In order to prevent financial crimes, particularly money laundering, the Nigerian government must control cryptocurrency activities, according to Adedeji Owonibi, co-founder of A&D Forensics, a Nigerian blockchain intelligence service provider.
On February 9, Owonibi brought up this topic during a Blockchain and Digital Forensic business training for specialists in bitcoin compliance. He made the argument that certain behaviors in Nigeria’s cryptocurrency industry might go unchecked because there are no laws in place. He declared: “Coin activities should be entirely regulated by Nigeria and laws should be established accordingly, as there can be no offense in the absence of a law.”
Owonibi clarified that the purpose of the compliance specialist training is to make sure banks follow the applicable laws when dealing with Virtual Assets Service Providers (VASPs), even with the Central Bank of Nigeria (CBN) having recently reversed its ban on cryptocurrency transactions. In an interview, Owonibi underlined how important it is for financial institutions in Nigeria to hire compliance experts to make sure that no money passing through their exchange is being utilized for illicit purposes.
Compliance regulations serve as a deterrent to unscrupulous actors by acting as safeguards against financial institutions, including banks, being exploited as entry points for money laundering and other illegal activity. Banks and other financial institutions were prohibited by the central bank from managing accounts for bitcoin service providers. The rules, which specify the requirements for virtual asset providers to open accounts, were sent to all banks and financial institutions on December 22, 2023.
According to Owonibi, banks need to make sure that the virtual asset service providers they open accounts with are compliant exchanges in order to keep them from acting as international conduits for the sale of drugs, money laundering, or financing of terrorism. He stated that additional work would need to be done by the government to guarantee that all security personnel are properly prepared to tackle financial crimes, even though it has been noted that the Nigerian government has been educating some law enforcement officers as compliance specialists but the CBN has released guidelines allowing cryptocurrency and crypto asset companies, as well as other virtual asset service providers, to open accounts with Nigerian banks.
Local cryptocurrency analysts have recommended that the Nigerian Securities and Exchange Commission (SEC) reexamine the standards for virtual asset service providers in order to allow local crypto exchanges to obtain licenses to operate in the nation, even with the lifting of the CBN bank ban.