Senate begins debate on bill to expand CBN oversight of fintechs, non-bank institutions
The Senate has opened debate on a bill seeking to amend the Banks and Other Financial Institutions Act (BOFIA) 2020 to grant the Central Bank of Nigeria (CBN) broader powers to designate and supervise non-bank financial institutions.
The proposed amendment targets major fintech operators whose activities, lawmakers argue, now amount to critical national infrastructure.
Tokunbo Abiru, chair of the Senate Committee on Banking, Insurance and Other Financial Institutions and sponsor of the bill, said the reform had become urgent due to the rapid evolution of Nigeria’s financial landscape.
Abiru noted that mobile money operators, payment service banks, wallet providers, digital lenders and switching companies now serve tens of millions of Nigerians and process large volumes of daily transactions. Despite holding vast pools of sensitive financial data, he said, many of these firms operate under regulatory structures that have not kept pace with their systemic significance.
“The reality today is that a non-bank institution, because of its market dominance, data concentration, customer reach or technological capacity, may pose risks equal to or even greater than those posed by a traditional bank,” he said.
“We are therefore confronted with a regulatory gap that leaves critical parts of the financial system operating outside the highest tier of statutory oversight; this bill seeks to correct that mischief.”
He warned that without updating BOFIA, Nigeria risked exposing itself to data insecurity, foreign control of sensitive financial infrastructure, and vulnerabilities with national security implications. Abiru added that many fintechs operate on foreign-owned networks, use offshore servers, and store customer data in jurisdictions beyond Nigeria’s regulatory reach.
“Today, we cannot say with certainty where all the financial and behavioural data processed by some of these institutions is stored, who has access to it, or which foreign jurisdictions may lay claim to it,” he said.
Abiru recalled the temporary CBN restriction on fintech onboarding in April 2024 over concerns regarding KYC compliance, money laundering red flags, and suspicious transactions.
The amendment proposes five key reforms, including establishing a statutory framework for designating systemically important institutions, creating a national registry of fintechs, empowering the CBN to impose enhanced supervisory requirements, strengthening data sovereignty, and boosting consumer protection.
He also dismissed calls for a separate fintech regulatory agency, saying it would duplicate functions and weaken oversight.
“Fintech regulation is deeply intertwined with monetary policy, payments oversight, prudential supervision and systemic-risk monitoring, functions that already reside naturally within the Central Bank,” he said.
“International best practice overwhelmingly favours integrating fintech oversight within existing regulators, not creating new bureaucracies.”
Lawmakers expressed concern that the digital financial ecosystem is becoming increasingly vulnerable, with some large fintech platforms potentially posing systemic risks capable of destabilising the national economy.
Abiru said digital institutions now operate at scales comparable to mid-sized banks and hold data with national security implications, yet many store such data offshore with opaque ownership structures. He cited the April 2024 halt in customer onboarding by several fintech firms as evidence that the current regulatory toolkit is insufficient.
The proposed reforms include enhanced prudential tools, data sovereignty safeguards, a national registry to improve traceability, and stronger consumer protections.
Related to this topic:
