THE CBN REGULATORY GUIDELINES ON THE E-NAIRA DRAFT

WHAT FINTECH COMPANIES SHOULD KNOW!

In an attempt to promote the financial inclusion objective, the Central Bank of Nigeria (CBN) introduced the E-naira and subsequently released the CBN regulatory guidelines draft on eNaira (draft) to maintain and regulate the issuance and use of the digital currency. This article is to examine the key provision of the draft in relation to fintech and its ecosystem. The draft provides clarity on the value on of the eNaira as equivalent to the value to naira, and would operate concurrently with naira.

The eNaira is to be administered by the CBN through the Digital Currency Management System (DCMS) which will be used by the CBN to mint and issue eNaira. Also, it’s expected to host eNaira wallets for different stakeholders including financial Institutions and consumer. Financial institutions (includes Fintech) are required to integrate their backend systems with the DCMS for efficient transfer of eNaira between bank accounts and eNaira wallets.



Hence Fintech companies are expected to act as intermediary between the CBN and customers, request eNaira for themselves and on behalf of its consumers. The responsibility of fintech would also see the integration of eNaira feature into their digital banking product. The periodic reporting obligation would include complaints and enquires by its users to CBN. Fintech companies are required to maintain a Treasury eNaira wallet; the Treasury eNaira wallet will be hosted on the Financial Institutions Suite (FI Suite) which is available on the DCMS, the primary application to be used by FIs to manage their eNaira holdings, requests, and redemption with the CBN. Fintech may create eNaira sub-treasury wallets for other financial product tied to it and fund from its single Treasury eNaira wallet with the CBN.



It pertinent to state that the Tax identification number (TIN), National identification number (NIN) and/or Bank Verification Number (BVN) shall be used as unique identifiers for all users and participants of the eNaira wallet. The draft place the daily transaction limit of eNaira for individual at N20, 000 ₦50,000, ₦200,000 and ₦1million for the tier 0,1,2,3 respectively and a balance wallet limit of N120,000, N300,000, N500,000 and N5million as well setting out the know-your-costumer (KYC) documentations requirement for each tiers. Fintech must comply with applicable Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) laws to ensure the detection and prevention of fraud and other transactions considered illegal on the DCMS.



Conclusion

Although the Launch of eNaira was slated for 1 October 2021, due to circumstance the plan was unattainable and was further slated to another date, however this would give ample time for fin-techs to integrate or plan towards developing API accommodating the eNaira, it is important to reiterate that the DCMS will be subject to comprehensive test security check, personal data will be kept of the ledger and will not be stored on the ledger to safeguard to the rights of Data subject.











Reference

1. REGULATORY GUIDELINES ON THE ENAIRA OCTOBER 1, 2021: https://engineersforum.com.ng/wp-content/uploads/2021/10/Regulatory-Guidelines-On-The-eNaira.pdf



2. CBN DRAFTS GUIDELINES TO NIGERIAN BANKS ON E-NAIRA: https://nairametrics.com/2021/08/29/cbn-drafts-guidelines-to-nigerian-banks-on-e-naira/



3. OALP NEWSLETTER ON THE CBN DRAFT REGULATORY GUIDELINES ON THE E-NAIRA.