PROVIDE GUIDELINES ON OPERATIONS OF BANK ACCOUNTS FOR VIRTUAL ASSETS SERVICE PROVIDERS (VASPs)
By Vincess Okushi
The Central Bank of Nigeria has directed all banks and other financial institutions to
immediately comply with the provisions of the Guidelines of their banking relationship with VASPs in Nigeria.
This directive is owing to the February 2021 circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers regarding 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.
Before this, the CBN in a circular on Tuesday 2nd January 2024, signed by Haruna Mustafa, Director, Financial Policy And Regulation Department said given the foregoing, it is necessary to guide financial institutions under its regulatory purview concerning their banking
relationship with VASPs in Nigeria. According to him,
THE GUIDELINES SUPERSEDE THE CBN’S CIRCULARS 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.HOWEVER, BANKS AND OTHER FINANCIAL INSTITUTIONS ARE STILL PROHIBITED FROM HOLDING, TRADING, AND/OR TRANSACTING IN VIRTUAL CURRENCIES ON
THEIR ACCOUNT.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) 2018 ALSO UPDATED ITS RECOMMENDATION 15 TO REQUIRE
VASPS ARE 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 RECOGNIZES VASPS AS PART OF THE DEFINITION OF A FINANCIAL INSTITUTION.
IN ADDITION, THE SECURITIES AND EXCHANGE COMMISSION (SEC) 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.
The statement ended.
