Nigerian Central Bank Freezes Bank Accounts of Fintech Firms, Accuses Them of Violating Forex Regulations

The Central Bank of Nigeria (CBN) reportedly frozen bank accounts belonging to four fintech firms for up to 180 days after a Federal High Court in Abuja acceded to an “ex parte motion.” The ex parte motion, which is a form of temporary suspension, was granted after a Nigerian chief, Micheal Kaase Aondoakaa, filed the motion on behalf of CBN governor Godwin Emefiele.

Accounts Frozen to Enable Further Investigation

According to one report, this temporary freeze of the bank accounts will enable the CBN to institute further investigations into the activities of the four firms. Meanwhile, several Nigerian media outlets have identified the affected firms as Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Chaka Technologies Limited, and Trove Technologies Limited.

The report also suggested that the CBN’s decision to seek the ex parte motion was made after the findings of the central bank’s preliminary probe showed that the four firms were operating unlicensed asset management businesses. In addition, the central bank accuses the fintech firms “of utilizing forex sourced from the Nigerian forex market for purchasing foreign bonds/shares in contravention of the CBN circular dated July 01, 2015.”

In the past few years, Nigeria has grappled with shortages of foreign currency which, in turn, have led to the continuing depreciation of the naira. In response to the naira’s decline, the CBN has placed restrictions or limits on the amount of foreign exchange ordinary Nigerians can withdraw from banks.

Fintech Firms Unperturbed

CBN has also blocked cryptocurrency firms from accessing the country’s banking system while sales of foreign exchange to bureaux de change operators was recently stopped. However, despite such CBN interventions, the naira continues to lose ground against major currencies. At the time of writing, the naira’s parallel market exchange rate against the U.S. dollar is 1:515 while the official rate is unchanged at 1:411.

Meanwhile, in arguing the CBN’s case against the fintech firms, a Nigerian prosecutor told a Federal High Court judge that foreign exchange deals done with the four companies “were making the Naira weaker to the United States dollars, hence, the need to block 15 of their accounts for about 180 days.”

However, a different report quotes the CEO of Rise Vest Technologies Limited reassuring users that his company’s “trading activities will continue as usual and the issue will be sorted out with the regulators.” Similarly, Bamboo Systems told its users via Twitter that its “legal and government relations teams are looking into it.”

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