Nigeria Fines Three Local Banks for Flouting Crypto Regulatory Directive

Key Insights:

• CBN has imposed a $1.9million penalty on three domestic banks over crypto transactions.
• Stanbic IBTC Bank, Access Bank Plc, and United Bank for Africa Plc are fined separately.
• In 2021, CBN immediately directed banks to close entities involved in crypto transactions.

The Central Bank of Nigeria (CBN), which officially launched a CBDC dubbed ‘eNaira’ last October, imposes penalties for banks and entities that do not comply with the restriction on crypto transactions.

Penalty for Crypto Transaction Rule Violation

The West African nation has imposed hefty fines on three local commercial banks for violating the crypto transaction ban. 

Stanbic IBTC Bank, Access Bank Plc, and United Bank for Africa (UBA) are among the financial institutions affected for allegedly conducting crypto transactions, a Bloomberg report said.

All three banks were fined separately. Stanbic IBTC Bank paid 200 million naira ($478,595), followed by Access Bank Plc and UBA, shedding 500 million naira ($1,202,733) and 100 million naira ($240,547) as penalties, respectively.

Per Stanbic IBTC CEO Wole Adeniyi, the CBN fined the bank for two accounts alleged to have been used for crypto transactions. Stanbic has followed the central bank directive, and the CBN used an “advanced capability” to detect the transactions that banks don’t have access to. He added,

“It doesn’t seem that they are going to entertain a refund, but they are now sharing intelligence with us to be able to kind of deter clients.”

Crypto Ban on Nigerian Banks

The central bank in February 2021, released an order to block accounts transacting in or operating cryptocurrency exchanges. The circular sent to financial institutions stated that failure to comply would result in “severe regulatory sanctions.”

The central bank decided to ban crypto transactions following protests against the excesses of the police’s Special Anti-Robbery Squad, where organizers accepted Bitcoins for donations.

The apex bank claimed that cryptos are used for money laundering, scams, terrorism financing, illicit fund flows, and other illegal activities.

Despite the central bank ban, Nigeria accounts for the largest volume of cryptocurrency transactions apart from the US, data from Paxful noted.

That said, Nigerian regulators are aware that crypto-assets like Bitcoin and XRP have helped disrupt international payments. The de-facto bank released its own central bank digital currency, e-Naira, while reports suggest that Nigerians prefer private crypto owing to Naira’s poor performance.