2025 was a very exciting year and saw significant changes in Nigeria’s legal and regulatory landscape. Series of laws were enacted by the National Assembly and regulatory guidelines were also issued by regulators including the Central Bank of Nigeria, Federal Competition and Consumer Protection Commission, the Nigerian Communications Commission, etc. There were also some important judicial decisions from the courts in Nigeria which shaped the legal and regulatory space in the country. This recap is divided into four parts representing the four quarters of the year, highlighting what we think are the most impactful laws and regulations, reforms, and judicial decisions in 2025.

1st Quarter (January – March 2025)

The first quarter was significantly marked by the issuance of guidelines and regulations from regulators and key judicial decisions by the courts. The Central Bank of Nigeria issued guidelines to suspend the extension of export proceeds and also announced the approval of the Nigerian Foreign Exchange (FX) Code. Key decisions which shaped the tax landscape and also affirmed the multi-sectoral regulatory authority of the Federal Competition and Consumer Protection Commission 9FCCPC) were delivered by the courts. The Investment and Securities Act, 2025 was also signed into law by the Nigerian President.

• The implementation of the Deduction of Tax at Source (Withholding) Regulations, 2024 began on 1st January 2025 requiring corporate entities, statutory bodies, public authorities, etc. to deduct withholding tax at source from 1st January 2025.
• On 8 January 2025, the Central Bank of Nigeria (CBN) issued a circular on the Suspension of Extension of Exports Proceeds on Behalf of Exporters for the immediate suspension of approvals for the extension of repatriation of export proceeds on behalf of exporters mandating that proceeds for non-oil exports must be repatriated and credited to the exporters’ domiciliary accounts within 180 days and for oil and gas exports, within 90 days from the date of the bill of lading.
• On 11th January 2025, the Presidential Enabling Business Environment Council announced that it would establish commercial courts and Ease of Doing Business Councils across all 36 states and the Federal Capital Territory as part of its effort to improve the country’s business climate.
• On 22nd January 2025, the CBN announced the approval of the Nigerian Foreign Exchange (FX) Code as a guideline to the banking industry to promote ethical conduct of Authorised Dealers in the Nigerian Foreign Exchange Market.
• 0n 24 January 2025, in a circular titled “Waiver of Non-Refundable Annual License Renewal Fee for Existing Bureaux De Change”, the CBN announced the waiver of payment of annual renewal fee for existing bureau de change (BDC) operators due to transition into the new BDC regulatory structure required by CBN.
• On 27 January 2025, the Federal High Court (FHC) in the appeal between Federal Inland Revenue Service v. MTN Nigerian Communications Plc (FHC/L/1A/2024), set aside the judgement of the Tax Appeal Tribunal (TAT) which awarded the sum of $71 million against MTN while declining the reliefs for penalties and interest sought by FIRS. The FHC increased the liability and ordered MTN to pay $87.9 million as penalties and interest.
• On 28 January 2025, the Collective Management Regulations, 2025 was issued by the Nigerian Copyright Commission and repealed the Copyright (Collective Management Organisation) Regulations, 2007. The Regulations provide for the approval and supervision of companies seeking to operate as a Collective Management Organisation (CMO) and their relationships with users and other CMOs, etc. The Regulations impose administrative fines ranging from N200,000 t0 N500,000 for unethical practices and non-compliance with the Regulations. Other sanctions include caution, suspension or disqualification.
• On 3 February 2025, the National Pencom Commission issued the Revised Circular on the Operations of Branch Offices and Service Centres by Licensed Pension Fund Administrators. The circular was issued to give effect to section 72 of the Pension Reform Act, 2014 and provides the metrics for requiring the opening and operation of branches and service centres by Pension Fund Administrators in Nigeria.
• On 7 February 2025, the Federal High Court in Emeka Nnubia v. Minister of Industry, Trade and Investment, Federal Competition and Consumer Protection Commission & Anor in Suit No: FHC/L/CS/1009/2024 affirmed the Federal Competition and Consumer Protection Commission (FCCPC) as the primary regulator for competition and consumer protection issues in all sectors in Nigeria including the telecommunications sector.
• On 12 February 2025, the Federal Ministry of Interior issued a circular on the Review of Approving Authority for Expatriate Quota and Citizenship Applications. The review was done to enhance transparency and accountability in the administration of Expatriate Quota and Citizenship applications.
• On 4 March 2025, the first Mobile Virtual Network Operator (MVNO) to be licensed by the Nigerian Communications Commission (NCC) launched and commenced operations in Nigeria.
• On 13 March 2025, the Court of Appeal in Kuda Microfinance Bank Ltd v. Amarachi Kenneth Blessing (CA/EK/48/2024) held that a bank may lawfully restrict a customer’s account upon receiving reports of fraudulent or suspicious activity without the need to first obtain a court order.
• On 20 March 2025, the Nigeria Data Protection Commission issued the Nigeria Data Protection Act General Application and Implementation Directive, 2025 (hereinafter “the GAID). The GAID was issued to provide clarity and practical guidance on the implementation of the NDPA. It repealed the Nigeria Data Protection Regulation, 2019 and the Nigeria Data Protection Regulation Implementation Framework, 2020.
• On 29 March 2025, the Nigerian President, signed the Investment and Securities Act, 2025 into law. The Act repealed the Investment and Securities Act, 2007 and it is aimed at strengthening the legal and regulatory framework for investments and capital market activities in Nigeria. The Act classified exchanges into composite and non-composite exchanges and also legally recognised virtual assets bringing an end to the uncertainty concerning transacting virtual assets in Nigeria.

2nd Quarter (April – June 2025)

The second quarter saw a lot of regulatory actions from regulators in the exercise of their regulatory powers and functions. Laws were also enacted in this quarter. The Securities and Exchange Commission issued a circular on the transmutation of executive directors and the Nigerian Immigration Service (NIS) issued guidelines for the purpose of implementing e-visa system, automated landing and exit cards in Nigeria. Four Nigerian tax laws were enacted to unify tax laws and revolutionize tax collections and enforcement in Nigeria.

• On 6 April 2025, the Registrar General of the Corporate Affairs Commission, announced the launch of an AI-driven Intelligent Company Registration Portal (ICRP) to revolutionize business registration in Nigeria and improve ease of doing business in Nigeria.
• On 25 April 2025, the Competition and Consumer Protection Tribunal upheld the $220 million penalty imposed on Meta platforms Incorporated (Facebook and WhatsApp) by the Federal Competition and Consumer Protection Commission (FCCPC) for data discriminatory practices in Nigeria and ordered for the payment of $35,000 as reimbursement for FCCPC’s investigation expenses. Part of the orders made by the Tribunal against Meta Platforms Incorporated include to immediately reinstate the rights of Nigerian users to determine how their data is shared and submit a compliance letter by 1 July 2025.
• On 2 May 2025, the Nigerian Immigration Service released the Guidelines for the Implementation of the e-Visa Application System and Automated Landing and Exit Cards. The Guidelines introduced e-visa which replaced visa on arrival. The e-visa application system also introduced thirteen (13) short-visit visa categories for eligible foreign travellers and imposed penalties for overstaying visas effective from 1 September 2025. Electronic landing and exit cards were also introduced to replace the manual processes of embarking and disembarking travellers.
• On 29 May 2025, the Nigerian President approved the establishment of the National Credit Guarantee Company Limited (NCGC) and the appointment of its board and management team. The NCGC is backed with an initial capital of N100 billion for the purpose of expanding access to finance for Micro, Small and Medium Enterprises (MSMEs), manufacturers, large businesses, etc. across Nigeria.
• On 11 June 2025, the Lagos State Electricity Regulatory Commission (LASERC) issued Order No. LASERC ORDER/001/2025 establishing the regulatory framework for electricity market operations within Lagos State. The issuance of the Order marked the conclusion of the transition for transfer of regulatory oversight from Nigerian Electricity Regulatory Commission to LASERC. The Order requires individuals and entities to obtain licenses from LASERC to legally undertake regulated electricity activities within Lagos State.
• On 17 June 2025, the Corporate Affairs Commission (CAC) announced the review of its service fees effective from 1 August 2025. The fees for company incorporation and post-incorporation services were therefore reviewed upward. The implementation date was also subsequently postponed to 1 October 2025.
• On 19 June 2025, the Securities and Exchange Commission (SEC) issued the Circular to All Public Companies and Capital Market Operators on the Transmutation of Independent Non-Executive Directors and Tenure of Directors. SEC directed the immediate discontinuance of the transmutation of Independent Non-Executive Directors (INEDS) into Executive Directors within the same company or its group structure by public companies and significant capital market operator. SEC also introduced a 3-year cool off period for Chief Executive Officer or Executive Director upon stepping down from a company before being eligible for appointment as Chairman.
• On 26 June 2025, the Nigeria President signed four tax reform bills into law. The four laws are: the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, the Nigeria Revenue Service (Establishment) Act 2025, and the Joint Revenue Board (Establishment) Act 2025. The Acts repeals certain tax laws and also reduced the multiplicity of taxes with the aim harmonising tax collection and enhancing the ease of doing business in Nigeria.
• On 30 June 2025, the Nigerian President ordered the temporary suspension of the implementation of the Financial Reporting Council (Amendment) Act, 2023 which imposed new annual dues on large private companies classified as Public Interest Entities.

