On the 12 January, the Financial Policy and Regulation Department within the Central Bank of Nigeria (CBN) released a circular on virtual currencies. The stance of the CBN is that due to the significant untraceability and anonymity of transactions involving virtual currencies, they become susceptible to criminal activities. Furthermore, the CBN also highlights the risk that consumers who use virtual currencies and suffer a loss, may have little or no legal redress. In particular, this is due to the unregulated nature of many virtual currency exchanges.
The aim of the circular is to put forward four points of guidance for banks and financial institutions based on the risks put forward. Thus, the CBN requires these entities to:
(i) not use, trade hold or transact with any virtual currencies,
(ii) make sure that any customers who are virtual currency exchanges have effective AML/CFT controls in place;
(iii) discontinue the relationship with any virtual currency exchange when the bank or financial institution is not satisfied with its internal controls;
(iv) report any virtual exchange suspicious activity to the Nigerian Financial Intelligence Unit.
These guidance points are interim actions that should be taken until further formal regulation is established or another decision is reached by the CBN. The circular then reiterated that virtual currencies are not considered to be legal tender. As a result, any bank involved with any virtual currency does so at its own risk.
