A critical investigation by Nigeria's House of Representatives has exposed severe vulnerabilities within the country's booming digital finance sector, raising alarms over widespread fraud and unlicensed cryptocurrency activities.
Deep-Rooted Gaps in Digital Finance Ecosystem
The Adhoc Committee of the House of Representatives, which is probing the economic and security implications of cryptocurrency and Point-of-Sale (POS) operations, has expressed profound concern after weeks of intensive hearings. Hon. Olufemi Bamisile, the Committee Chairman, revealed that engagements with regulators, security agencies, and fintech firms uncovered "deep gaps" that threaten the entire system.
Speaking at a resumed session in Abuja on Monday, Bamisile highlighted that POS terminals, now a cornerstone of daily Nigerian commerce, have become a hotspot for criminal activity. He detailed alarming patterns involving unregistered agents, cloned terminals, and weak Know-Your-Customer (KYC) protocols, all of which leave citizens exposed to significant financial losses.
Unlicensed Crypto and Illicit Fund Movements
The investigation took a more serious turn with the disclosure of "credible allegations" that some POS operators are now offering cryptocurrency and other digital-asset services without the required licenses. This unauthorized expansion into complex financial instruments raises massive red flags concerning consumer protection, anti-money laundering standards, and terrorism-financing risks.
An even more sinister scheme was also uncovered. Bamisile disclosed that fraudulent companies are being registered at the Corporate Affairs Commission (CAC) using the stolen Bank Verification Number (BVN) and National Identification Number (NIN) details of innocent Nigerians. These fake entities then open multiple bank accounts and use unverified POS agents to launder illicit funds throughout the financial system.
Data Security and National Sovereignty at Risk
A major point of contention raised during the session was the practice of some fintech companies storing sensitive customer data on foreign servers. Bamisile argued that this severely weakens the ability of Nigerian regulators and security agencies to conduct real-time audits, trace suspicious transactions, or enforce lawful directives. He emphasized that this has "direct national-security implications" for the country.
The Committee, however, acknowledged that legitimate operators face their own hurdles, including overlapping regulatory mandates and inconsistent policies from various government agencies. Bamisile assured that the probe is not adversarial but seeks "honest conversations, clarity and collaboration." The ultimate goal is to propose legislation for a harmonized regulatory framework that fosters innovation while ensuring robust security and consumer protection.
The Committee is set to continue its investigative hearings in the coming weeks before presenting its final recommendations to the House for legislative action.