3rd Quarter (July – September 2025)

The third quarter was also significantly marked by regulatory actions through issuance of Guidelines and regulations. Sanctions and penalties were also imposed for regulatory breaches. The Federal Inland Revenue Service (FIRS) announced the discontinuance of the issuance of tax exemption certificates. The Nigerian Communications Commission issued a license framework for licensing and regulating international Application to Person (A2P) messaging in Nigeria.

• On 6 July 2025, the Nigeria Data Protection Commission (NDPC) imposed a fine of N766,242,500 on Multichoice Nigeria who are the owners of DSTV for breaching the Nigerian Data Protection Act through unlawful cross-border data transfers and violation of Nigerian data subjects’ personal data.
• On 8 July 2025, the Nigerian Communications Commission (NCC) issued the License Framework for International Application to Person (A2P) Messaging in Nigeria. The framework was issued by NCC in a move to regulate Application to Person services in Nigeria through the introduction of the International A2P Messaging Aggregator License.
• On 25 July 2025, the Federal Competition and Consumer Protection Commission (FCCPC) issued the Digital, Electronic, Online or Non-Traditional Consumer Lending Regulations, 2025. The regulations provide for the registration of digital and traditional money lenders with the exception of licensed microfinance banks. It also imposes obligations including filing of bi-annual and annual reports, etc. on money lenders with sanctions and penalties provided for the breach of any of the provisions of the Guidelines.
• On 29 July 2025, the Federal Inland Revenue Service (FIRS) in a public notice announced the discontinuance of issuance of tax exemption certificates to all taxpayers including pioneer status companies, non-governmental organisations and free zone entities. Subsisting tax exemption certificates would not be renewed by the FIRS.
• On 30 July 2025, the National Insurance Commission (NAICOM) issued the Guidelines for Insurtech Operations in Nigeria. The Guidelines became operational on 1 August 2025 providing a regulatory framework for the safe and responsible deployment of Insurtech solutions by licensed insurance operators. The Guidelines provide the minimum capital requirements for Insurtech operators as well as the permissible and non-permissible activities.
• On 5 August 2025, the Nigerian President, signed the Nigerian Insurance Industry Reform Act, 2025 into law. The Act repealed the Insurance Act 2003 and consolidated several insurance laws including the Marine Insurance Act, Motor Vehicles (Third Party Insurance) Act, etc. into a unified and streamlined legal framework for the insurance industry. It also revised the minimum capital requirements for insurance companies across various insurance categories to reflect a risk-based capital approach in alignment with current international standards and practices.
• On 6 August 2025, NCC announced the release of the Guidelines on Corporate Governance, 2025. The Guidelines are applicable to all communication companies in Nigeria and provides for the composition of the board of directors, board committees and appointment processes, etc.
• On 16 September 2025, the Central Bank of Nigeria (CBN) issued a circular on the Appointment and Announcement of Successors to Managing Director. The CBN requires Payment Service Banks (PSBs) to obtain the regulatory approval of the CBN of the successor of a Managing Director (MD/CEO) no later than six months to the expiration of the tenure of the incumbent MD/CEO.
• On 18 September 2025, the Federal Government issued a directive mandating all mining and quarrying companies licensed since 2024 to finalize their Community Development Agreements with host communities before 31 December 2025.
• On 21 September 2025, the Minister of Solid Minerals Development announced the revocation of 1,263 mineral licenses in Nigeria following failure by the licensees to comply with the mandatory payment of their annual service fees.
• On 29 September 2025, the National Pension Commission (PENCOM) issued a circular which reviewed the minimum capital requirement for Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs). The circular directs PFAs to increase their capital base to 20 million Naira from 5 million Naira while PFCs are to increase their capital base to 25 billion Naira from 2 billion Naira.

4th Quarter (October – December 2025)

Key regulatory activities especially in the Nigerian financial services and oil and gas sectors occurred in the fourth quarter. The Central Bank of Nigeria (CBN) issued guidelines to regulate agent banking activities in Nigeria. A draft Guidelines for handling Authorized Push Payment Fraud was also issued by CBN to preserve the integrity of Nigerian payment system. The Nigerian Investment Promotion Commission also put a stop to applications for Pioneer Status Incentive in view of the Economic Development Tax Incentive (EDTI) to commence from 1 January 2026.

• On 6 October 2025, the Central Bank of Nigeria (CBN) issued the Guidelines for the Operation of Agent Banking in Nigeria. The Guidelines provides for the permissible and non-permissible agent banking activities, appointment of agents, agent qualification and due diligence requirements, rules on agents’ locations and geo-tagging of agents’ devices, etc.
• On 9 October 2025, CBN issued the Exposure Draft Guidelines on the Operations of Automated Teller Machines (ATMs) in Nigeria to provide additional guidance on the operation of ATMs and provide clarity of security requirements of ATMs, resolution of failed transactions, etc.
• On 10 November 2025, the Nigerian House of Representatives ad hoc committee on the economic, regulatory and security implications of cryptocurrency adoptions and Point of Sale Operations discussed the opportunities, challenges and future of Nigeria’s digital finance ecosystem with cryptocurrency operators and digital asset innovators.
• With effect from 10 November 2025, the Nigerian Investment Promotion Commission (NIPC) stopped receiving applications for Pioneer Status Incentive in a bid to fully transition to the new Economic Development Tax Incentive (EDTI) scheme which will take effect from 1 January 2025.
• On 13 November 2025, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) announced the suspension of the proposed 15 percent import duty on Premium Motor Spirit (PMS) and Automotive Gas Oil (AGO) which was initially approved by the President and announced by the NMDPRA on 21 October 2025.
• On 26 November 2025, the Securities and Exchange Commission (SEC) directed all capital market operators to state their compliance level and ensure that all tradable instruments are registered in line with the newly enacted Investments and Securities Act, 2025 no later than January 2026.
• On 26 November 2025, CBN issued the Draft Guidelines for Handling Authorised Push Payment Fraud. The draft Guidelines provides for reporting APP fraud, resolution and reimbursement and the roles of financial institutions in preventing, detecting and mitigating APP fraud. The Guidelines also mandates financial institutions to have an APP Fraud Policy and implemented by the Boards of financial institutions.
• On 28 November 2025, the Nigeria President approved the establishment of the National Tax Policy Implementation Committee to oversee the implementation of Nigeria’s newly enacted tax laws which would take effect from 1 January 2025.
• On 1 December 2025, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) launched the 2025 oil licensing round through digital bids of the 50 oil and gas blocks approved for bidding. The oil licensing round is expected to deepen investment in the Nigerian upstream sector.
• On 10 December 2025, the Joint Revenue Board (formerly Joint Tax Board) placed a nationwide ban on road taxes, levies and related charges in a bid to sanitize Nigeria’s tax administration and improve the ease of doing business.

