The Central Bank of Nigeria, CBN, Tuesday, banned banks from all transactions in bitcoin and other virtual currencies.
A
circular signed by the apex bank’s director, financial policy and
regulation department, Kelvin Amugo, stated that the move was
necessitated by money laundering and terrorism financing risks inherent in operations of virtual currencies.
“The
emergence of Virtual Currencies (VCs) has attracted investments in
payments infrastructure that provides new methods of transmitting value
over the internet.
“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.”
The Central Bank therefore advised banks to ensure that they do not use, hold, and
transact
in virtual currencies. The apex bank also warned the banks to 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 CBN said.
The
CBN stressed that virtual currencies such as Bitcoin, Ripples, Monero,
Litecoin, Dogecion, Onecoin 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
apex bank’s directive is coming after the Securities and Exchange
Commission, SEC, issued a warning against virtual currencies.
“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,” the
commission had said.
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