Nigerian Central Bank: Financial institutions should not use or hold virtual currencies, otherwise they must bear their own risks

The Central Bank of Nigeria recently issued a warning to domestic financial companies and institutions: Do not touch virtual currencies.

The Financial Policy and Supervision Department of the Central Bank of Nigeria has issued a new advisory advising banks not to "use, hold, or transact with virtual currencies." The document cites bitcoin, onecoin, monero, and dogecoin as examples, and says that banks that still insist on using digital currencies must do so "at their own risk."

It is worth noting that the announcement also requires banks to pay close attention to any clients who may operate digital currency exchanges and ensure that these exchanges strictly comply with anti-money laundering (AML) and know your customer (KYC) regulations. The central bank stated that banks must immediately cancel the accounts of exchanges that operate in violation of regulations.

The announcement mentioned:

Once banks and other institutions discover that virtual currency exchanges or related customers have violated the rules, they must immediately stop providing them with financial services... Any suspicious transactions should be reported immediately to the Nigerian Financial Intelligence Unit.

A year ago, the central bank called on relevant departments to formulate new regulatory rules for Bitcoin. Central bank officials believe that due to the money laundering risks brought by Bitcoin, relevant regulations must be improved as soon as possible.

Nigerian government departments have recently begun to review the technology. Earlier this week, the country's Securities and Exchange Commission (SEC) warned the public about digital currency investment and considered local radio stations advertising virtual currencies as a huge risk.

The following is the full text of the announcement issued by the Central Bank of Nigeria:

To Nigerian banking and financial institutions engaged in virtual currency activities

The emergence of virtual currencies (VCs) has attracted massive investments in payment infrastructure while creating new methods of value transfer on the Internet.

Most virtual currency transactions are untraceable and anonymous, so they can be easily abused by criminals, especially for money laundering and terrorist financing. Virtual currencies traded on exchange platforms are unregulated, which is the same all over the world. Therefore, once the exchange system collapses or closes down, consumers are likely to be unable to obtain corresponding financial compensation and lose a large amount of money in vain.

The continued development of Virtual Currency Payment Products and Services (VCPPS) means that there is an urgent need for guidance to ensure the authenticity of the Nigerian financial system. That is, we must address money laundering and terrorist financing (ML/TF) risks, especially in the current situation where virtual currency exchanges and other institutions are engaged in virtual currency and fiat currency transactions.
Banks and financial institutions that are subject to the above risks must comply with the following provisions, pending further regulatory rules issued by the central bank:

1. Banks and financial institutions should not use or hold virtual currencies, nor conduct virtual currency transactions;

2. Ensure that clients operating virtual currency exchanges strictly comply with AML regulations and urge them to record customer identities, authenticate and monitor transactions.

3. Once banks and other institutions discover that a virtual currency exchange or its customers have violated the rules, they must immediately stop providing financial services to them;

4. Any suspicious transactions should be reported immediately to the Nigeria Financial Intelligence Unit.

The Central Bank of Nigeria reiterated that virtual currencies and their products, including Bitcoin, Ripple, Monero, Litecoin, Dogecoin, OneCoin, etc., are not legal tender in Nigeria. Therefore, any bank or institution engaged in this field must bear its own risks.