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CBN Is Crafting Guidelines To Regulate Fintechs In Nigeria



Director, Banking and Payment System Central Bank of Nigeria (CBN), Mr. Dipo Fatokun who also doubles as the chairman of the Nigerian Electronic Fraud Forum (NeFF), in this interview on the sidelines at the unveiling of the 2017, NeFF Annual Report, spoke on the measures being taken to combat fraud in the Nigerian financial system and steps to be taken by customers. BUKOLA IDOWU was there for LEADERSHIP.

What steps are being taken to combat frauds in recent times by NeFF and the CBN especially in the face of rising electronic frauds?
The CBN in collaboration with the Nigerian electronic forum which as you know is a forum encompassing many stakeholders including the law enforcement agencies, the banks, switches and all payment systems providers. What we have done is to identify various types of fraud that have evolved and then bring out mitigants to curb them.
Sometime ago precisely last year, the forum held a meeting of which the issue of ransomware was discussed and shortly thereafter, that became a global problem. But because we had seen the problem coming, CBN had issued a guideline on what to do and that was why none of the banks in Nigeria was affected. Also one of the steps we have taken to curtail fraud is the framework on USSD, which is channel that is very prominent for banking transactions.
Any channel that is prominent, fraudsters would also follow the channel. So in order to curtail fraud in that angle, we have issued a framework which would become effective from October 1, 2018. The issue of stability and trust in the payment system is very close to the heart of the management of the Central Bank of Nigeria, and each time the governors come together, they discuss it and issue guidelines just as we have been doing.

There has been reports of people being robbed with Point of Sales (POS) terminals, how is this possible and what is been done to mitigate it?
When they use PoS at gunpoint telling you to put your pin, what they want to confirm is your pin. There is no way a PoS would dispense cash; it is not an ATM. The system we have for PoS in Nigeria is offline confirmation of pin. So when armed robbers accost someone they want to confirm the pin on the card is actually accurate because if they asked the owner of the card he or she might tell them the wrong pin.
So, once the pin is okay they can now go ahead to withdraw. What we have done is to collaborate with the banks to ensure that there is proper profiling of the people they give PoS to. They give it to only genuine merchants and they profile them to know that these merchants are actually genuine merchants. The other side is that some who have fallen victims have fallen victims because they were not aware of the immediate steps they should take.
If the armed robbers do not lead you to an ATM what stops the card owner from making an immediate report. Some would say they were calling and the banks lines were engaged; you can send an email which would minimize your loss. I have had cases of people saying the theft occurred on a weekend and they waited till the following working day and at that time a lot of money would been taken away from the account.
So, when it happens, make sure you give instant report to your bank and when that happens and your card would be hot listed immediately and the damages would be minimized. The other option is to make the verification to be done online but that also has its limitation. So, the management of CBN has actually directed that the banking and payment system department look into this and to come up with strategies to ensure that this is totally eliminated.

The report on fraud in the system as given by several institutions in the country have been contradictory, how can this be rectified?
The figures coming from NeFF has to with fraud relating to electronic payments. But you know that electronic fraud is not the only type of fraud you have in the banking system. You have the credit fraud and cheque fraud which are not electronic payments. So, it depends on what you are looking at. If you look at electronic payment fraud, the figures we issue on the volume and value of fraud in the industry comes from the database of electronic fraud which is the anti-fraud portal we have at NIBBS.
Banks and other system players or system participants are expected to report their fraud figure to that portal and NIBBS collate and issues the figure on a quarterly basis, half year and a yearly basis, so there can be no contradiction. However, if you comparing with other fraud happening in the system, maybe it compasses others apart from electronic fraud.

Financial technology (Fintechs) companies have continued to grow in recent times, are we likely to see new regulations for this sector soon?
Financial technology companies are the new players in the payment industry and there is this fear that fintechs would take the over the roles of the traditional banks. We believe that would not happen because banks would continue to play their roles, however some activities would have to be ceded to these fintechs. Due to the importance of these fintechs, the CBN is crafting guidelines that would enable their regulation and supervision to be put in place.
Currently, we already have guidelines for their licensing and we already have guidelines on what they are expected to do and what they not expected to do but because we know technology keeps on revolving, so, new guidelines would also be issued from time to time to look at areas that are not currently captured. It is an on-going process and it is not a one-size-fits-all. As events unfold, guidelines and circulars would also come out to ensure that the payment system is very safe and secured.