New Regulations From The Central Bank Of Nigeria

The Central Bank of Nigeria (CBN), the land’s pinnacle regulator of cyberbanking activities, has released new guidelines to further regulate the services provided past mobile coin operators (MMOs) in Nigeria.

Changes in regulations mostly focus on streamlining and increasing the telescopic of MMO business, but also the protection of customers using these services.

These new regulations update the previous circular of regulatory changes issued in 2015. Since so, mobile coin operators accept evolved to some extent with the surge in financial solutions driven by technology and the COVID-19 pandemic.

The new guidelines released on 9 July 2021 take made some additions to the 2015 framework and now seek to provide robust coverage of the MMO value chain from service providers to subscribers and agents.

CNB’due south guidelines target 2 distinct financial services operators, including:

• The Bank Led Model: These are deposit money banks offering MMO services lone or with other banks, essentially commercial banks operating disruptively in the MMO space.
• The Not-Banking concern Led Models:
  These are non-banking organisations that have obtained a license from the CBN to carry on MMO services. Annotation that they also use deposit money banks and settlement banks.

To a higher place and beyond, the new regulations for MMOs have definitely simplified financial transactions and services in Nigeria by increasing the number of banked individuals.

Banks no longer need to have physical presences to provide financial services to residents of rural areas. This further promotes the CBN’due south “cash-lite” agenda and has likewise made commercial transactions easier.

Changes to Permissible and Not-Permissible Activities

The new Guidelines take made additions to the permissible activities that were listed out under the old guidelines.

New activities now permissible for MMOs include: being operational, wallet cosmos, e-money issuance, agent recruitment and management, pool business relationship management, non-bank acquiring services and bill of fare-acquiring services.

Despite the new changes, MMOs are withal prohibited from conveying on the following types of businesses in the country: direct or indirect loans or guarantees, insurance underwriting, subsidiaries’ establishment, strange currency eolith services and other forex activities that save the facilitation of cross-border remittances to personal accounts field of study to the applicable regulatory framework.

Savings Wallets Now Allowed

CBN volition now allow MMOs to offering savings wallets to exist operated with settlement banks and the funds held in these wallets are insured with the Nigerian Deposit Insurance Corporation (NDIC) using a laissez passer-through insurance system subject to specific requirements in relation to investment operations and interest distribution.

The savings wallets funds are subject to a maximum management rate of 10% but must too ensure that the principal sum is non afflicted by charges and fees.

Annotation that customers can use the funds in these wallets to invest only in authorities treasury bills.

New Changes for Consumer Protection and Sanctions

MMOs are now required to resolve customer complaints within 48 hours.

In addition, they must: ensure that customers understand the transactions being concluded, provide robust frameworks against loss of service, proper communication channels and offering adequate disclosures to customers.

Where for instance, at that place is a new capitalisation requirement by the CBN and a settlement banking concern is unable to meet up, the settlement bank will have its licence withdraw. In such an consequence, the NDIC’south maximum deposit coverage level kicks in at N500,000 ($1212) for each subscriber.

Where an MMO has its license withdrawn or activities banned, the CBN ensures that the deposit liabilities of the subscribers are to be assumed by some other MMO, or some other financial establishment as defined nether the Cyberbanking and Other Fiscal Institutions Deed (BOFIA).

The CBN as well reserves the right to take sanctions against an MMO, its board of directors, officers or agents, withhold corporate approvals as well as append or revoke licenses.

Increases in Limits for Transactions

The balance limits for wallet holders take been increased from N50,000 ($121) to N5,000,000 ($121,126) for daily activities.

For cumulative balance, the N300,000 ($727) cap has been removed and is now unlimited, depending on the Know-Your-Customer (KYC) tier.

Reporting and Compliance

The new guidelines also stipulate that all chance mitigation techniques adopted past the MMOs must exist within the scope of the relevant lawmaking of corporate governance, for example, the Code of Corporate Governance for Finance Companies 2018.

While MMOs take not been listed every bit financial institutions as such in the Code, it appears that the CBN has expanded the definition in the Code to cover MMOs by virtue of the fact that MMOs are listed as “other fiscal institutions” by the BOFIA.

Furthermore, all MMOs are to file annual audited reports and mandatory continuity business plans to the CBN within the first iii months of the following yr or no later than 31 March of the following year.

By Ibrahim Moshood, Associate, Centurion Law Group.

Edited by Luis Monzon
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