The Nigerian government needs to regulate cryptocurrency activities to curb financial crimes, especially money laundering, according to Adedeji Owonibi, the co-founder of Nigerian blockchain intelligence service provider A&D Forensics.

At a training for cryptocurrency compliance specialists by a blockchain and digital forensics firm, Owonibi pointed out that the lack of regulations in Nigeria’s crypto space permits various practices to go unmonitored:

“Nigeria should completely regulate cryptocurrency activities within the country and set out laws to that effect because if there is no law, there is no offense.”

Despite the recent reversal of the crypto transaction ban by the Central Bank of Nigeria (CBN), which enables banks to operate accounts for virtual assets service providers (VASPs), Owonibi explained that the compliance specialist training aims to ensure banks adhere to the relevant laws in their interactions with VASPs.

In an interview, Owonibi emphasized the need for Nigerian financial institutions to use the services of compliance specialists to ensure all funds that pass through their exchange are not used for criminal activities.

Compliance laws are meant to stop bad actors and act as checks to ensure that financial institutions like banks are not used as gateways to launder money and perpetrate other criminal activities.

The central bank had previously banned banks and other financial institutions from operating accounts for cryptocurrency service providers. The guidelines were issued to all banks and financial institutions on Dec. 22, 2023, outlining the conditions for VASPs to open accounts.

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Owonibi said banks must ensure that the VASPs they open accounts for are compliant, preventing them from becoming channels for money laundering, drug sales or terrorism financing globally.

While noting that the Nigerian government has been training some law enforcement agents as compliance specialists, Owonibi said the government needs to do more to ensure all security officials are well-trained to combat financial crimes.

Despite the CBN’s softened stance, local crypto analysts have advised the Nigerian Securities and Exchange Commission to revisit VASP guidelines to enable local crypto exchanges to get licenses to operate in the country.

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