CBN’s Crackdown on Cryptocurrency Trading Results in N1.314bn Fines for Six Banks in 2021

Bennett Oghifo
It emerged yesterday that six banks were fined N1.315 billion by the Central Bank of Nigeria (CBN) in the 2021 financial year for failing to comply with regulations prohibiting their customers from trading in cryptocurrencies. In the latest revelation from the banks’ full year 2021 financial report, First City Monument Bank (FCMB), Fidelity Bank Plc. and Wema Bank were fined a total of N514 million crypto infractions.

The FCMB was fined N400 million over its failure to close four accounts of customers said to be involved in cryptocurrency trading.Fidelity Bank Plc. received a sanction of N14.28 million for cryptocurrency infractions, the bank said in its 2021 audited financial statement.Wema Bank got a penalty of N100 million for contravening the CBN circular on cryptocurrency.

It also emerged earlier in the week that a N800 million penalty was imposed by the CBN on three banks – Access Bank Plc., Stanbic IBTC, and the United Bank for Africa Plc. – also for violating regulations barring customers from transacting in cryptocurrencies.The UBA was fined N100 million for a customer’s digital-currency transactions. Access Bank Plc. was fined N500 million for failing to shut down customers’ crypto accounts, according to a filing with the Nigerian Exchange Limited.

Stanbic IBTC Bank was fined N200 million for two accounts allegedly used for crypto transactions.The total penalties imposed so far for contravening the CBN circular on cryptocurrency is a massive N1.315 billion for the six banks.The apex bank issued a circular on February 5, 2021, warning and reminding local financial institutions against conducting crypto transactions or enabling payments for crypto exchanges.It directed financial institutions to close the accounts of anyone participating in or operating cryptocurrency exchanges immediately.

The CBN has ignored pushback against its crypto regulation and has advised Nigerians to adopt its CBDC, the eNaira. The penalties are part of efforts by the apex bank to ensure that banks implement an order to block trading in cryptocurrencies due to the threat they pose to Nigeria’s financial system. Despite these regulations, Nigeria accounts for the largest volume of cryptocurrency transactions outside the United States., according to Paxful, a Bitcoin marketplace.

The country also has the largest proportion of retail users conducting crypto transactions under $10,000, Chainalysis says. The Chief Executive Officer, Stanbic IBTC, Wole Adeniyi, during an investor conference call in Lagos last Tuesday confirmed that his bank was fined N200 million for two accounts alleged to have been used for crypto transactions.

Adeniyi said that while Stanbic IBTC followed the apex bank’s directive, the transactions it was sanctioned for might have passed through its system undetected. He noted that the CBN was able to detect the relevant transactions using an “advanced capability” that Nigerian banks don’t have access to, and they’ve asked the apex bank to share the technology. “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,” he added.

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