CBN hits banks with N1.31bn fine for flouting directive on crypto accounts

The Central Bank of Nigeria (CBN) has penalised six banks for N1.314 billion over alleged non-compliance with a regulation on cryptocurrency accounts. 

The banks include Stanbic IBTC, First City Monument Bank (FCMB), Access Bank, Wema Bank, United Bank for Africa (UBA) and Fidelity Bank.

Stanbic IBTC Bank, the domestic unit of Standard Bank Group Ltd, was fined N200 million for failing to comply with the apex bank’s director, according to the lender’s 2021 consolidated and separate financial statement.

In February 2021, the apex bank directed banks to close accounts of persons or entities involved in cryptocurrency transactions within their systems.

In the circular released to deposit money banks (DMB), non-bank financial institutions (NBFIs), and other financial institutions (OFIs), the apex bank noted that disobedience to the directive would attract severe penalties.

The development elicited reactions from Nigerians, but CBN, in a 5-page circular, explained that cryptocurrencies portend the risk of loss of investments, money laundering, terrorism financing, illicit fund flows and criminal activities in the country.

DMBs SANCTIONED  

According to the 2021 financial statements of some banks seen by TheCable, CBN implemented the directive by placing monetary sanctions on the deposit money banks (DMBs).

STANBIC IBTC – N200 MILLION

Central Bank fined Stanbic IBTC N200 million for contravening the 2021 circular on cryptocurrency.

“The CBN debited the Bank’s position with the sum of N200 million for an alleged contravention of CBN circular with reference number BSD/DIR/GEN/LAB/14/001 on Cryptocurrency,” the bank’s financial statement reads. 

Speaking during an investor conference call in Lagos, Wole Adeniyi, chief executive officer, Stanbic IBTC Bank, said the bank complied with the CBN directive, adding that the transactions it was sanctioned for may have passed through its system undetected.

He said the bank had written a letter of appeal for a review of the circumstances surrounding these accounts and a waiver of the N200 million fine.

FCMB – N400 MILLION

First City Monument Bank (FCMB) was also fined by the Central Bank of Nigeria (CBN) over its failure to close four accounts of customers said to be involved in cryptocurrency.

“Contravention of CBN Circular BSD/DIR/GEN/LAB/14/001 on Cryptocurrency… Failing to close customers accounts (Thanas fasio Experts, Quadrant Emergencia Golden Global, Cryset Limited, Royal Jingling Enterprise) identified to be involved in cryptocurrency,” FCMB’s 2021 financial statement reads.

ACCESS BANK – N500 MILLION

In its 2021 consolidated and separate financial statement, Access Bank Plc said it was fined N500 million naira for “failure to close some customer’s crypto accounts.”

UBA – N100 MILLION

United Bank for Africa Plc also received N100 million penalty for cryptocurrency transactions by a customer.

FIDELITY BANK – N14.28 MILLION

Fidelity Bank Plc received a sanction of N14.28 million for cryptocurrency infractions, the bank said in its 2021 audited financial statement.

WEMA BANK – N100 MILLION

Wema Bank got a sanction of N100 million ‘for contravening CBN circular on cryptocurrency’.

The CBN had on August 17, 2021, secured, through an ex parte motion, an order freezing the accounts of some fintech companies for 180 days over alleged forex infractions.

The affected companies were Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Bamboo Systems Technology Limited OPNS, Chaka Technologies Limited, CTL/Business Expenses, and Trove Technologies Limited.

In October same year, a federal high court vacated the interim order freezing the accounts of Rise Vest Technologies Ltd, a fintech company.

Ruling on the application, Taiwo O. Taiwo, the judge, held that CBN could not rely on a circular to freeze the bank account of a company.

The judge noted that the CBN failed to provide any law showing that it is illegal to deal in cryptocurrency in Nigeria, adding that the CBN circular of February 5, 2021, is not a law.

The judge, among others, held that although the CBN has the power to investigate any infraction, the infraction must relate to BOFIA or any other enactment administered by the regulator.

Despite the ban, Nigeria is among the world’s top cryptocurrency users, representing 6.31 percent of the entire population, according to Triple A, a blockchain company, in 2021.