NIGERIA Law and Practice Contributed by: Isa Alade, Seyi Bella, Ayodele Adeyemi-Faboya and Ayomikun Ogunkanmi, Banwo & Ighodalo
lines and other regulatory offences. Another example of this is the reported directive given by the NCC to telecommunication companies to restrict access to Binance’s website and other cryptocurrency platforms to prevent illegal finan - cial activity and FX market manipulation. Perhaps the most significant enforcement action in 2024 is the revocation of the banking licence of Heritage Bank Plc by the CBN for reasons of mismanagement of the financial position of the bank and little reasonable chance of recovery. There were concerns that the bank constituted a systemic risk to the broader financial market in Nigeria. On the other side of the pond, while the SEC was not reported to have withdrawn any licenses, the SEC did issue public warnings against dealing with unlicensed entities operat - ing in the capital market, such as Marino FX Ltd. 2.11 Implications of Additional, Non- Financial Services Regulations Implementing non-financial services regulations, such as those addressing privacy, cybersecu - rity, social media content, and software develop - ment, has significant implications for both fin - tech companies and legacy financial institutions. Fintech firms are particularly affected by privacy regulations like NDPA, which mandates robust data protection measures, transparency, and user consent. These companies must establish systems for real-time data processing and secu - rity, whereas traditional banks, with their legacy systems, may find compliance less challenging but face difficulties transitioning older infrastruc - ture to meet modern privacy requirements. Cybersecurity regulations, such as the Cyber - crimes Act, also play a crucial role in shaping the landscape for fintech companies. These regula - tions require fintechs to implement strong cyber defences and report any incidents promptly. The
relatively new nature of fintech operations means they often lack the resources and infrastructure of legacy institutions, leaving them more vulner - able to cyber threats. On the other hand, legacy players generally have more established cyber - security frameworks but may still struggle with outdated systems that are ill-equipped to handle new, sophisticated digital threats. Social media content regulations, especially around cyberstalking and defamation, add another layer of complexity for fintechs, particu - larly those that operate or engage with users on social media platforms. Fintech companies must ensure their platforms do not inadvertently facili - tate harmful or illegal content. Traditional finan - cial institutions, with their smaller social media presence, may face fewer regulatory challenges in this area, although this could change as they expand digital interaction channels. On 16 May 2024, the Federal High Court in Lagos, Nigeria, ruled in favour of the Central Bank of Nigeria (CBN) in the case of Chris Eke v Central Bank of Nigeria, affirming the CBN’s Customer Due Dili - gence Regulation issued on 20 June 2023. This regulation mandates that financial institutions collect their customers’ social media handles as part of the standard KYC process. The court held that the regulation did not infringe upon the privacy rights of bank customers. Intellectual Property laws such as the Nigeria Copyright Act, Trade Marks Act, and Patents and Designs Act also require compliance with patent and copyright provisions and the assur - ance that any third-party software used is appro - priately licensed. Both fintechs and legacy play - ers must navigate these regulations to ensure legal compliance and maintain consumer trust in a rapidly evolving digital financial environment.
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