Conclusion

2025 has been a remarkable year of significant changes and reforms in Nigeria’s legal and regulatory landscape. Key regulatory guidelines and regulations were introduced by regulators including the Central Bank of Nigeria, the Federal Competition and Consumer Protection Commission, the Nigeria Data Protection Commission, etc. The CBN introduced the guidelines for agent banking to regulate agent banking activities. The CBN guidelines for handling APP fraud was also issued to preserve the integrity of the financial services sector. The Nigerian tax landscape was also reshaped with the enactment of four new tax laws which repealed some existing tax laws and consolidated several tax laws. The Investments and Securities Act, 2025 ushered in a new regime for the recognition of virtual assets. Key judicial pronouncements were also made by the courts. The Competition and Consumer Protection Tribunal imposed fines on Meta Platforms incorporated for violating the Nigeria Data Protection Act and unlawful cross-border transfer of data of Nigerian data subjects. The Court of Appeal also delivered a judgement authorizing financial institutions to freeze customers’ bank accounts on suspicion of fraudulent activities without the need to first obtain a court order.

As we approach the new year, we extend our sincere gratitude to all our clients for their continued trust in us and wish you a Merry Christmas and a prosperous New Year 2026.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com or contact:

Agent banking entails the provision of financial services by a third party (Agents) to customers on behalf of a licensed deposit-taking financial institutions (Principals).

This article therefore provides an overview of some of the key provisions of the new Guidelines.

Scope of Permissible Agent Banking Activities

The activities which are allowed or prohibited under agent banking relationships are set out in the Guidelines. Some of the activities that are permitted under agent banking are cash deposits and withdrawals, facilitating bill payments, local currency funds transfer services, providing account opening forms on behalf of principal, facilitating cheque book request and collection, etc.

Super Agents and Agents are however prohibited from carrying out banking services including account opening, loan underwriting, investment and foreign exchange services.

Agent Banking Arrangements

Agent banking arrangements or relationships could involve two or three parties as the case may be. Agent banking relationship could involve the Principal and the Agents or where the relationship is tripartite, include a Super Agent as an intermediary between the Principal and Agents.

The Principal is a duly licensed deposit-taking financial institutions authorized to carry out agent banking activities; the Super Agent is an incorporated entity licensed to carry out the activities of recruiting, aggregating and managing Agents, while Agents are individuals or non-individual entities appointed by Principals or Super Agents to carry out agent banking activities.

An agent banking relationship is formalized when a financial institution enters into an agent banking agreement with an Agent for the purpose of providing any of the permitted agent banking activities. An Agent cannot be engaged by more than one financial institution to provide agent banking services or be under more than one network of Super Agent at a time.

Mandatory Regulatory Requirements for Appointment of Agents

Financial institutions and Super Agents have very strict regulatory obligations in the appointment of Agents to provide permitted agent banking services to customers. These regulatory requirements are to be met by financial institutions or Super Agents prior to the appointments of Agents. The regulatory requirements include obtaining satisfactory documentations from Agents such as certificate of incorporation with the Corporate Affairs Commission (CAC), particulars and Bank Verification Numbers (BVN) of directors/promoters etc., conducting enhanced due diligence on Agents, and carrying out risk assessment obligations on Agents prior to their appointment and onboarding. The risk assessment could be carried out directly by the financial institution or through a Super Agent.

Use of Dedicated Agent Accounts

Transactions by Agents within the scope of the permitted activities are required to be performed through a dedicated account or wallet maintained with the Principal and the POS device provided to the Agent shall be linked with the account or wallet only. Performance of transactions outside the dedicated account or wallet is a violation which attracts sanctions including liability for any misconduct or fraud arising from the transaction, termination of the agent banking agreement and blacklisting of the Agent.

List of Agents and Locations

Financial institutions are to publish a list of their Agents on their website. Each branch of the financial institution is also required to display the list of its Agents within its locality.

Agents are only allowed to provide agent banking services within their approved locations and may not relocate, transfer or close their operations at the approved locations without prior notification to the financial institution and/or Super Agent.

To prevent Agents from operating at multiple locations, devices provided to Agents in providing agent banking services must be geo-fenced or tagged to the operate only within the agreed registered Agent location. The requirement for the devices to be geo-fenced or tagged will take effect from 1^st April 2026.

Operational and Transactional Limits

Financial institutions are required to provide operational and transactional limits for Agents in line with the Guidelines and ensure that the limits are not exceeded in the provision of agent banking services. Accordingly, the mandatory transaction limits set by the Guidelines include N100,000 daily limit and N500,000 weekly limit for deposits and withdrawals. A daily and weekly limit of N100,000 apply to bill payments.

Sanctions and Penalties

The CBN may direct financial institutions to take remedial or corrective actions including taking actions that it may deem appropriate against erring Agents or terminating the Agent Banking Agreement. CBN may also impose sanctions and penalties against financial institutions, Super Agents and/or Agents as the case may be. The sanctions which CBN may impose include:

1. Suspension or prohibition from further engagement in agent banking business
2. Prohibition from onboarding new agents
3. Suspension or removal of the Board, Management and officers of the Principal
4. Revocation of agent banking approval
5. Revocation of operational license.

Conclusion

The issuance of the new Guidelines by CBN is to ensure the regulation of the operations of agent banking in Nigeria. Agents are restricted to transact only the permitted business activities within their approved locations. The devices of Agents are to be geo-fenced or tagged to prevent Agents from operating from multiple locations. Agent banking arrangements are to be formalized with the execution of agent banking agreements upon the satisfactory review of the documentations, conduct of enhanced due diligence and risk assessments. CBN has the power to direct financial institutions who are Principals in agent banking arrangements to take remedial or corrective actions, however, CBN has extensive powers to impose administrative penalties and sanctions on erring Principals and Super Agents.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

Prior to the enactment of the ISA, the legality of trading or transacting in virtual/digital assets was uncertain especially following the Central Bank of Nigeria (CBN) circular of 2021 which directed all financial institutions to identify persons and entities transacting or operating cryptocurrency exchanges in Nigeria and ensure that their bank accounts are closed.

In 2022, the Nigerian Securities and Exchange Commission (SEC) issued the ‘New Rules on Issuance, Offering Platforms and Custody of Digital Assets’ (Digital Asset Rules) which set out the requirements for licensing and regulating different trading activities relating to virtual/digital assets including Virtual Assets Service Provider (VASP), Digital Assets Custodian (DAC), Digital Assets Offering Platform (DAOP) and Digital Assets Exchange (DAX) in Nigeria. Despite the issuance of these new rules by the SEC, the regulatory uncertainty on virtual/digital assets persisted until the enactment of the ISA 2025.

The SEC is the regulatory authority responsible for the registration and licensing of virtual assets including Virtual Asset Service Providers (VASPs). VASP is defined as an entity that conducts one or more of the following activities or operations for or on behalf of another person:

1. Exchange between virtual assets and fiat currencies;
2. Exchange between one or more forms of virtual assets;
3. Transfer of virtual assets;
4. Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets; and
5. Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

Registration of VASPs is governed by the ISA 2025, Digital Assets Rules, and other applicable SEC rules and regulations.

