The Central Bank of Nigeria (CBN) has recently issued guidelines for the operations of bank accounts for Virtual Assets Service Providers (VASPs) in Nigeria. This move comes in response to the evolving global trends in the regulation of virtual assets, including cryptocurrencies and crypto assets.

The objectives of these guidelines are to provide minimum standards and requirements for banking business relationships and account opening for VASPs in Nigeria, as well as to ensure effective monitoring of the activities of Banks and Other Financial Institutions providing services for Securities and Exchange Commission (SEC) licensed VASPs/Digital Assets (DA) entities in Nigeria.

The guidelines also aim to provide guidance on the relationship and operations of accounts for licensed VASPs/DA entities and to ensure effective risk management in the banking industry with regard to the operations of licensed VASPS.

Key findings from the guidelines include the following:

1. Eligible Stakeholders: The guidelines apply to commercial and merchant banks, payment service providers, and all entities registered by the Securities and Exchange Commission (SEC) to conduct the business of digital/virtual assets services provision.

2. Permissible Activities: Financial institutions are permitted to undertake activities such as opening designated accounts, providing settlement accounts and services, acting as channels for FX flows and trade, and other activities permitted by the CBN.

3. Operation of Bank Account by VASPs: The guidelines outline strict requirements for the designation, opening, and operation of accounts by VASPs. These include documentation requirements, restrictions on account use, monitoring and reporting obligations, and provisions for designated settlement accounts.

4. Risk Management for AML, CFT, and CPF: Financial institutions are required to establish appropriate risk management systems to determine whether designated accounts have been used, are being used, or are likely to be used for money laundering, terrorism financing, and proliferation financing. Customer due diligence, continuous verification, and monitoring of suspicious transactions are also emphasized.

5. Consumer Protection Measures: Financial institutions are mandated to establish consumer protection systems against fraud risks, provide channels for customer complaints, and ensure strict adherence to consumer complaints management systems.

6. Sanctions: The CBN has the authority to impose sanctions, including prohibition from opening further designated accounts, monetary penalties, and suspension of operating licenses for non-compliance with the guidelines.

These guidelines represent a significant step towards regulating the operations of VASPs in Nigeria, aligning with global efforts to prevent money laundering, terrorism financing, and proliferation financing in the virtual assets space. Financial institutions and VASPs are required to immediately comply with the provisions of these guidelines.

In conclusion, the issuance of these guidelines reflects the CBN's commitment to promoting transparency, accountability, and security in the virtual assets sector, while also ensuring the protection of consumers and the integrity of the financial system.