Virtual Currencies aren't legal tenders, CBN warns

January 18, 2017
1 min read

Coming barely a week after the Security and Exchange Commission (SEC) warned Nigerians against the use of bitcoin and other Virtual Currencies (VCs), the Central Bank of Nigeria (CBN) warns banks to discontinue all virtual currency transactions. The director, Financial Policy and Regulation department, CBN Mr. Kelvin Amugo in a circular to banks and other financial institutions stated

"Transactions in VCs are largely untraceable and anonymous making them susceptible to abuse by criminals, especially in money laundering and financing of terrorism. VCs are traded in exchange platforms that are unregulated, all over the world. Consumers may, therefore, lose their money without any legal redress in the event these exchanges collapse or close business".

To this effect, he stated

"The attention of banks and other reporting financial institutions is hereby drawn to the above risks and you are required to take the following actions pending substantive regulation or decision by the CBN;

Ensure that you do not use, hold, and /or transact in any way in virtual currencies"

He further stated that banks and financial institutions are expected to ensure that existing customers that transact in VCs should have Anti-Money Laundering/ Combating the Financing of Terrorism (AML/CFT) control which allows them to comply with customer identification, verification and transaction monitoring requirements. Also, the financial institutions are expected to discontinue their relationships with these customers if they are unsatisfied with the control in place.

The circular concluded that transactions with virtual currencies are not legal tenders in Nigeria and that any bank or financial institution that goes against these directives, do so at its own risk.

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