Illegal FX Transactions: Panic as CBN Freezes Accounts of Bamboo, Chaka, Others
By Adedapo Adesanya
The Central Bank of Nigeria (CBN) threw another bombshell on Tuesday as a federal high court in Abuja granted its request to freeze bank accounts of a few financial technology (fintech) companies for 180 days.
The affected companies were Rise Vest Technologies Limited, Bamboo Systems Technology Limited, OPNS, Chaka Technologies Limited, CTL/Business Expenses and Trove Technologies Limited.
The apex bank accused the listed companies of “illegal foreign exchange transactions” and sought the court’s injunction to freeze their bank accounts for six months pending the completion of investigations.
In the motion ex parte marked FCH/ABJ/CS/822/2021 and filed on August 4, the CBN through its counsel Michael Kaase Aondoakaa, submitted that “the investigation being carried out concerns what has been discovered to be serious infractions by the defendants/respondents in connection with some foreign exchange transactions, and non-documentation by the defendants/respondents in violation of the extant laws and regulations, particularly the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act and the Central Bank of Nigeria foreign exchange manual.”
“That more specifically, there is a grave allegation that the defendants/respondents are engaged in illegal foreign exchange transactions, accessing/procuring of foreign exchange via their banks from the Nigerian foreign exchange market via several bureaux de change, international money transfer operators and have transferred cash deposit of more than S10,000.00 (Ten thousand dollars) to various accounts overseas contrary to provisions of extant laws and regulations and also traded in foreign securities and cryptocurrencies in contravention to CBN Circular referenced TED/FEM/FPC/GEN/01/012 and BSD/DIR/PUB/LAB/014/001 dated February 5, 2021, and July 01, 2015.
“It is evident that Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Chaka Technologies Limited and Trove Technologies Limited are complicit in operating without a license as asset management companies and utilising FX sourced from the Nigerian FX market for purchasing foreign bonds/shares in contravention of CBN’s directive.”
In his ruling, Justice Ahmed Mohammed said: “Having listened to senior counsel to the applicant on the motion ex parte filed in August, it is granted as prayed.”
He added that any person who feels aggrieved about the freezing order was entitled to approach the court within the period to seek redress.
He then adjourned the matter to February 20, 2022, for hearing.
This is coming six months after the bank ordered all Deposit Money Banks (DMBs), Other Financial Institutions (OFIs) and Non-Banks Financial Institutions (NBFIs) to with immediate effect shut down the accounts operated by entities that facilitate the trading of digital currencies.
The situation has created panic, especially among investors who are worried about their funds with the affected companies. However, one of them, Chaka, in a statement, assured them of the safety of their money.
“With respect to the recent news, please be rest assured that your investments remain safe and accessible on Chaka.
“Chaka is duly licensed by the Security Exchange Commission (SEC), which means that all of our operations are within the purview of Nigerian regulators.
“Funds on Chaka are insured by the SIPC and all investments are registered and regulated by the Security Exchange Commission (SEC) and Nigerian Exchange Group (NGX).
“We have begun engaging with appropriate authorities to gain clarity and clear any misunderstandings. We will continue to update you with any developments on the matter,” the statement disclosed.