Lawmakers Worry Over Rising POS-linked Crimes, Unlicensed Crypto Activities

The House of Representatives’ Ad-hoc Committee on the Economic, Regulatory, and Security Implications of Cryptocurrency Adoption and Point-of-Sale (POS) Operations in the country has expressed concern over the rising cases of fraud linked to POS operations and the infiltration of unlicensed crypto-related activities.

The chairman of the committee, Hon. Olufemi Bamisile, expressed this concern during the panel’s resumed investigative session with fintech leaders, POS operators, and representatives of regulatory and security agencies on Monday.

Bamisile said recent engagements with stakeholders had revealed deep gaps within the country’s rapidly growing digital finance ecosystem.

He said the Committee had received multiple reports of unprofiled agents, cloned terminals, anonymous transactions, and weak Know Your Customer (KYC) practices.

The lawmaker warned that such issues are putting Nigerians at serious risk of financial losses, cybercrime, and security breaches.

“We are concerned about the growing rise in fraud associated with POS operations. Unprofiled agents, cloned terminals, and weak KYC practices continue to expose citizens to preventable dangers,” he said.
Bamisile also lamented a disturbing trend of POS operators venturing into digital-asset and cryptocurrency services without regulatory approval, stressing that such activities pose significant threats to consumer protection and national security.

“There are allegations and credible information that some POS operators now engage in crypto-related services for which they are not licensed. This raises serious red flags around anti–money laundering, terrorism financing, data integrity, and the misuse of instruments originally designed for basic payment services,” he said.

Bamisile also said the Committee had been alerted to the registration of phoney companies at the Corporate Affairs Commission (CAC), some of which allegedly use the National Identification Number (NIN) and Bank Verification Number (BVN) of unsuspecting citizens to open accounts and launder illicit funds through unverified POS channels.

“This highlights weak verification mechanisms and underscores the urgent need for a coordinated oversight framework.

“Another issue the Committee intends to probe is the storage of sensitive customer data on foreign servers by major fintech companies operating in Nigeria,” he said.

Bamisile warned that keeping data outside the country’s jurisdiction undermines the ability of regulators and security agencies to conduct timely audits, trace suspicious transactions, or enforce compliance orders.

“This has direct national-security implications, especially in a sector connected to terrorism financing risks and cyber-enabled crimes,” he said.

Bamisile assured operators that the engagement was not adversarial, stating that the industry also faces challenges such as fragmented regulation, overlapping mandates by government agencies, policy inconsistencies, and multiple compliance requirements.

In his presentation, Paul Okafor, National President of the Association of Digital Payment and POS Operators of Nigeria (ADPPON), warned that the POS ecosystem in Nigeria has reached a critical emergency point, with fraud escalating to levels that now pose a direct threat to national security.

Okafor said the rapid expansion of the industry has overwhelmed regulators, leaving significant gaps that criminals are exploiting.

He informed the lawmakers that while POS operators have grown from 50,000 in 2017 to over 2.3 million today, regulatory capacity has expanded by “less than 10 per cent.”

“This imbalance is what has produced the crisis we are facing today,” he said. “The regulators, especially the CBN, are not incompetent; they are overwhelmed by the sheer speed and scale of growth,” Okafor added.
Quoting data from the Nigeria Inter-Bank Settlement System (NIBSS), Okafor said POS, banking, and digital-payment channels suffered N17.67 billion in fraud losses in 2023, affecting more than 80,000 customers.

“But the situation worsened drastically in 2024, with losses rising to N52.26 billion — an increase of N34.59 billion in just one year,” he said.
Okafor stated that attempted fraud across financial channels surged by 338 per cent, while POS channels alone accounted for 26.37 per cent of all cases recorded.

“More than 38,000 POS fraud cases were officially reported in one year,” Okafor said. “Unofficially, we estimate that over 70,000 cases go unreported because victims simply give up.
“In some states, security agencies report that nearly 40 per cent of kidnap ransom payments pass through informal POS cash-out channels. This is no longer a fintech issue; this is a national security threat,” he noted.
Okafor urged the Committee to issue a clear directive compelling the Central Bank of Nigeria (CBN) to introduce urgent reforms to rescue the system.

“If we fail to act, fraud will escalate, kidnappers will continue to exploit the system, Nigerians will lose more money, financial inclusion will collapse, and trust in the financial system will be destroyed. And when trust dies, the financial system dies,” he said.