Initial Assessment Filing and Accelerated Regulatory Incubation Program (ARIP)

All promoters of any initial digital asset offerings (including VASPs) within Nigeria or targeting Nigerians are required to comply with the SEC mandatory initial assessment filing before applying for Accelerated Regulatory Incubation Program (ARIP). To comply with the initial assessment filing, VASP promoters are required to complete and submit an assessment form and draft white paper providing the details of the digital assets offering, and information about the issuer. To fully comply with the initial assessment filing, the filing is required to be accompanied with a legal opinion providing the justifications for classifying the tokens to be sold through the digital asset offering as securities or not.

Upon the submission of an initial assessment filing, SEC would review it and notify the applicant of its eligibility to submit an application for ARIP. Participation in ARIP provides an applicant with an Approval in Principle to legally operate and provide its services in a regulated environment under supervision by the SEC. A successful participation in ARIP would entitle the applicant to apply for full registration with the SEC to provide its services to the broader public in Nigeria.

Requirements for the Registration of Virtual Assets Service Providers (VASP)

An applicant for a VASP license is required to be a company incorporated with the Corporate Affairs Commission (CAC) and must meet all the requirements stipulated by the SEC to obtain a VASP license in Nigeria. The requirements which a VASP applicant must meet include the following:

1. Evidence of incorporation of a local entity including Certificate of Incorporation, Memorandum and Articles of Association (MEMART) and Status Report with the Corporate Affairs Commission (CAC).
2. Latest audited accounts or audited statement of affairs of the company in the case of a new company.
3. A business model with a clear or unique value proposition.
4. Know Your Customer (KYC) procedures and risk management protocol.
5. Copies of the rules of the applicant for investor protection, conflict of interest, customer protection, dispute resolution, etc.
6. Evidence of sufficient financial, human and other resources for the operation of a VASP license
7. Evidence of appropriate security arrangements in compliance with SEC Technology Risk Management requirements.
8. A letter of no objection or approval letter issued to the applicant by regulator(s), where the applicant operates in other sectors.
9. An office in Nigeria managed by a director of the applicant company resident in Nigeria.
10. Sworn undertaking to maintain, keep proper records and render returns to the SEC.
11. Sworn undertaking to comply with applicable SEC Rules and Regulations and the Investment and Securities Act, 2005 by a director or company secretary.
12. Any additional requirements which the SEC may require.

Capital Requirements and Registration Fees

An applicant for a VASP license is required to have a minimum paid-up capital of N500,000,000 (Five Hundred Million Naira). The minimum paid-up capital could be bank balances, fixed assets or investment in quoted securities. A current fidelity bond covering at least 25% of the minimum paid-up capital is also required by the SEC.

The required registration fee payable to SEC for obtaining the VASP license is N30,000,000 (Thirty Million Naira). There are other fees payable to SEC for registration including application, processing and sponsored individuals’ fees.

Where the applicant complies with the registration requirements and pay the applicable registration fees, SEC may grant registration to the applicant and list the applicant in the list of its licensed capital market operators. However, the SEC may reject the application for registration if the proposed activity infringes public policy, is injurious to investors or violates any laws, rules and regulations implemented by SEC.

Conclusion

The enactment of ISA 2025 has put to rest the uncertainties surrounding virtual assets in Nigeria. This means that virtual assets are recognized in Nigeria as securities with SEC being the regulatory authority for these assets with powers to register Virtual Asset Service Providers (VASPs) and other digital assets service providers.

For a VASP to be registered, it must first submit an initial assessment filing to determine its participation in ARIP which is a form of Approval in Principle which allows the VASP to provide its services in a regulated environment under the supervision of SEC.

A successful participation in ARIP would further entitle the VASP to apply to the SEC for registration provided that it can meet the registration requirements and pay the fee stipulated by the SEC. If the SEC is satisfied it may grant registration to the applicant and list it in the list of registered capital market operators. However, SEC may also reject the application where the proposed activity is contrary to public policy or it is injurious to investors, etc.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

Money laundering and terrorist financing are major threats to national and global security, and Nigeria is no exception. Under Section 18(2) of the Money Laundering (Prevention and Prohibition) Act, 2022 (MLPPA), money laundering is defined as the act of concealing, disguising, converting, transferring, or controlling funds or property, knowing they are proceeds of an unlawful act. Terrorist financing on the other hand, refers to the provision of funds or financial support to individuals or groups to enable them commit acts of terrorism.

Financial institutions have long been the primary focus of anti-money laundering and counter-terrorism financing (AML/CFT) efforts by governments, it is however now widely recognized that several other sectors are also at risk of being exploited by illicit financial actors. These sectors include professionals, business support services and businesses that are not primarily engaged in financial services but are vulnerable to being used as channels for illicit financial flows. These businesses and professions, often referred to as Designated Non-Financial Businesses and Professions (DNFBPs), include lawyers, real estate agents, accountants, casinos, non-governmental organizations (NGOs), among others. Section 30 of the MLPPA defines DNFBPs as dealers in jewellery, cars and luxury goods, precious stones and metals, chartered accountants, audit firms, tax consultants, clearing and settlement companies, legal practitioners, hotels, casinos, supermarkets, dealers in real estate, audit firms, etc. and such other businesses as the Federal Ministry of Industry, Trade and Investment or appropriate regulatory authorities may from time to time designate.

To ensure effective regulation and oversight of these sectors, the Nigerian Special Control Unit on Money Laundering (SCUML) was established. SCUML operates as a unit under the Nigerian Economic and Financial Crimes Commission (EFCC) and is responsible for registering, monitoring, and supervising DNFBPs in accordance with the MLPPA, the Terrorism (Prevention and Prohibition) Act 2022, and relevant SCUML Regulations.

Legal and Regulatory Framework for AML/CFT in Designated Non-Financial Institutions

In line with international standards and global best practices, Nigeria has established a comprehensive legal and regulatory framework to address money laundering and terrorist financing within DNFBPs. This framework is designed to guide, regulate, and enforce compliance among DNFBPs. Key laws and regulations governing AML/CFT compliance in DNFBPs include:

The Money Laundering (Prevention and Prohibition) Act, 2022 (MLPPA): The MLPPA repealed the Money Laundering (Prohibition) Act, 2011 and introduced a more robust legal and institutional framework for combating money laundering and related offences in Nigeria. The Act establishes the SCUML as the regulatory authority responsible for supervising DNFBPs and ensuring their compliance with AML/CFT obligations. The Act mandates DNFBPs to implement internal controls, procedures, and policies to mitigate money laundering and terrorism financing risks, particularly in relation to new products or emerging technologies.

The Terrorism (Prevention and Prohibition) Act, 2022 (TPPA): This Act repealed the Terrorism (Prevention) Act, 2011. It provides for a unified and comprehensive framework for the detection, prevention, prohibition, and prosecution of acts of terrorism, terrorism financing, proliferation, and financing the proliferation of weapons of mass destruction in Nigeria. It complements the MLPPA and emphasizes customer due diligence and the reporting of suspicious transactions related to terrorism financing. The TPPA incorporated the Nigeria Sanctions Committee (NSC), tasked with identifying and publishing the names of individuals and entities linked to terrorism and proliferation financing in Nigeria. It mandates all DNFBPs to among other things, identify and freeze all funds, assets, and other economic resources belonging to listed individuals or entities, report such actions to the NSC, and file Suspicious Transaction Reports with the Nigerian Financial Intelligence Unit (NFIU) for further investigation. To support compliance, the NSC launched the Nigeria Sanctions List Alert System (NigSac), which provides real-time alerts to DNFBPs on designated persons and entities. Subscription to this alert system is considered a critical obligation under the TPPA for all DNFBPs.

