In response to the directive by the Corporate Affairs Commission (CAC) for Point of Sales (PoS) operators to register with it, the body, the “Association of Mobile Money and Bank Agents in Nigeria (AMMBAN)” says it has concluded plans to head to court to address the legality of the directive.
President of the association, Fasasi Sarafadeen, faulted the directive mandating PoS operators to register with the CAC, saying the move had forced the association to go to court to seek a redress.
Sarafadeen said the directive from the CAC violated the provision of the Companies and Allied Matters Act, Laws of the Federation of Nigeria, 2004, which “explicitly states that the commission has no jurisdiction over individuals not operating as a company”.
“According to section 863(1) of the Companies and Allied Matters Act, 2004, the order to enforce CAC directive on individual PoS agents operating under their name is wrong and will be challenged, as it contravenes the Companies and Allied Matters Act, Laws of the Federation of Nigeria, 2004, which explicitly states that CAC has no jurisdiction over individuals not operating as a company.
“We shall challenge it legally. The court will have to intervene in the interpretation of the quoted section of the CAMA if individuals operating as a sub-agent (likened to a bank branch) must register with CAC.
“CBN is right, no issue, the memo is clear, it only applies to non-individuals, unlike the Corporate Affairs Commission who generalised. We are in talks with the lawyer representing the association already, and a league of human rights lawyers whom we are not disclosing who they are for now”, he said.
Explaining the categories, he stated that there were two categories of Point-of-Sale agents.
“CAMA only mandates registration of individuals operating as a company. There are two categories of POS agents: individuals and non-individuals. Individual agents operate under their names, such as Musa Caroline or Abubakar Audu, and are typically profiled with financial institutions under their names.
“Non-individual agents, on the other hand, operate under registered or unregistered business names, such as Wale Ventures or Johnson Enterprises.
“It is this second category of agents that the Corporate Affairs Commission can enforce the law on, as they are required to register their business names by the law”, Sarafadeen explained.
He noted that sub-agents are independent branches of a company already registered with the Corporate Affairs Commission.
“Sub agents are not carrying out as an independent company but branches of a company. For example, while commercial banks operate with bank branches across the country, Fintechs (MMO, super agents, and co) operate with a network of sub-agents.
“It is, therefore, lack of knowledge of the workings in a Fintech/agent banking industry to be tagging sub-agents as illegal”, he added.
According to the AMMBAN boss, the CAC should focus its efforts on addressing the high failure rate of registered businesses in Nigeria, rather than enforcing regulations on individual POS agents operating under their names.
“The Corporate Affairs Commission should prioritise addressing the alarming failure rate of registered businesses in Nigeria, rather than targeting sub-agents. With over 4.9 million businesses registered, 50 per cent of which fail every five years, this should be the focus.
“In addition, the Central Bank of Nigeria’s memo specifically addressed non-individual agents, not individual sub-agents, and CAC’s threat to harass sub-agents is unwarranted and excessive”, he added.
He noted that the clampdown on agent banking in the name of CAC registration was not in line with President Bola Tinubu’s renewed Hope agenda, which prioritises job creation and opposes policies that cause unemployment.
“We are aware that President Bola Ahmed Tinubu is not approved of any policy that will cause unemployment, noting that agent banking has created over 1.9 million jobs in the last few years. Clampdown in the name of CAC registration is not in line with the renewed Hope agenda of Mr. President and we are appealing to Mr. President, the Senate, and the House of reps to intervene as they did for the anti-masses policy of cyber security levy.
“CAC should be concerned about how 50 per cent of registered businesses in Nigeria fail within the first few years, resulting in growing unemployment year-on-year. Rather than embarking on policies that will eradicate entrepreneurs, escalate unemployment, and reverse the gains of financial inclusion in Nigeria”, he stated.
The Federal Government through the Corporate Affairs Commission had issued a two-month registration deadline for Point of Sales companies, to register their agents, merchants, and individuals with the commission in line with legal requirements and the directives of the Central Bank of Nigeria.
The agreement was reached during a meeting between Fintechs and the Registrar-General CAC, Hussaini Ishaq Magaji, in Abuja.
CAC said the move would curb kidnapping and payment of ransoms.
According to the Nigeria Inter-Bank Settlement System, there are over 1.9 million PoS terminals deployed by merchants and individuals nationwide.
This new directive came against the backdrop of frequent fraud incidents involving POS terminals and plans to stop trading in cryptocurrency or any virtual currency by the Central Bank of Nigeria. POS terminals accounted for 26.37 per cent of fraud incidents in 2023, according to a fraud report by the Nigeria Inter-Bank Settlement System Plc.
Last week, the CBN stopped major fintech firms like Kuda, Opay, PalmPay, and Moniepoint from onboarding new customers and instructed the companies to warn their customers against trading in cryptocurrency or any virtual currency on their apps, threatening to block any accounts found engaging in such activities.
The CBN’s move was linked to an ongoing audit of the Know-Your-Customer process of the fintechs, which have been under scrutiny in recent months over concerns around money laundering and terrorism financing.
Before the CBN’s directive, the Economic and Financial Crimes Commission had obtained a court order to freeze at least 1,146 bank accounts owned by various individuals and companies allegedly involved in illegal foreign exchange transactions.