Virtual Currency Ban For Banks – CBN

by Ike Obudulu Last updated on March 13th, 2017,

The Central Bank of Nigeria, CBN, has banned banks from all transactions in Bitcoin, Ripples and other virtual currencies.
The CBN announced the ban in a circular signed by the apex bank’s Director, Financial Policy and Regulation Department, Kelvin Amugo, warning that virtual currencies such as Bitcoin, Ripples, Monero, Litecoin, Dogecoin, 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 said that money laundering and terrorism financing risks were inherent in operations of Virtual Currencies (VCs) and therefore there was need to checkmate their operations.
“Transactions in VCs are largely untraceable and anonymous making them susceptible to abuse by criminals, especially in money laundering and financing of terrorism,” CBN said.
CBN explained further that, “The emergence of Virtual Currencies (VCs) has attracted investments in payments infrastructure that provides new methods of transmitting value over the internet.
“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.”
Pending a substantive regulation or decision by the CBN, the banks were 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. However, CBN said, “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).

Author

Ike Obudulu

Ike Obudulu

Versatile Certified Fraud Examiner, Chartered Accountant, Certified Internal Auditor with an MBA in Finance And Investments who has both worked for and consulted with some of the world's largest companies on main street and wall street in over 20 countries, Ike brings his extensive reporting and investigations experience to bear on his role as Chief Editor.
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