The Corporate Affairs Commission (CAC) has announced its intent to take firm action, including closing down Point of Sale (POS) businesses that have not registered by the September 5, 2024 deadline. In a public notice issued last Friday, the commission expressed concern over the low level of compliance, suggesting that some operators might be involved in “unwholesome activities” due to their refusal to formalize their operations.
This comes in the wake of legal action initiated by the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), challenging the legality of the CAC’s directive. AMMBAN contends that making POS operators register with the CAC is unlawful.
Despite the pushback, the CAC maintained its position, pointing out that it had given a 60-day window following its July 7, 2024 announcement in major newspapers. “The Corporate Affairs Commission wishes to remind the public, especially fintech operators referred to as Point of Sale (POS) operators, that the 60-day registration window expired on September 5, 2024,” the notice read.
While some operators have complied with the directive, the CAC noted that a large number have not. “We commend those who have taken steps to register their businesses for their responsible approach. However, operators who have failed to comply might be engaging in questionable activities or have other reasons best known to them,” the commission added.
The CAC also warned that it is collaborating with law enforcement agencies and relevant stakeholders to ensure full compliance. Non-compliant operators risk having their businesses shut down and facing legal penalties.
Background of the Registration Directive
The directive, which was first issued in May 2024, targets POS agents working for major fintech companies like OPay, Palmpay, and Moniepoint. The original deadline was set for July 7, 2024, following discussions between the CAC and POS operators during a meeting in Abuja. According to the Registrar-General of the CAC, Hussaini Magaji, the move is in line with legal requirements and Central Bank of Nigeria (CBN) guidelines. The deadline was extended by 60 days to September 5, with a strict warning that non-compliance would lead to prosecution and potential business closures.
However, AMMBAN argues that the requirement contradicts the Companies and Allied Matters Act (CAMA), which they claim exempts individuals not operating as companies. “The court will need to interpret this section of CAMA to determine whether individuals acting as sub-agents, similar to bank branches, are required to register with the CAC,” said Oluwasegun Elegbede, AMMBAN’s National General Secretary.
Increasing Concern Over POS Fraud
The push for registration comes amidst growing concerns over fraud involving POS terminals. According to the Nigeria Inter-Bank Settlement System (NIBSS) Plc, POS terminals were responsible for 26.37% of fraud incidents in 2023. In response, the Central Bank of Nigeria has implemented stricter regulations to reduce the use of cryptocurrency and other virtual currencies within the financial ecosystem.
Registrar-General Magaji stressed that the registration process is intended to protect both fintech businesses and their customers, as well as to strengthen the economy. He cited Section 863, Subsection 1 of the Companies and Allied Matters Act (CAMA) 2020, along with the CBN’s 2013 guidelines on agent banking, as the legal basis for the directive.
Now that the September 5 deadline has passed, the CAC is gearing up to enforce these regulations, which could cause significant disruptions for POS operators who fail to comply. With legal proceedings from AMMBAN still ongoing, the situation remains tense, and the outcome could have lasting implications for fintech regulations in Nigeria and across Africa.
For more updates, join our WhatsApp channel: https://whatsapp.com/channel/0029VabITrvEAKW7DSkTfP0JCAC.