CBN Launches Pilot Program for Virtual Asset Oversight
The Central Bank of Nigeria (CBN) has initiated a pilot program focused on enhancing oversight of virtual asset service providers (VASPs) as part of its efforts to strengthen the integrity of the financial system. This announcement came via a statement released on Tuesday.
The CBN has selected an initial group of companies to participate in the program, which includes prominent names such as Flutterwave, Paystack, KuCoin, KoinKoin, Juicyway, and cNGN.
This initiative comprises multiple phases, with upcoming stages already scheduled. No additional participants will be admitted during the pilot’s duration.
The program aims to bolster compliance with anti-money laundering, counter-terrorist financing, and counter-proliferation financing (AML/CFT/CPF) regulations, in alignment with established legislation that includes the Money Laundering (Prevention and Prohibition) Act 2022 and the Banks and Other Financial Institutions Act 2020 (BOFIA).
The apex bank contends that the pilot is an integral component of its risk-based supervision strategy, which is designed to enhance financial system stability and market integrity oversight for virtual asset activities within its regulatory framework.
Importantly, the CBN clarified that this pilot initiative does not replace or supersede the existing regulatory framework or the authority of other regulatory bodies overseeing virtual assets in Nigeria.
Objectives of the Pilot Program
The pilot program seeks to cultivate a detailed understanding of the AML/CFT/CPF risks, business models, and operational practices adopted by the participating VASPs. It also provides support to these entities in fortifying their AML/CFT/CPF frameworks to align with the CBN’s supervisory expectations, particularly under FATF Recommendations 15 and 16. There will be a special emphasis on preparing for travel regulations and the management of proliferation funds.
Engagement and Reporting Requirements
The participation of VASPs in this pilot is a formal supervisory invitation from the CBN, designed to foster a controlled and constructive environment for engagement. This arrangement allows participating entities to contribute valuable insights that will enhance the CBN’s oversight capabilities related to AML/CFT/CPF, financial system stability, and the integrity of virtual asset transactions.
Ongoing Evaluation and Compliance Measures
Throughout the pilot phase, each participating VASP will be required to submit monthly supervisory key performance indicators (KPIs) related to AML/CFT/CPF compliance using a prescribed CBN template. Furthermore, they will engage in supervisory discussions with the CBN and, if applicable, the Nigerian Financial Intelligence Unit (NFIU).
The regulator has indicated that these VASPs must undergo reviews focusing on critical areas such as governance, customer onboarding, sanctions screening, transaction monitoring, and cross-border operations. Additionally, participants will need to demonstrate a credible implementation plan to comply with FATF Travel Rules.
The CBN emphasized that participation in this pilot program is closely monitored and does not confer any regulatory status, approval, or licensing rights to the involved entities.
