions of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act and the Central Bank of Nigeria foreign exchange manual. In addition, the companies were also alleged to have been operating Asset


Proshare Nigeria Pvt. Ltd.

 

Management businesses without the appropriate licensing from the Security and Exchange Commission (SEC). In 2015/2016, following the crash in crude oil price, the Central Bank of Nigeria bid to minimize the impact of FX illiquidity on the Nigerian economy had devised several measures to ration available FX. To actualize this, the CBN banned access to the official FX windows (at the time) for the importation (dealing) in 41 items, part of which there is an investment in Foreign Currency Bond and Shares. According to the CBN, Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Chaka Technologies Limited, and Trove Technologies Limited are alleged to be complicit in operating without a license as asset management companies and utilizing FX sourced from the Nigerian FX market for purchasing foreign bonds/shares in contravention of CBN's directive. In the meantime, we expect the FINTECH companies to pursue the double efforts of praying the court to step aside from the motion, and consult with both the CBN and SEC.

 

On a balance of factors, we think that this move can be counter-productive for an economy that seeks to stimulate investors' confidence and support growth. In addition, the importance of FINTECHs cannot be over emphansized, as the FINTECH sector provides supports for the Nigeria economy through the telecommunication service component of the Gross Domestic Product (GDP), promotes financial inclusion, and attract FX inflow to country. As such, we think that the regulatory authorities should prioritize consultations when dealing with the sector. Also, we believe that the current FINTECH clime provides an opportunity for Nigeria to catch up with the trend of development in the global financial space.


Proshare Nigeria Pvt. Ltd.

 

Related News

1.   CBN Secures Order Freezing Risevest, Bamboo Accounts Over "Illegal FX Transactions"

2.   CBN Obtains Freezing Orders on Individuals and Companies from FHC Abuja

3.   Analysing CBN's Guidelines for Licensing and Regulating Payment Service Holding Companies

4.   CBN Sets N10bn Capital Base for Credit Guarantee Companies

5.   CBN Issues Exposure Draft of Guidelines for Regulation and Supervision of CGC in Nigeria

6.   Payment Service Holding Company: Digital Payments Industry Remains Significantly Under Tapped

7.    CBN Releases Guidelines for Licensing and Regulation of Payment Service Holding Companies in Nigeria

8.   Backward Integration: CBN Clears Dangote, BUA on Sugar Importation into Nigeria

9.   CBN Publishes Regulatory Framework for Mobile Money Services in Nigeria

10.  CBN Publishes Supervisory Framework for Payment Service Banks

11.   Minister Appoints Titan Trust Bank Plc as a Designated Bank for the Collection of NESS Fees

12.  Central Bank of Nigeria Issues New Framework for Payment System Providers

13.   An Overview of the Central Bank of Nigeria's Regulatory Framework for Non-Bank Acquiring


Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP