CBN Lifts Crypto Transaction Ban, VASPs Still Need Vetting

Central Bank of Nigeria (CBN) lifts the ban on crypto transactions, as Owonibi advocates the importance of banks vetting VASPs for compliance.

According to Adedeji Owonibi, Co-founder of A&D Forensics a blockchain intelligence service provider in Nigeria, the government of Nigeria should regulate cryptocurrency operations in order to reduce financial crimes particularly money laundering.

At a Blockchain and Digital Forensics firm’s training for bitcoin compliance specialists on February 9th, Owonibi brought this up. He brought out the fact that many activities in Nigeria’s crypto realm are unchecked due to the absence of legislation. 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.

Owonibi clarified that the purpose of the compliance specialist training is to guarantee that banks follow all applicable laws when dealing with virtual asset service providers (VASPs) even though the Central Bank of Nigeria (CBN) just reversed its crypto transaction ban, allowing banks to open accounts for VASPs.

Owonibi stressed in an interview how important it is for Nigerian banks to employ compliance experts to check that no illegal activity is funding their operations.

To prevent criminals from using banks and other financial institutions as a cover for money laundering and other illicit operations, compliance laws are put in place to prevent such behavior.

Crypto service companies were previously barred from opening bank accounts by the CBN. The rules were given to all banks and financial institutions on Dec. 22, 2023, establishing the prerequisites for virtual asset providers to create accounts.

Owonibi emphasized the importance of banks verifying the compliance of virtual asset service providers before opening accounts with them. This would help prevent these companies from being used as tools for illicit activities such as drug sales, money laundering, or terrorism funding on a worldwide scale.

Owonibi pointed out that the CBN has been educating some police officers to become compliance specialists, but she said that more should be done to assure that all security personnel are adequately prepared to fight financial crimes.

But according to new rules published by the CBN, Nigerian banks are now able to accept virtual asset service providers, such as bitcoin and crypto asset organizations.

Crypto experts in Nigeria have urged the Nigerian Securities and Exchange Commission (SEC) to reevaluate the rules for virtual asset providers in order to grant licenses to local crypto exchanges, even though the CBN ban was lifted.