The Central Bank of Nigeria (CBN) has lifted restrictions on banks facilitating crytpo transactions enabling virtual assets service providers (VASP) to operate accounts with banks and other financial organisations.
This was disclosed in a circular sent to banks and other financial institutions on Friday. The circular with reference number FPR/DIR/PUB/CIR/002/003, was signed by the apex bank’s Director, Financial Policy and Regulation Department, Haruna Mustafa.
The circular dated December 22, 2023, is titled ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS).’
The apex bank, however, said that banks are still prohibited from holding, trading, or transacting in virtual currencies on their accounts.
The CBN said the ban was lifted due to current global trends that have shown the need to regulate the activities of virtual assets service providers (VASPs) which include cryptocurrency and crypto assets.
The circular said, “The CBN, in February 2021, issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers in view of the money laundering and terrorism financing (ML/TF) risks and vulnerabilities inherent in their operations as well as the absence of regulations and consumer protection measures.
“However, current trends globally have shown that there is a need to regulate the activities of virtual assets service providers (VASPs) which include cryptocurrencies and crypto assets. Following this development, the Financial Action Task Force (FATF) in 2018 also updated its Recommendation 15 to require VASPS to be regulated to prevent misuse of virtual assets for ML/TF/PF.
“Furthermore, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognises VASPs as part of the definition of a financial institution.
“In addition, the Securities and Exchange Commission in May 2022 issued Rules on Issuance, Offering and Custody of Digital Assets and VASPs to provide a regulatory framework for their operations in Nigeria.
“In view of the foregoing, the CBN hereby issues this guideline to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria. “
The CBN noted that this new guideline supersedes its old ones referenced FPR/DIR/GEN/CIR/06/010 of January 12, 2017, and BSD/DIR/PUB/LAB/014/001 of February 5, 2021 on the subject, adding that all banks and other financial institutions are required to immediately comply with its new guideline.
Guidelines for operating accounts for VASPs
Under the new CBN guidelines, banks and OFIs are can perform the following activities in their operations of accounts for VASPs, according to the CBN.
- Opening of designated accounts;
- Provide designated settlement accounts and settlement services;
- Act as channels for FX flows and trade; and
- Any other activity that may be permitted by the CBN from time to time.
According to the guidelines, a designated account can only be opened with the approval of senior management of the financial institution.
“From the commencement of these Regulations, Fl shall not open or permit the operation of any account by any person or entity to conduct the business of virtual/digital assets unless that account is designated for that purpose and opened in line with the requirement of these Guidelines,” the apex bank stated.
“Any application for opening a designated account by a company providing virtual/digital services under these Guidelines shall be supported by the following documents:
Evidence of a valid licence issued by the Securities and Exchange Commission (SEC) for the entity to engage in the business of VASP/DAX/DAOP.
- Certified true copy of the memorandum and article of association.
- Certified true copy Form CAC2-Statement of share capital and return of allotment of shares.
- Certified true copy Form CAC 2.1 particulars of secretary.
- Certified true copy Form CAC 3- notice of registered address.
- Certified true copy of Form CAC 7-Particulars of Directors
- Verifiable registered address of the company
- copy of Certificate of Capital Importation (CCI) (where applicable)
- Valid means of identification of all the directors, principal officers and beneficial owners of the company.
- BVN of all the directors, principal officers and beneficial owners of the company.
- Home address of all the directors, principal offices and beneficial owners of the company.”
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.
