Nigeria’s Anti-Graft Agency Cracks Down on Banks Linked to Crypto Scams

Regulators take aim at financial institutions enabling digital asset fraud.

Nigeria's Economic and Financial Crimes Commission (EFCC) launched a sweeping investigation into domestic banks allegedly facilitating cryptocurrency-related scams. The move signals a tightening regulatory noose around traditional finance's role in the digital asset ecosystem.

The Compliance Crackdown

Sources close to the investigation reveal scrutiny focuses on lax Know-Your-Customer (KYC) protocols and suspicious transaction monitoring. The EFCC probes whether certain banks turned a blind eye to flows connected to Ponzi schemes and fake investment platforms masquerading as legitimate crypto ventures.

Banking's Double Game

This crackdown highlights a persistent tension. Banks often publicly distance themselves from crypto while profiting from its ancillary financial flows—a classic case of wanting the fee revenue without the regulatory headache. It's the financial sector's version of having your cake and eating it too, just with more compliance paperwork.

The action underscores a global trend: regulators are no longer just chasing crypto-native entities. They're following the money trail back to its traditional banking roots. For Nigeria's burgeoning crypto scene, this could mean short-term turbulence but potentially longer-term legitimacy as bad actors get flushed out. The real scam might be how long traditional finance thought it could play both sides without consequences.

Nigeria’s EFCC wants platforms aiding fraudsters prosecuted

In his statement, Uwujaren mentioned that so far, the agency has been able to uncover more than N18.7 billion in investment scams, while noting that fraudulent transactions with the use of digital asset accounts for N162 billion. He also accused one new generation bank, six fintechs, and some microfinance banks of helping these fraudsters launder their criminal proceeds. He mentioned that these institutions lacked the mandatory due diligence needed for heavy transactions.

“It is worrisome that investigations by the EFCC showed that cryptocurrency transactions to the tune of N162 billion passed through a new generation bank without any due diligence. Investigations also showed that a single customer maintained 960 accounts in the new generation bank, and all the accounts were used for fraudulent purposes,” Uwujaren said. He added that the financial institutions were clearly compromised and allowed the fraudsters to MOVE their illicit funds.

Uwujaren mentioned that, like in every case that the EFCC reviewed, the fraudsters then change the funds into digital assets and move them to SAFE destinations after moving the funds through the Nigerian banking system. He also used the opportunity to call on all regulatory bodies to ensure banks carry out mandatory regulatory checks, including Know Your Customer (KYC), Customer Due Diligence (CDD), Suspicious Transaction Reports (STRs), and others.

The director also instructed the regulators to ensure that deposit money banks, fintechs, and micro finance banks found complicit in aiding fraudsters should be suspended and referred to the EFCC for thorough investigation and possible prosecution. Uwujaren added that some of the fraudsters used an airline discount scheme to lure their victims, while a company named Fred and Farid Investment Limited was complicit in fraudsters luring innocent Nigerians into a bogus investment scheme.

Scammers targeting Nigerians in bogus investment schemes

The director mentioned that the modus operandi of the scammers in the airline scam involved carefully devised airline discount information that any unsuspecting foreign traveler WOULD fall for. “What they do is to advertise a discount system in the purchase of flight tickets of a particular foreign carrier. The payment module is designed in such a way that its victims would be convinced that the payment is actually made into the account of the airline. No sooner is the payment made than the passenger’s entire funds in his bank account are emptied,” he added.

Uwujaren added that more than 700 victims fell into the trap of the fraudsters through the scheme, estimating the total loss to be around N651 million. He claimed that the EFCC was able to recover part of the funds for the victims of the scam, but cautioned Nigerians to be more vigilant. He added that more than 200,000 victims were scammed in another case they were looking into. He noted that the perpetrators raked in more than N18 billion through nine companies.

He claimed that the company used bogus investment arrangements to lure unsuspecting residents of the country. Uwujaren said the nine companies offered several investment packages where users were allowed to purchase and invite others to earn more. He added that some of the perpetrators are foreign nationals, noting that the three Nigerian accomplices behind the crime have been arrested and charged in court.

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