Introduction
The
Fintech has changed the traditional means of banking and rendering of other financial services. The use of technology to render services is evidenced through mobile and retail banking, payment and processing, lending, capital market trading, investment, crypto or virtual currency .
The evolution of fintech has created a new set of risks such as data theft, cyber-crimes and other legal challenges.
The purpose of this article is to examine the existing legal framework for the regulation of fintech in
Regulatory Legislations in
There is no single legislation regulating fintech in
- The CBN Guidelines on Mobile Money Services in
Nigeria , 2015 -
The CBN Guidelines for Licensing and Regulation of Payment Service Banks in
Nigeria , 2018 - The CBN Risk-Based Cyber-Security Framework and Guidelines for Deposit Money Banks and Payment Service Providers, 2018
- The CBN Microfinance Policy, Regulatory and Supervisory Framework, 2011
-
The CBN Guidelines on Operations of Electronic Payment Channels in
Nigeria , 2016 -
The CBN Regulation for Bill Payments in
Nigeria , 2018 -
The CBN Regulatory Framework for the Use of Unstructured Supplementary Service Data (USSD) for Financial Services in
Nigeria , 2018 -
The CBN Guidelines on International Mobile Money Remittance Service in
Nigeria 2015 -
The CBN Regulation for Direct Debit Scheme in
Nigeria 2018 -
The CBN Guidelines on International Money Transfer Services in
Nigeria , 2014 -
The CBN Regulation on Electronic Payments and Collections for Public and Private Sectors in
Nigeria , 2019 -
The CBN Revised Guidelines for Finance Companies in
Nigeria , 2014
Other legislations generally applicable in fintech services are;
- Companies and Allied Matters Act (as amended), 2020
- Investment and Securities Act, 2007
- Securities and Exchange Commission Rules (as amended), 2013
Federal Competition and Consumer Protection Act, 2018- National Insurance Commission Act, 1997
- Money Laundering (Prohibition) Act, 2011
Economic and Financial Crimes Commission (Establishment) Act, 2004- Terrorism (Prevention) Act, 2011
- Advance Fee Fraud and other Fraud Related Offences Act, 2006
- Cybercrimes (Prohibition, Prevention, Etc) Act, 2015
- Nigeria Data Protection Regulation, 2019
- Bank and Other Financial Institution Act, 2020
- Foreign Exchange (Monitoring and Miscellaneous) Provision Act, 1995
- NCC Value Added Services and Aggregator Framework, 2018
These regulations seek to ensure an effective financial system for the settlement of transactions, including the development of electronic payment systems in
Under the Guidelines for the Operation of International Money Transfer Services in
Under the CBN Guidelines on International Mobile Money Remittance Service in
In addition to the CBN guidelines, payment services involving mobile telephone infrastructure are regulated under the NCC License Framework for Value-Added Service. Under this framework, mobile payment service providers must obtain a five-year renewable license from the NCC.3
Regulatory Authorities
Similar to the legislations regulating fintech, there is no single authority established to regulate fintech services. The bodies regulating fintech services will depend on the transaction the fintech company is engaging in. The CBN however, has primary regulatory oversight over fintech services and products. It issues licenses and prescribes guidelines that regulate financial institutions.
Other regulatory bodies are;
Licensing and Restrictions on Fintech Services
Companies are required to obtain necessary license if they operate fintech services. For example, in the financial sector, a banking license must be obtained from the CBN before a fintech company can engage in lending operations.4 The CBN has issued sundry regulations which require providers of fintech services to obtain a license from the CBN.
Fintech operators licensed by the CBN include mobile money operators, switching companies, payment gateways, and payment terminal service providers and aggregators. Operators of bill payment platforms are required to either obtain a license from the CBN or be integrated into a licensed payments service provider. Mobile money operators and other fintech service providers which make use of telecommunications infrastructure, also require the approval of the NCC.5
The CBN in exercising its right of oversight over Payment System, drafted the Payment System Management Bill6 in the absence of any law regulating payments in
There is presently no comprehensive directive of fintech products or services that are prohibited in
The CBN has adopted a cautious stance towards crypto currencies. In
As regards Crowdfunding, in
Also, in
Data Protection and Cyber Security10
The Fintech Industry faces a major risk of data theft and other cybercrimes. The NITDA regulates the protection of data applicable to Nigerians in and outside
The Cybercrime Act, a general law on Cyber security in
Conclusion
The need for fintech regulations in
As a growing industry without a comprehensive regulatory framework, it is instructive that fintech companies operating in
Footnotes
1. Uche Aniechebe, "How Regulations Can Define the Future of Fintech in
2. Global Legal Insights, Fintech 2020, 2nd Ed, Available at https://www.globallegalinsights.com/practice-areas/fintech-laws-and-regulations/nigeriaAccessed
3.
4. Ibid
5. Fintech Regulation in
6. Section 47(2) of the CBN Act (as amended), 2007
7. New Licence Categorisation for Nigerian Payment System Available at https://www.cbn.gov.ng/Out/2020/CCD/Categorization%20of%20PSPs.pdfAccessed December, 11 2020.
8. Uche Aniechebe, "How Regulations Can Define the Future of Fintech in
9. Global Legal Insights, Fintech 2020, 2nd Ed, Available at https://www.globallegalinsights.com/practice-areas/fintech-laws-and-regulations/nigeriaAccessed December, 2020.
10. Olayanju Phillips, "An Overview of the Regulatory Framework of FinTech in
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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