THE Central Bank of Nigeria, CBN, yesterday, banned banks from any transactions in virtual currencies.
Director, Financial Policy and Regulation department,
CBN, Mr. Kelvin Amugo, who announced the ban said it was necessitated
by money laundering and terrorism financing risks inherent in operations
of virtual currencies.
In a circular to
banks and other financial institutions on virtual currency operations in
Nigeria, Amogu stated: “The emergence of Virtual Currencies (VCs) has
attracted investments in payments infrastructure that provides new
methods of transmitting value over the internet. Exchange platforms Virtual currencies
“Transactions in VCs are largely untraceable and anonymous
making them susceptible to abuse by criminals, especially in money
laundering and financing of terrorism. VCs are traded in exchange
platforms that are unregulated, all over the world. Consumers may,
therefore, lose their money without any legal redress in the event these
exchanges collapse or close business.
“The development of
VCs Payment Products and Services (VCPPS) and their interactions with
other New Payment Products and Services (NPPS), give rise to the need
for guidance to protect the integrity of the Nigerian financial system.
There is, therefore, the need to address the Money Laundering/Terrorism
Financing risks associated with VC exchanges and any other type of
institutions that act as nodes, where convertible VC activities
intersect with the regulated fiat currency financial system.
“The attention of banks and other reporting financial
institutions is hereby drawn to the above risks and you are required to
take the following actions pending substantive regulation or decision by the CBN;
Ensure that you do not use, hold, and /or transact in any way in virtual currencies;
Ensure that existing customers, that are virtual currency
exchangers, have effective AML/CFT controls that enable them to comply
with customer identification, verification and transaction monitoring requirements;
“Where banks or other financial institutions are not
satisfied with the controls put in place by the virtual currency
exchangers/customers, the relationship should be discontinued
immediately; and any suspicious transactions by these customers should
immediately be reported to the Nigerian Financial Intelligence Unit
(NFIU).”
The apex bank reiterated that VCs such as Bitcoin, Ripples,
Monero, Litecoin, Dogecion, Onecoin, etc. and similar products are not
legal tenders in Nigeria, thus any bank or institution that transacts in such business does so at its own risk.”
The CBN ban is coming a week after the Securities and Exchange Commission (SEC) issued a warning against virtual currencies.
The Commission had said in a statement
last week, “the public is hereby advised to exercise extreme caution
with regard to digital (crypto currencies) as a vehicle of investments.
Given that these instruments and the persons, companies or entities that
promote them have neither been authorized, nor any guidelines/regulations
developed for them by any of the regulatory authorities in Nigeria,
there is no protection available to users or investors in these virtual
currencies from financial losses if the virtual currencies fail or the
companies promoting them go out of business.”
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