Nigerian Financial Intelligence Unit Act, 2018: This Act established The Nigerian Financial Intelligence Unit (NFIU) as the central national agency responsible for receiving and analysing disclosures from reporting organizations, to produce financial intelligence to other agencies combating money laundering, terrorism financing, and other financial crimes. The NFIU is empowered to request financial information from a broad range of institutions and to issue guidance and directives to these institutions and to conduct on-site inspections to ensure compliance with anti-money laundering and counter-terrorist financing regulations.

The Economic and Financial Crimes Commission (Establishment) Act, 2004: This Act establishes the Economic and Financial Crimes Commission (EFCC) as Nigeria’s principal agency for investigating and prosecuting financial crimes, including money laundering. The EFCC works in collaboration with the NFIU and other regulatory bodies to enforce anti-money laundering, and prosecute offenders.

Economic and Financial Crimes Commission (Anti-Money Laundering, Combating the Financing of Terrorism and Countering the Proliferation Financing of Weapons of Mass Destruction for Designated Non-Financial Businesses and Professions and Other Related Matters) Regulations, 2024: These Regulations cover the relevant provisions of the MLPPA, TPPA and any other relevant laws or regulations that provides for AML/CFT and Countering Proliferation Financing of Weapons of Mass Destruction (CPF), the conduct of Customer Due Diligence, monitoring and filing of suspicious transactions reports to the NFIU, etc. The Regulations designate the SCUML as the body responsible for the registration, monitoring and supervision of DNFBPs’ compliance with AML/CFT/CPF obligations. The Regulations mandate DNFBPs to implement risk-based AML/CFT/CPF programs proportionate to their business operations and ensure clients and customers are integrated into these systems., amongst other obligations.

SCUML Regulations 2013 (as amended by SCUML Regulations 2016): This is also known as the Federal Ministry of Industry, Trade and Investment (Designation of Non-Financial Institutions and Other Related Matters) Regulations, 2013. It was issued pursuant to the Money Laundering (Prohibition) Act, 2011. Despite the repeal of the enabling Act, the Regulations remain in force as subsidiary legislation. The Regulations designate specific businesses and professions as Non-Financial Institutions (NFIs) and impose key AML/CFT obligations, including customer due diligence, the establishment of internal compliance programs, and reporting requirements. The Regulations also established SCUML as the body responsible for registering, supervising, and monitoring DNFBPs. It should be noted that under this regulation, the SCUML was initially established as a department under the Federal Ministry of Industry, Trade and Investment. SCUML has now been re-established under the EFCC by the MLPPA, reflecting a more enforcement-driven approach.

Additionally, Nigeria actively collaborates with international bodies such as the Financial Action Task Force (FATF), the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), and the Egmont Group of Financial Intelligence Units to enhance and align its AML/CTF framework with global standards.

Statutory Obligations of Designated Non-Financial Businesses and Professions Under the AML/CFT Framework

Under Nigeria’s AML regime, DNFBPs are legally required to comply with several statutory obligations aimed at preventing money laundering, terrorist financing, and proliferation financing. DNFPBs are enjoined to comply with these obligations to avoid regulatory sanctions, including fines, penalties, or business closure. The key obligations imposed on DNFBPs include:

1. Registration: To register with the SCUML under the relevant category and be issued with registration certificate.
2. Customer Due Diligence: DNFBPs must implement risk-based customer due diligence measures. This involves verifying customers’ identities, identifying beneficial owners, and assessing risks associated with each customer.
3. Reporting Suspicious Transactions: DNFBPs are required to submit Suspicious Transaction Reports (STRs) to the NFIU when they detect transactions that may be linked to money laundering, terrorism financing, or other financial crimes within 24 hours after the said transaction.
4. Reporting International Transfer of Funds and Cash: DNFBPs are required to report in writing a transfer to or from a foreign country of funds or securities by a person or body corporate including a money service business of a sum exceeding US$10,000 or its equivalent to the NFIU within one day from the date of the transaction.
5. Record Keeping: DNFBPs must maintain records of transactions, customer identification data, and supporting documents for at least five years after the completion of the transaction. These records must be accessible for regulatory review.
6. Internal Procedures, Policies and Controls Compliance Programs: DNFBPs must establish internal AML/CFT compliance programs, including the development of policies, procedures, and controls to prevent financial crimes. Regular staff training and independent audits are also encouraged as they are essential to ensure ongoing compliance.
7. Risk Assessment: DNFBPs are mandated to undertake risk assessments for new products, business practices and technologies before launching them to identify and manage money laundering risks. DNFBPs must then take appropriate measures to manage and mitigate any identified risks.
8. Politically Exposed Persons (PEPs): DNFBPs must conduct Enhanced Due Diligence (EDD) on PEPs, requiring additional scrutiny of transactions, ongoing monitoring, and obtaining senior management approval before establishing or maintaining a business relationship.
9. Currency Transactions Reports (CTRs): DNFBPs are mandated to make Currency Transactions Reports to SCUML of any single transaction, lodgement or transfer of funds in excess of N5,000,000 or its equivalent in the case of an individual or N10,000,000 in the of body corporate within 7 days from the date of transaction.
10. Cash Based Transactions Reports (CBTRs): DNFBPs are required to make Cash Based Transactions Reports to SCUML on any single transaction in excess of $1,000 or its equivalent within 7 days from the date of transaction.

Conclusion

Designated Non-Financial Businesses and Professions (DNFBPs) play a critical role in Nigeria’s fight against money laundering and terrorism financing. Their statutory obligations under AML/CFT regulations include registration, record-keeping, reporting suspicious activities, conducting customer due diligence, amongst others. Non-compliance can result in various sanctions, including fines, suspension, revocation or withdrawal of operating license by the appropriate licensing authority. As DNFBPs in Nigeria continue to grow and engage with global markets, it is it is imperative they remain up to date with regulatory developments and adopt effective compliance practices. By doing so, they can mitigate legal and reputational risks, prevent financial crimes, and contribute to the country’s broader efforts to combat financial crimes.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

On 26^th June 2025, the President of the Federal Republic of Nigeria signed four landmark tax reform bills into law, marking a significant shift in the nation’s tax landscape. The laws are the Nigeria Tax Act (Ease of Doing Business), the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act. Once operational, these laws are expected to simplify tax administration, improve compliance, enhance revenue generation, and foster a more business-friendly environment. The implementation of the newly signed four tax fiscal reform laws will commence by 1^st January 2026.

This article outlines some notable highlights of the Acts that individuals and businesses should be aware of.

Key Highlights of Nigeria’s Newly Signed Tax Reform Acts

Some of the highlights of the newly signed Tax Reform Acts include:

