- The reason for this decision is to protect its customers from fraud and money laundering activities
- Fidelity Bank said it decided to block transfers to OPay, Moniepoint, and Palmpay over KYC concerns
Fidelity Bank, one of the leading banks in Nigeria, recently announced that it has blocked transfers to OPay, Moniepoint, and Palmpay from its bank app. The reason for this decision is to protect its customers from fraud and money laundering activities that are rampant on these platforms.
What are OPay, Moniepoint, and Palmpay?
OPay, Moniepoint, and Palmpay are examples of neobanks, which are digital-only banks that operate without physical branches. They offer various financial services such as savings, loans, payments, and investments through mobile apps or web platforms. They also partner with POS agents who act as their representatives in different locations.
Neobanks are popular among Nigerians because they offer convenience, speed, and low fees. They also claim to have less stringent KYC (Know Your Customer) requirements than traditional banks, which makes them attractive to people who do not have formal identification documents or utility bills.
How are neobanks used for fraud and money laundering?
However, the ease of opening and operating neobank accounts also makes them vulnerable to abuse by fraudsters and criminals. According to a report by [Nairametrics], neobanks have become the preferred channels for receiving stolen funds by cybercriminals and internet fraudsters (popularly known as Yahoo boys).
The report cites several cases where victims of hacking, phishing, or card cloning had their money transferred to neobank accounts without their consent or knowledge. The perpetrators then quickly withdrew the money through POS agents or transferred it to other accounts before the victims could notice or report the incident.
One of such victims is Maduka Fidorocks Onwukeme, a lawyer who shared his experience on [Facebook]. He said his bank account was compromised and hacked, and the money was swiftly moved to a newly created OPay account. He later discovered that the OPay account was opened 30 minutes before the hack and that the money was withdrawn in less than 20 minutes through a POS agent.
He also found out that OPay did not verify the identity or address of the account holder, which made it impossible to trace or recover the money. He had to write a petition to the Central Bank of Nigeria (CBN) to complain about the incident and hold OPay accountable. After two weeks of investigation, he was able to get his money back from OPay.
Why did Fidelity Bank block transfers to neobanks?
Fidelity Bank said it decided to block transfers to OPay, Moniepoint, and Palmpay over KYC concerns. The bank said it noticed that these platforms were not complying with the CBN’s guidelines on customer identification and verification. The bank said it was worried that its customers could fall prey to fraudsters and criminals who use these platforms to receive stolen funds.
The bank said it was acting in the best interest of its customers and in line with its commitment to prevent financial crimes and promote financial inclusion. The bank said it would continue to monitor the situation and review its decision as appropriate.
What does this mean for customers?
If you are a customer of Fidelity Bank, this means that you cannot initiate a bank transfer to any user using OPay, Moniepoint, or Palmpay from your bank app. You will have to use other means of payment such as cash, card, USSD, or other bank apps.
If you are a user of OPay, Moniepoint, or Palmpay, this means that you cannot receive money from any customer of Fidelity Bank through your neobank account. You will have to provide another bank account number or use other payment options such as cash or card.
What is the way forward?
The decision by Fidelity Bank has sparked mixed reactions from Nigerians. Some have applauded the bank for taking a bold step to protect its customers from fraud and money laundering. Others have criticized the bank for being unfair and discriminatory towards neobanks and their users.
The CBN has not issued any official statement on the matter yet. However, it is expected that the regulator will intervene and ensure that all financial institutions comply with its rules and regulations on KYC and anti-money laundering.
Neobanks also have a responsibility to improve their security measures and customer verification processes.
Discussion about this post