As CBN Moves to Rein in Payment Giants

Nigeria's Central Bank (CBN) is tightening its grip on the nation's booming fintech industry with a series of new directives aimed at curbing risks associated with hidden ownership and data security. The recent regulations mandate that banks, fintechs, and payment service providers disclose their Ultimate Beneficial Owners (UBOs) and ensure payment transaction data is localized by January 1, 2027.

The move comes as Nigeria's electronic payment sector has experienced exponential growth. Data from NIBSS shows a significant increase in electronic payment transactions, reaching N284.99 trillion in the first quarter of 2025, up from N234.49 trillion a year prior. The NIBSS Instant Payments platform processed nearly 11 billion transactions in 2024, more than doubling the approximately five billion recorded in 2022.

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As digital finance grows, the identity of those who ultimately control banks, fintechs and payment platforms becomes a matter of national financial security.

CBN's emphasis on UBOs stems from concerns that opaque ownership structures can facilitate illicit activities, influence credit flows, and create market dominance for a select few. "As digital finance grows, the identity of those who ultimately control banks, fintechs and payment platforms becomes a matter of national financial security," the article states.

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the requirement aligns with FATF Recommendations 10 and 25 by enabling the CBN to identify the natural persons behind financial institutions and prevent sanctioned persons or disguised interests from controlling the ecosystem.

Experts like Mr. Oladele Adeoye from DataPro Limited highlight that the UBO requirement aligns with Financial Action Task Force (FATF) recommendations, enabling the identification of individuals behind financial institutions and preventing sanctioned entities from gaining control. Mr. Shittu Idris, also from DataPro, views the directive as a crucial safeguard for Nigeria's anti-money laundering efforts, helping to prevent criminals and shell companies from exploiting local platforms for financial crimes.

These reforms are particularly significant given Nigeria's placement on the FATF grey list in February 2023 due to weaknesses in its anti-money laundering and counter-terrorist financing framework. The CBN's proactive measures signal a commitment to strengthening financial oversight and ensuring the integrity of the rapidly evolving digital finance landscape.

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the directive aligns with FATF Recommendations 24 and 25, which place strong emphasis on beneficial ownership transparency to prevent criminals, tax evaders and shell companies from concealing illicit financial flows through opaque corporate structures.