1. Personal Income Tax Relief: Low-income earners earning NGN800,000 or less per annum are completely exempted from personal income tax under the Nigeria Tax Act (NTA). 25% personal income tax applies only to individuals earning above N50 million annually. The Act also increases the tax exemption threshold for compensation for loss of employment or injury from NGN10million to NGN50million.
2. VAT Exemptions on Essential Goods and Services: Essential goods and services including food items, medical equipment and services, pharmaceuticals, tuition fees, electricity, educational books and materials, exports (excluding oil and gas exports) etc., are exempted from VAT. The impact of this is that businesses selling these goods and services can recover their VAT costs, despite the zero rate.
3. Establishment of Nigeria Revenue Service (NRS): The Federal Inland Revenue Service (FIRS), the agency established to regulate the collection of tax in Nigeria has now become Nigeria Revenue Service (NRS). The Nigeria Revenue Service (Establishment) Act repeals the current Federal Inland Revenue Service Act and defines the NRS’ expanded mandate, including non-tax revenue collection of other agencies such as the Nigeria Customs Service, Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Nigeria Ports Authority (NPA), among others. The Bill also lays out transparency, accountability, and efficiency mechanisms. The Acts also provide that State Internal Revenue Services (SIRS) will be autonomous in the running of their affairs.
4. Increase in Tax Exemption Threshold for Small Companies: Prior to the assent of the Acts, only small companies with an annual gross turnover of less than N25m were exempted from tax. Under the new Acts, there is an increase in the tax exemption threshold for small companies from annual gross turnover of N25m to N100m. Thus, small companies with gross turnover of N100m and below and total fixed assets not exceeding NGN250million are now exempt from Companies Income Tax (CIT), Capital Gains Tax (CGT) and the newly introduced Development levy.
5. Increased Capital Gains Tax (CGT) rate – The NTA increases the CGT rate from 10% to 30% for companies, aligning the CGT and CIT. For individuals, capital gains will be taxed at the applicable income tax rate based on the progressive tax band of the individual.
6. Introduction of Development Levy – Nigerian companies except small companies will pay a “Development Levy” at 4% of their assessable profits. The Development Levy consolidates the Tertiary Education Tax (TET), Information Technology Levy (IT), the National Agency for Science and Engineering Infrastructure (NASENI) levy and the Police Trust Fund (PTF) levy.
7. Introduction of Economic Development Incentive – The Acts replace the “pioneer” tax holiday with a new Economic Development Incentive (EDI), offering a 5% annual tax credit for 5 years on qualifying capital expenses made by eligible companies within 5 years from production start. Unused credits can be carried forward for another 5 years, after which they expire.
8. Minimum Effective Tax Rate (ETR) – Nigerian companies who are members of a multinational group with aggregate group turnover of EUR750million and above or have an annual turnover of NGN50billion and above, will now be subject to ETR of 15% of their “Net Income”. This rule does not apply to Free Zone companies on their exports out of Nigeria, provided that such companies are not part of multinational groups.
9. Introduction of the Office of Tax Ombuds: Under the new Acts, an Office of Tax Ombud has been introduced to protect taxpayers against arbitrary tax assessments. The Tax Ombuds office will liaise with the tax authorities on behalf of taxpayers and serve as an independent arbiter to review and resolve complaints relating to taxes, levies, duties or similar regulatory charges.
10. Increased penalties for non-compliance: There has been a significant increase in non-compliance penalties and the introduction of new penalties. Some of the updates include increase in the penalty for failure to file returns to NGN100,000 in the first month, and NGN50,000 for every month the failure continues, introduction of new penalties such as penalty of NGN5million for awarding contracts to individuals or entities that are not registered for tax, penalties for failure to grant access for deployment of technology, inducing a tax officer, etc.
11. Powers for AGF to Deduct Taxes: The new laws grant the Attorney General of the Federation (AGF) powers to deduct unremitted taxes by a government or MDA and pay to the beneficiary government.
12. VAT and CIT Rates Remain the Same: Under the new laws, Value Added Tax (VAT) remains at 7.5% and Company Income Tax (CIT) for large companies remains at 30%, without any increment. However, the 30% rate can be reduced to 25% effective from a date as may be determined in an Order issued by the President on the advice of the National Economic Council.
13. Tax Incentives for Agricultural Companies: Income generated by companies engaged in agricultural businesses, including crop production, livestock, aquaculture, forestry, dairy, cocoa processing and manufacturing of animal feeds will be exempt from income tax for the first five (5) years from commencement of business.

Other notable reforms introduced by the new Acts include; transfer of income from Electronic Money Transfer levy exclusively to states as part of stamp duties, ceding of 5% of VAT revenue to states by the federal government, tax break or incentives for employers to hire more people, tax exemption on personal effects not exceeding N5m, VAT exemption on purchase of real estate, amongst others.

Conclusion

The signing of the four landmark tax reform Acts in Nigeria marks a significant transformation in Nigeria’s tax regime. The reforms introduced by these Acts are expected to reduce the tax burden on vulnerable groups, encourage MSME growth, and stimulate foreign and local investments. Businesses are advised to reassess their compliance strategy and consult with legal or tax professionals to understand how the new laws affect their operations.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com or contact:

In the last few years, the Nigerian Financial Technology (FinTech) space has witnessed exponential growth and has attracted both local and international investors. Nigeria is home to some unicorns especially in the payments segments of the financial services sector. Like in most jurisdictions, the regulators appear to be playing ‘catch up’ with FinTechs and it has been said that there appears to be an over regulation of FinTechs in Nigeria.

FinTechs in Nigeria are regulated by a number of regulators through laws, guidelines and regulations. While there appears to be concerns that FinTechs are overregulated in Nigeria in view of the series of regulations that mandatorily apply to their operations, there is also the view that the idea of overregulating FinTechs is a myth.

The article discusses the regulation of FinTechs in Nigeria in order to explore whether the concerns relating to the overregulation of FinTechs in Nigeria is a myth or reality.

The Reality of Overregulation of FinTechs in Nigeria

The main regulators regulating FinTechs in Nigeria include the Central Bank of Nigeria (CBN), the Nigerian Securities and Exchange Commission (SEC), Nigerian Deposit Insurance Commission (NDIC), the Nigeria Data Protection Commission (NDPC), Federal Competition and Consumer Protection Commission, etc.

These regulators have taken a robust approach to regulating the business activities and operations of FinTechs in many areas including licensing, consumer protection, data protection, risk management, technical requirements, etc.

These regulatory activities have prompted the discussion about the possibility of overregulation of FinTechs in Nigeria especially as sometimes there are conflicting signals coming out from different regulatory agencies. Some of these issues include the following:

1. Rigid Licensing Regime: Mandatory registration and licensing obligations are imposed on FinTechs before the commencement of any business operations in Nigeria by both the Central Bank of Nigeria and SEC.

There are mandatory, regulatory and documentary requirements for these registrations and licensing which are usually rigid and strict and may vary depending on the product offerings, business activities or nature of the FinTech company. These requirements are sometimes said to be very rigid and there are hardly any flexibilities or discretions on the part on the regulators.

2. Overlapping Regulatory Oversight: FinTechs in Nigeria are regulated by multiplicity of agencies. This multiple regulatory oversight creates a complex and confusing regulatory and compliance environment.

For instance, a digital money lending company licensed by the CBN and required to comply with the consumer protection framework of the CBN may also be required to comply with FCCPC’s regulations requiring registration with the FCCPC.

These two requirements are not the same and usually lead to overlapping and sometimes conflicting regulatory requirements.

In the past, the CBN had restricted banks from opening and operating bank accounts for digital/virtual assets companies despite the fact that SEC recognizes cryptocurrencies as digital assets and issued clear guidelines which regulate the operation of cryptocurrency and virtual asset companies in Nigeria.

The new Investment and Securities Act, 2025 somewhat seeks to address some of these conflicting positions. The jury is however still out on how the regulators would enforce the provisions of the new law.

3. Compliance with Established Minimum Standards: Minimum standards are prescribed and mandatorily required for equipment and technologies to be deployed in the provision of financial services by FinTechs in Nigeria.

For instance, the CBN provided the minimum standards for the equipment, applications and processing systems required for the provision of contactless payment through the Guidelines for Contactless Payments in Nigeria, 2023.

Thus, the systems to be deployed for contactless payments must comply with Advanced Encryption Standards, Payment Application Data Security Standard, ISO27001 – Information Security Management System, etc. for the operation of any contactless payment in Nigeria.

4. Prior Approval: There are a number of instances where CBN would require prior approval before certain actions could be undertaken by a FinTech company.

One of such instances is the requirements for potential operators in the FinTech space to obtain CBN’s prior approval in the form of Approval-in-Principle (AIP) before its promoters could apply to the Corporate Affairs Commission (CAC) for the incorporation of their companies. The CAC on the other hand will not usually require for Approval-in-Principle before it incorporates a FinTech company.

