Nigeria urged to regulate cryptocurrency to tackle financial crimes

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The Nigerian government would need to regulate cryptocurrency activities to curb financial crimes, especially money laundering, according to Adedeji Owonibi, the Co-founder of A&D Forensics, a Nigerian blockchain intelligence service provider.

Owonibi mentioned this on Feb. 9 at a training for cryptocurrency compliance specialists by a Blockchain and Digital Forensic firm. He pointed out that the lack of regulations in Nigeria’s crypto space permits various practices to go unmonitored. He said:

“Nigeria should completely regulate cryptocurrency activities within the country and set out laws to that effect because if there is no law, there is no offense.”

Despite the recent reversal of the crypto transaction ban by the Central Bank of Nigeria (CBN), enabling banks to operate accounts for Virtual Assets Service Providers (VASP), Owonibi explained that the compliance specialist training aims to ensure banks adhere to the relevant laws in their interactions with VASPs.

In an interview, Owonibi emphasized the need for Nigerian financial institutions to use the services of compliance specialists to ensure that all monies that pass through their exchange are not funds used for criminal activities.

Compliance laws are meant to stop bad actors as they act as checks to ensure that financial institutions such as banks are not used as gateways to launder monies and perpetrate other criminal activities.

The central bank had banned banks and other financial institutions from operating accounts for cryptocurrency service providers. The guidelines were issued to all banks and financial institutions on Dec. 22, 2023, outlining the conditions for virtual asset providers to open accounts.

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Owonibi said banks must ensure that the virtual asset service providers for whom they open accounts are compliant exchanges, preventing them from becoming channels for money laundering, drug sales, or terrorism financing globally.

While noting that the Nigerian government has been training some law enforcement agents as compliance specialists, Owonibi said the government would need to do more to ensure all security officials are well-trained to combat financial crimes.

However, the CBN has issued guidelines permitting virtual asset service providers, including cryptocurrency and crypto asset organizations, to open accounts with banks in Nigeria.

Despite the CBN bank ban lift, local crypto analysts have advised the Nigerian Securities and Exchange Commission’s (SEC) crypto licensing requirements to revisit the virtual asset services providers’ guidelines to enable local crypto exchanges to get licenses to operate in the country.

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