UPDATE: Bank accounts of six forex trading companies that were frozen in 2021 have now been unfrozen by Nigeria’s apex bank on Tuesday, July 25, 2023 in a circular by the bank.
The Central Bank of Nigeria has placed post-no-debit (PnD) on the accounts of the foreign exchange trading platforms for suspected violations of the country’s foreign exchange policy.
The 2021 restriction
As the Central Bank of Nigeria (CBN) steps up its game to sanitize the foreign exchange market, there might be scapegoats in the incoming days as the apex bank Tuesday, August 17, 2021, announced the freezing of operation accounts of six fintech forex online investment platforms.
The announcement followed an injunction obtained by the CBN’s lawyer Micheal Kaase Aondoakaa (SAN) at the Federal High Court, Abuja, to freeze their account details for 180 days until its committee concludes investigations regarding alleged violations of forex.
The affected six Fintech investment platforms are:
- Bamboo Systems Technology Limited
- Chaka Technologies Limited
- Rise Vest Technologies Limited
- Trove Technologies Limited
- CTL/Business Expenses
- Bamboo Systems Technology Limited OPNS
Their major offence:
Specifically, CBN mentioned Bamboo Systems Technology Limited, Rise Vest Technologies Limited, Trove Technologies Limited, and Chaka Technologies Limited for indulging in asset management dealings through the forex they sourced from the official market.
The apex bank said the affected firms used the same official rate they sourced in Nigeria to purchase foreign bonds and shares which they sell to Nigerians. Most of their investor earn returns in USD.
That action contravenes the CBN circular referenced TED/FEM/FPC/GEN/01/012, dated July 01, 2015.
What Does the CBN July 01, 2015 Circular Say?
Entitled, “Re-inclusion of some imported goods to and services on the list of items not valid for foreign exchange in the Nigerian foreign exchange markets” CBN specifically mentioned Euro bond, foreign currency bond, and share purchases as one of the 41 listed items that can’t source forex from the Nigerian market.
The statement which was signed by its Director of Trade and Exchange Department, Olakanmi Gbadamosi, says:
As stated in the circular, all the items on the attached schedule which have already been classified as “Not Valid for Forex” cannot be funded at the interbank, from proceeds of exports and Bureaux de Change sources.
“Consequently, Authorised Dealers are enjoined to ensure that these items are funded from sources outside all the segments of the Nigerian foreign exchange markets”
Is CBN all out for scapegoats?
The latest freezing of the accounts of the fintech companies sends a warning message to all financial institutions in the country and other tech-based investment apps that encourage Nigerians to invest their monies in dollars instead of never stable Nigerian naira.
The Godwin Emefiele-led apex bank rose from its meeting on July 27, 2021, and announced its determination to take charge of the fx market largely monopolised by Bureau de Change operators spread across Nigeria.
CBN also announced the stoppage of sales of dollars and other foreign currencies to the BDC operators and mandated financial institutions to step up forex teller points in their branches for Nigerians to easily access FX for PTA, foreign schools fees, and foreign medicals, a guide of which is available at: https://infomediang.com/buy-forex-for-foreign-medical-bills-nigeria
Since then, the apex bank had consistently warned that it will not hesitate to sanction any firms, banks or individuals found to have violated its fx regulations.
What About Their Collaborators In Banks?
Some of the questions some Nigerians are asking include:
What happens to the collaborators of these forex trading platforms that have been in business for more than five years?
How did the funds worth billions of naira in forex pass through the banks?
Would saboteurs of CBN policy on foreign exchange in Nigerian banks ever be penalised by Godwin Emefiele?
Reactions from the affected firms
At the time of publication, none of the fintech investment platforms has refuted the CBN’s allegation.
However, in a swift reaction, Rise, in a social media circular assures its investors that their portfolios are secured.
“With regard to the latest news about us and our FX dealings, you can be sure that your investments and funds are safely managed, that funding and withdrawals will continue to be processed as normal, and that all our US operations remain intact,” rise vest technologies said.
It maintained that it’s on top of the situation to cooperate with regulators, “as we always have to ensure that all issues raised are properly addressed.”
It stated that its users and their investments are secured because they “are managed by regulated third parties in all jurisdictions in which we operate.”
Not The First Time For Chaka Technologies Limited
For Chaka Technologies Limited, it isn’t the first time government regulatory agencies would be raising alarm over its operations.
On December 17, 2020, the Security and Exchange Commission (SEC) obtained an order to stop the company from stock trading.
A communique on the official website of SEC stated:
“The interim Orders, which apply to all Chaka platforms, were granted pursuant to an application by the Securities and Exchange Commission. In the application, the Commission – through its solicitor, Dr. Chuka Agbu SAN – informed the Tribunal that the Defendants were engaged in investment activities, including providing a platform for the purchase of shares in foreign companies such as Google, Amazon and Alibaba.”
Implications Of The CBN’s Actions Against Affected Coys
The latest announcement comes days after the Securities and Exchange Commission (SEC) warned Nigerians to do due diligence on investment platforms through its portal before investing their hard-earned monies, stating that three million Nigerians lost N18 billion to Ponzi scheme operators, reported TheCable
This is going to put to question the trust of investors in the affected fintech investment platforms.
Usually, when regulators clamp down on entities, they would have to go the extra mile to bounce back.
They would have to engage more with their investors to keep assuring them that their investments are sufficiently protected.
They will also have to come clean that they have not violated the regulations of the CBN in any way.