However, a promoter who incorporates a FinTech company before applying to the CBN for AIP could face regulatory challenges in obtaining the license as the CBN regulations with respect to these FinTech licenses are clear – do not incorporate before applying for AIP.

CBN also requires operators in the financial services sector to obtain prior approval and ensure that individuals to be employed are not blacklisted for employment in the sector.

With the bureaucracy in the CBN, it usually takes weeks or even months before these approvals could be obtained which can delay the commencement of business operations of the FinTech companies.

5. Stringent Capital Requirements: The capital requirements for various FinTech licenses from the CBN have been criticized and said to be very burdensome especially for start-ups.

These capital requirements have been said to make the provision of financial services unnecessarily expensive. For examples, the capital requirement for Payment Solution Service (PSS) license is 250 million Naira, Mobile Money Operators (MMO) license is 2 billion Naira, etc. these are expensive and not affordable for many potential players in the FinTech space.

These enormous capital requirements will inevitably stifle innovation and hinder financial inclusion. In 2018, the CBN increased the capital thresholds for Microfinance Banks (MFBs) from 100 million Naira to 1 billion Naira for state MFBs, and from 2 billion Naira to 5 billion Naira for national MFBs thereby causing many FinTechs to go out of business as they simply could not meet the new capital requirements.

6. Frequent Regulatory Changes and Issuance of New Regulations: The Nigerian FinTech regulatory environment is constantly evolving and this is closely marked by regulators issuing frequent amendments to guidelines and regulations. In some circumstances, guidelines and regulations are superseded with the issuance of new ones that introduce additional onerous compliance obligations, revised licensing fees, etc.

These frequent changes create regulatory compliance burden on FinTechs, requiring them to ensure that their processes, systems and operations comply with the latest regulations or amendments. For instance, the CBN issued a circular on 6 May 2024 requiring all financial institutions to reconfigure their systems for the purpose of deducting cybersecurity levy within a stipulated period.

However, barely two weeks after the CBN directive, the CBN circular requiring financial institutions to reconfigure their systems for the cybersecurity levy deductions was withdrawn by the CBN. Many financial institutions would have incurred cost as a result of taking steps to comply with the circular failing which they may be sanctioned by the CBN.

7. Compliance Costs: The many regulations hurdle that FinTechs are required to comply with, are quite expensive thereby leading to increased and expensive compliance costs. Many startup FinTechs struggle to absorb these costs. These enormous compliance costs together with operational costs create regulatory and operational burden for many FinTechs which if not managed properly, could prevent them from upscaling and ultimately may lead to their demise.

Overregulation as a Myth in Nigeria

Despite the various issues which show that FinTechs appear to be overregulated in Nigeria, there are various reasons why it is arguable that the nature of regulations of FinTechs is very necessary.

1. Consumer Protection: The regulation of FinTechs in Nigeria is necessary for the purpose of ensuring consumer protection. Many regulations put in place by the regulators such as customer due diligence requirements, FCCPC’s registration requirement, data compliance, etc. are designed to safeguard consumers in areas such as fraud, predatory lending practices and financial crimes, breach of data, etc.

The FCCPC’s registration requirement for digital money lenders was put in place to protect consumers from exploitative practices such as breach of data privacy, threats and intimidating tactics for loan recovery, etc.

Without FinTech regulations, consumers may be subject to arbitrary charges, data breaches and delayed or lack of resolution of legitimate complaints, etc.

The capital requirements and the strict licensing regime put in place by the CBN also ensure that only promoters that are financially capable are admitted into the Nigerian FinTech ecosystem. In doing so, the CBN ensures that consumers’ funds are protected while in the custody of licensed FinTech operators.

The SEC also requires the registration of players in the Nigerian capital market to enable it bring the players within its regulatory purview. SEC has consistently advised Nigerians against investing in unregistered investment schemes and issued notices notifying Nigerians of fraudulent/unregistered investment schemes.

The effort by the SEC is to ensure consumer protection by ensuring that Nigerians do not invest in fraudulent/unregistered investment schemes and thereby lose their funds. Despite the efforts of the SEC, many Nigerians invested and lost about 822 million USD in CBEX, a Ponzi Scheme which promised Nigerian investors high returns on their investments. Without regulation of FinTechs, there would be little to no consumer protection.

2. Stability and Security of the Financial System: The regulators issue regulations to address important issues that may affect the stability and security of the financial systems if left unregulated.

To ensure the security and stability of the financial system, the regulators such as the CBN have put in place the minimum standards that must be complied with for any FinTech company to operate in Nigeria. These minimum standards are put in place to safeguard the financial system and also protect consumers whose funds and data may be stolen by cybercriminals without the adoption of the minimum standards.

The CBN issued the Risk-Based Cybersecurity Framework and Guidelines for Other Financial Institutions, 2022 providing for the minimum cybersecurity measures to be taken to ensure their continued safe and secured operations. The CBN also requires compliance with Anti-money laundering requirements by promoters applying for financial licenses from the CBN.

These efforts by the CBN are to ensure that the financial system remains stable, reliable and secured for consumers and other players in the financial sector.

3. Supportive Regulatory Initiatives: The regulatory sandbox and the regulatory incubation programs operated by the CBN and SEC respectively tend to provide potential operators in the financial services sector with regulatory support to ensure that their innovative products are tested in a regulated environment fostering innovation while also ensuring compliance.

The CBN has also issued regulations which ensures that the provision of financial services is not restricted to the use of traditional bank account number through regulations that allow the creation and operation of e-wallets, opening of bank accounts with phone numbers, etc.

4. Continued Growth of the Fintech Sector: Despite the enormous regulatory challenges which FinTechs tend to face in Nigeria, they have continued to experience exponential growth. Nigeria is home to FinTech unicorns which include Flutterwave, Opay, Moniepoint, etc. This shows that when followed to the letter, the regulations do not necessarily inhibit the normal operation or growth of FinTechs or limit their profitability but instead provide them with a necessary framework for growth.

Conclusion

We have discussed the key areas where there appear to be strict and burdensome regulations of FinTechs in Nigeria in what could be regarded as overregulation. We have also considered some of the key issues which show that strict FinTech regulations are necessary especially for ensuring the stability and security of the financial system and the protection of consumers.

There are valid arguments on both sides which show that FinTech overregulation in Nigeria may be a reality and may also be a myth. Whether FinTechs are overregulated in Nigeria would depend on which angle one decides to look at it.

When viewed from the necessity of ensuring consumer protection, fraud prevention, KYC, anti-money laundering, the stability and security of the financial system, one could argue that FinTech overregulation in Nigeria is a myth.

However, when viewed from the rigid licensing and capital requirements, mandatory minimum standards, lack of discretion, etc, it may be argued that FinTech overregulation in Nigeria is a reality. It is important that the regulators maintain a balanced perspective when regulating, issuing guidelines and regulations to ensure that FinTech companies are not stifled from innovating and growing.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.
For further information or to see our other service offerings, please visit www.goldsmithsllp.com or contact:

Arbitration is a process where parties to a dispute agree to submit their dispute to one or more neutral third parties, known as arbitrators, who render a binding decision on the matter. This method is distinct from other ADR forms, such as mediation or conciliation, in that the arbitrator’s decision is typically final and enforceable, similar to a court judgment. The consensual nature of this approach allows parties to tailor the process to their specific needs, selecting arbitrators with relevant expertise and determining procedural rules that best suit the context of their dispute.

The advantages of using Alternative Dispute Resolution in Commercial disputes provides confidentiality, expertise, flexibility and autonomy, enforceability, cost and time efficiency.

Regulatory Framework in Nigeria.

