CBN Fines Union Bank N200 million For Cryptocurrency Trading

Union Bank of Nigeria (UBN) has been penalised by Nigeria’s financial regulator, the Central Bank of Nigeria (CBN), for enabling cryptocurrency trading.

According to the commercial bank’s financial statements for the period of 2022, the central bank fined Union Bank N200 million for cryptocurrency trading.

Cryptocurrency trading has been banned in Nigeria by the CBN, which ordered Deposit Money Banks (DMBs) to close accounts that have ties with cryptocurrency, starting from February 2021. 

In a circular dated 5 February 2021, signed by the Directors, Banking Supervision and Payments System Management, Bello Hassan and Musa Jimoh, CBN had stated that: “Further to earlier regulatory directives on the subject, the Bank hereby wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited. 

“Accordingly, all DMBs, NBFIs and OFIs are directed to identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.” 

The CBN said digital currencies such as bitcoin, litecoin, and others are largely used in terrorism financing and money laundering, considering the anonymity of virtual transactions. 

Aside from breaching the cryptocurrency regulation of the central bank, Union Bank also contravened CBN’s directive that warned against the provision of foreign currency to account holders that don’t earn in the same denomination.

The financial regulator also sanctioned Union Bank for late substitution of maturing securities pledged, as well as non-provision of shortcodes to customers to enable them to block their accounts upon notice of fraud threats. 

The financial statement of the commercial bank showed that the apex bank fined Union Bank N4 million for “violating the central bank’s circular prohibiting financial institutions from giving foreign currency facility to customers that do not earn foreign currency,” the statement reads. 

Also, Union Bank was fined N1 million by the financial regulator for late substitution of maturing securities pledged. 

The lender was also forced to forfeit N2 million “for non-provision of short codes to customers to enable them block their accounts upon notice of fraud threats.”