In 2024, Nigeria’s fintech sector encountered significant regulatory challenges, including hefty fines and a six-week ban on onboarding new customers. These measures were implemented in response to concerns over non-compliance with anti-money laundering (AML) standards and fraud prevention protocols. In reaction, leading fintech companies such as Moniepoint, OPay, and PalmPay overhauled their operations, implementing stricter compliance measures and intensifying their data collection efforts to rebuild trust with regulators.
The regulatory landscape further evolved in May 2024 when the Central Bank of Nigeria (CBN) retired 18 directors, including the director overseeing other financial institutions. According to industry insiders, this leadership change led to a more collaborative approach to fintech regulation.
“Once the new leadership took office, they adopted a less rigid stance toward the fintech industry,” said a fintech executive who requested anonymity to speak freely.
Two other executives noted that the new CBN directors were more open to dialogue with fintech companies, enabling the sector to strengthen its lobbying efforts and foster a more cooperative relationship with regulators.
To address the compliance issues flagged by the CBN in 2024, fintechs made significant progress in improving their data collection and reporting practices. They now provide detailed reports to the Nigerian Financial Intelligence Unit (NFIU) on politically exposed persons, suspicious transactions, fraud cases, and geo-tagged transaction data.
PalmPay, which boasts over 30 million customers, introduced advanced software to detect and flag large or frequent transactions that appear suspicious. This allows its compliance team to review such transactions before submitting reports to the NFIU. Similarly, Moniepoint expanded its definition of suspicious activities, including blocking accounts that log in from countries commonly associated with fraudulent activities.
“We are committed to ensuring that our platforms are not used as conduits for fraud,” emphasized a fintech executive, reflecting a shared commitment across the industry.
Beyond tightening transaction monitoring, fintechs restructured their internal teams to improve efficiency and accountability. Compliance teams are now more closely integrated with customer onboarding and retention units, enabling better identification of potential threats throughout the customer lifecycle.
In addition to internal reforms, fintechs enlisted ethical hackers—cybersecurity experts hired to identify vulnerabilities in their systems. These professionals help fintechs stay ahead of malicious actors by detecting and addressing security weaknesses before they can be exploited.
“Ethical hackers play a crucial role in helping us identify and fix potential flaws in our systems, allowing us to stay one step ahead of criminals,” explained a fintech executive.
Fintechs also rolled out app updates to bolster security. For instance, PalmPay and OPay introduced facial recognition technology for first-time users, large transactions, and transfers to new beneficiaries. These measures aim to reduce the risk of fraudulent activities slipping through the cracks. Both companies also launched a “night guard” feature to provide additional protection for transactions conducted after 6 p.m., a period traditionally more prone to fraud.
Looking ahead, the fintech sector’s ability to maintain this positive trajectory will depend on its continued commitment to compliance. By presenting a unified front to regulators—similar to the banking sector—fintechs aim to foster a more transparent and cooperative regulatory environment. This, in turn, will support the industry’s growth and its role in promoting financial inclusion across Nigeria.
