OPay, the mobile money service provider, has recently declared that it will be implementing mandatory physical address verification for all merchants enrolled in the OPay Business program. This initiative is a direct response to the regulatory guidelines set forth by the Central Bank of Nigeria (CBN), aiming to enhance the integrity of financial transactions.
To facilitate this verification process, OPay will dispatch its own personnel to the locations of the merchants to provide assistance with the financial technology procedures required by the CBN. In an effort to safeguard merchants against potential fraudulent activities, OPay has issued a cautionary note urging them to exercise vigilance. Merchants are encouraged to confirm the identity of any individual claiming to be an OPay representative by requesting to see valid identification. This could include an OPay-issued ID card, a Lark Business Card, tools from the Business Development suite, or credentials from the General Agent Platform.
OPay has made it clear that during these verification visits, the company’s representatives are strictly prohibited from asking for sensitive information such as passwords, One-Time Passwords (OTPs), Personal Identification Numbers (PINs), or any other details pertaining to the merchants’ OPay Business accounts.
The move by OPay to comply with the CBN’s directives is part of a broader effort to strengthen Know Your Customer (KYC) protocols. This is in response to concerns raised by the CBN regarding the risks of money laundering and unauthorized financial flows, emphasizing the need for more stringent measures to ensure the security of the financial ecosystem.
In April 2024, the Central Bank of Nigeria (CBN) took decisive action against illicit financial activities by freezing 1,146 bank accounts linked to unauthorized foreign exchange transactions. In the wake of this, the CBN issued a directive to financial operators, instructing them to halt the opening of new accounts as a measure to curb these unauthorized transactions.
During that period, key players in the financial sector, including representatives from mobile money operators, convened with high-level officials such as the National Security Adviser (NSA), members of the Economic and Financial Crimes Commission (EFCC), and the CBN. The purpose of this meeting was to negotiate terms and discuss the potential lifting of the imposed ban on the acquisition of new customers.
In response to the CBN’s stringent regulations, mobile money operators have been proactive in enhancing their customer verification processes. PalmPay introduced facial recognition technology for verifying identities, while Kuda Bank required customers to upload documents confirming their residential addresses. Similarly, OPay took the initiative to start in-person verification of merchant addresses to ensure compliance with the CBN’s directives.
Recently, the CBN has made an announcement that has been positively received by the financial community. The statement indicated that mobile money operators, including OPay, PalmPay, and Moniepoint, will be permitted to resume the onboarding of new customers within the next few months. This development signals a progressive step towards normalizing operations while maintaining the integrity of the financial system through improved customer verification measures.
The Central Bank of Nigeria (CBN) is poised to introduce additional measures aimed at reinforcing the process of onboarding new customers as well as scrutinizing existing ones, with the objective of thwarting money laundering and other illegal financial transactions.
The Governor of the CBN has underscored the regulatory nature of this directive, acknowledging the exponential growth experienced by the financial sector, particularly in the area of mobile money operations. The Governor’s remarks highlighted the critical importance of regulation in a sector that has witnessed such rapid expansion. The intent behind these measures is to maintain vigilant oversight over the sector to prevent money laundering and the movement of illicit funds.
“Regulation is very critical in a sector that seems to have grown so incredibly rapidly,” the CBN Governor stated, signaling the central bank’s commitment to ensuring that the burgeoning financial services sector operates within a framework that safeguards against financial malpractices. The CBN’s approach reflects a balance between fostering the growth of the financial sector and implementing stringent controls to protect the integrity of the country’s financial system.
The Governor of the Central Bank of Nigeria (CBN) further reiterated that, to date, the CBN has not revoked the license of any fintech organization. This statement serves to clarify the central bank’s current stance and actions regarding the regulatory oversight of fintech companies operating within the country. Despite the stringent measures and close monitoring, the CBN has not taken the extreme step of license revocation, indicating that the regulatory body is focused on ensuring compliance and rectifying issues rather than penalizing companies through license withdrawal.
This approach suggests a preference for working with fintech entities to align their operations with regulatory standards, thereby fostering a cooperative environment for the growth and development of the financial technology sector.
