Cryptocurrency threatens national, financial security ― Stakeholders

Stakeholders in the Nigerian financial sector yesterday said cryptocurrency like other virtual currency has facilitated various fraudulent and criminal transaction that undermined the powers of the state.

According to the stakeholders, the virtual status of the currency makes it fluid for all sorts of manipulations especially as it reaches a point where it becomes untraceable.

Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, who led in the presentation of stakeholders perspective to the Senate Joint Committee on Banking Insurance and other Financial Institutions, ICT and Capital Market, said Cryptocurrency is a dark transaction that abhors trails and transparency.

He said the CBN as an institution with the responsibility to protect the legitimate earnings of actors in the nation’s economic activities has studied the cryptocurrency space and decided that it was better to insulate the Nigerian economy from its vagueries that could lead actors in that space and the nation’s economy exposed to dangerous economic vulnerability.

He maintained the CBN has a duty to protect all legitimate economic actors whether informed or uninformed.

“Transactions are extremely opaque, they are dark, they are not visible and they are not transparent.

“In another parlance, these are people who do not want a trail but indeed by its nature cannot be trailed.

“That is the reason virtually all regulators in the World are weary to recognize it. Since Nigerians delved into its usage, we have been studying its development and paying close attention to currencies in that space.

“Now, we know enough at this stage to decide that the continuation of these opaque activities significantly threatens the safety and soundness of our financial independence and like you know, the CBN has as its nature, all responsibility as the primary regulator to protect the activities all actors and stakeholders and particularly the uninformed actors in that space.

“For the financial system, all actors who may want to take advantage of their knowledge otherwise to reap where others of the uninformed loss.

“That is the reason we have asked all banks to resist, desist, and, indeed desist from operating accounts of cryptocurrency dealers in Nigeria,” Emefiele stated.

He said the potent risk and vulnerability the cryptocurrency and its other currency in that space poses to the Nigerian economy, has informed her decision to direct all financial institutions to desist from any transaction related to virtual currency.

He expressed worry that Nigerian earned second place in the virtual currency transaction while investigation has revealed that it has facilitated money laundering, ransom payments, terrorism and all sorts of fraudulent transactions.

“For the avoidance of doubt, we have asked our banking supervision, our payment system and our IT department to carry out conduct a thorough investigation through the activities of current exchanges and their major players.

“The result of their investigation will lead to a better understanding of their activities and may be unveiled to all in due course.

“However we know that Cryptocurrency has been used to facilitate scams which we all popularly called 419 transactions that have been known to facilitate money laundering; it has been known to facilitate an avenue through which kidnappers receive ransoms and they have been known to be instruments that have been used to finance terrorism, not just in Nigeria but in different parts of the world where these have thrived.

“That is why sometimes we wonder from data available that Nigeria comes second in the world. Most of us are prodding the fact that Nigeria comes second in the world with the use of tools that facilitates scam and 419; we come second in the world with the use of tools that are used to financers terrorism.

Emefiele who emphasised that virtual currency eludes a regulated environment thus it scares just as it undermines regulators maintained that global financial institutions of many countries have taken similar decisions.

“Our business is to protect the uninformed and ensure that those who need protection in a regulated environment have those protections.

“Let me state that this decision is in the best interest of every well-meaning Nigerians who have nothing to hide and is happy to have traceable and transparent dealings in our financial system

“I do not know how many of you may have heard that the international monetary funds, the US, the United Kingdom, Europe agree with us and highlighted that a vast majority of the central bank around the world have taken the same position as we have done in Nigeria.

Representatives of the Nigerian Financial Intelligence Unit (NFIU) said about three weeks ago, it intercepted $3million dollars in its investigation. An amount it reversed because it was not traceable.

Sani Tukur who spoke for the agency stated that the character of the virtual currency makes it suitable for dark operations because it is not traceable when investigated.

He stated that the funds used to sponsor the #EndSARS protest was sourced from the virtual currency market.

In his presentation to the Senate panel, Chairman, Independent Corrupt Practices and other Related Offences Commission, Prof Bolaji Owasanoye, SAN, said cites examples of cases where ransom money was traced to virtual sources.

According to him: “Virtual and cryptocurrencies pose serious legal and law enforcement risks for Nigeria. The current National Identification Number registration and linking with SIM cards is a pointer to the fact that insurgents, terrorists, kidnappers, bandits, and drug merchants have used the anonymity of unregistered SIM cards to commit their crimes with relative ease.

“Cryptocurrencies guarantees similar anonymity and can easily be used as leverage for terrorist financing and other crimes. With the NIN registration, cryptocurrencies may become an alternative payment platform for kidnappers and this would be impossible for law enforcement to agencies to trace.”

According to him, “The main suspect used technology in placing the money in the banking sector. A sizable amount was traced to several bank accounts but before investigators recovered some of the money, a large proportion had been made to disappear using serpentine ICT-aided transfer schemes that have so far eluded investigators.”

He stressed that on cryptocurrency like other virtual currency, “There is no movement of any ‘currency’ in the real sense of the word. By their very nature, they provide considerable anonymity that is almost impossible to be accessed by unauthorized persons, including law enforcement authorities.”

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