Nigeria has established a comprehensive regulatory framework for private dispute resolution, notably through the Arbitration and Mediation Act 2023 (the Act). This legislation modernizes and consolidates the country’s approach to alternative dispute resolution, aligning it with international standards and best practices.

Key Features of the Arbitration and Mediation Act 2023:

1. Unified Legal Framework: The Act creates a unified pathway for resolving conflicts via private mechanisms, promoting fair and efficient outcomes in commercial matters.
2. Mandatory Stay of Court Proceedings: Courts are now mandated to halt proceedings and refer parties to dispute resolution when a valid agreement exists, unless the agreement is deemed void, inoperative, or incapable of being performed.
3. Third-Party Funding: The Act explicitly permits third-party funding, addressing previous uncertainties and enhancing access to justice. This arrangement involves a funder who has no prior interest in an investment or commercial dispute, providing financial support to one of the parties engaged in the dispute resolution, in return for a share of the eventual proceeds of the award, if any.
4. Award Review Tribunal: This innovative provision allows parties to opt for an Award Review Tribunal to review arbitral awards, providing an additional layer of scrutiny before resorting to court intervention.
5. Interim Measures: The Act empowers both arbitral tribunals and national courts to grant interim relief to protect parties’ interests during dispute resolution. Interim measures issued by arbitral tribunals are enforceable by the courts, strengthening the process’s effectiveness. Examples of Interim measures include injunctions, security for costs, preservation of assets.
6. Arbitrator Immunity: The Act grants immunity to arbitrators, appointing authorities, and arbitral institutions, except in cases of bad faith, promoting impartiality and independence.
7. Electronic Communications: Agreements can now be validly made through electronic communications, broadening the scope of acceptable forms for such agreements.

These provisions collectively enhance Nigeria’s alternative dispute resolution landscape, making it more attractive for both domestic and international commercial disputes. The Act’s alignment with global standards underscores Nigeria’s commitment to providing a robust and efficient dispute resolution mechanism.

Reasons Why Parties Should Choose Arbitration

This method offers several compelling advantages over traditional litigation, making it an attractive option for resolving commercial disputes:

1. Confidentiality: Proceedings are conducted in private, ensuring that sensitive business information remains confidential. This privacy helps protect trade secrets and maintain reputations.
2. Expertise of Arbitrators: Parties can select arbitrators with specialized knowledge relevant to their industry or the specific issues at hand, leading to more informed and appropriate decisions.
3. Flexibility and Control: The process can be customized to fit the parties’ preferences, ranging from the procedural rules and timelines to the venue of hearings.
4. Enforceability of Awards: Arbitral awards are generally easier to enforce internationally compared to court judgments. Nigeria is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which means that awards obtained abroad can be enforced in Nigeria.
5. Cost and Time Efficiency: This mechanism is often quicker and less expensive than court litigation. . The streamlined procedures and limited discovery processes often result in faster resolutions, reducing legal fees and associated costs. For example, a typical court case in Nigeria can take 4 to 10 years to conclude, depending on the complexity of the case and the jurisdiction, with some cases taking even longer.
6. Neutral Forum: In international disputes, it offers a neutral venue, which can alleviate concerns about potential biases in a foreign court system. This neutrality fosters fairness and can be pivotal in disputes involving parties from different countries.

The Arbitration Process in Nigeria

To effectively utilize this method of dispute resolution, it’s essential for parties to include clear and comprehensive dispute resolution clauses in their commercial agreements. These clauses serve as a mutual commitment to resolve potential disputes handle potential disagreements outside the courtroom.

The process typically unfolds in the following stages:

1. Commencement: The process begins when a party submits a “Notice of Arbitration” or “Demand for Arbitration,” outlining the dispute and the relief sought. This notice is sent to the opposing party and where applicable, to the designated dispute resolution institution.
2. Selection of Arbitrator(s): Depending on the clause in the agreement, parties select one or more arbitrators based on criteria such as expertise, neutrality, and availability. Selection can be by mutual consent or through institutions such as the Nigerian Institute of Chartered Arbitrators (NICArb), Lagos Court of Arbitration, International Centre for Arbitration and ADR, Maritime Arbitrators Association of Nigeria, or the Lagos Chamber of Commerce International Arbitration Centre. etc.
3. Preliminary Hearing and Scheduling: Once appointed, the arbitrator(s) conduct a preliminary hearing to discuss procedural matters, including timelines, discovery processes, and the scheduling of hearings. This stage ensures that both parties understand the procedures and have an opportunity to present their case adequately.
4. Exchange of Information (Discovery): Parties exchange relevant documents and information pertinent to the dispute. Although this stage is usually more concise than in court proceedings, it still allows for meaningful disclosure to support the hearing.
5. Hearing: During the hearing, both parties present their evidence and argument through their skilled lawyers. This may include witness testimonies, expert reports, and documentary evidence. Hearings can be conducted in person, via video conference, or through written submissions, depending on the agreement and circumstances.
6. Deliberation and Award: After the hearing, the arbitrator(s) deliberate and issue a written decision, known as an award. This award is binding on the parties and enforceable in courts, subject to limited grounds for challenge.

Throughout the dispute resolution process, parties maintain control over various aspects, such as selecting arbitrators and tailoring procedures to fit the specific needs of their dispute. This flexibility, combined with the binding nature of arbitral awards, makes this method a valuable tool for resolving commercial disputes efficiently and effectively.

Parties’ Role in the Arbitration Process

In resolving disputes outside the courtroom, the disputing parties play a central and proactive role, exercising significant control over various aspects of the process. Their key responsibilities and rights include:

1. Initiating the Process: A party seeking to begin proceedings must file a “Notice of Arbitration” or “Demand for Arbitration,” formally initiating the proceedings and outlining the dispute and desired remedies.
2. Selecting Arbitrators: Parties have the autonomy to choose arbitrators with relevant expertise and impartiality, ensuring a knowledgeable and unbiased tribunal.
3. Determining Procedural Rules: Through mutual agreement, parties can establish the rules governing the proceedings, including timelines, confidentiality measures, and specific procedures, tailoring the process to their specific needs.
4. Presenting Evidence and Arguments: Parties through their lawyers are responsible for presenting their case, including submitting evidence, calling witnesses, and making legal arguments to support their positions.
5. Maintaining Confidentiality: Given that this form of dispute resolution is a private process, parties are expected to uphold the confidentiality of the proceedings, safeguarding sensitive information and the integrity of the process.
6. Complying with the Arbitral Award: Once a decision is rendered, parties are obligated to adhere to the terms of the arbitral award, which is binding and enforceable. It can be contested on specific grounds including misconduct, fraud or error in judgement.

By actively engaging in these roles, parties can ensure a fair, efficient, and tailored resolution to their commercial disputes.

Contract Clauses and Pending Court Proceedings

When a commercial contract includes an alternative dispute resolution clause specifying that disputes should be resolved through a private adjudication process, and a party initiates court proceedings instead, the legal framework provides mechanisms to address this situation.

Under the Arbitration and Mediation Act 2023 (AMA), if a lawsuit is filed concerning a matter covered by such an agreement, the defendant can request the court to refer the parties to the agreed procedure. Section 5(1) of the AMA mandates that courts must redirect the matter unless the agreement is found to be “null and void, inoperative, or incapable of being performed.” This provision underscores the judiciary’s commitment to upholding parties’ agreements to arbitrate disputes.

To enforce the private dispute resolution clause, the defendant should promptly file an application for a stay of proceedings before submitting any pleadings or taking further steps in the court process. Timeliness is crucial; any delay or participation in the court proceedings may be interpreted as a waiver of the right to arbitrate. The court, upon receiving such an application, is obligated to halt its proceedings and direct the parties to follow the agreed path,  provided the agreement is valid and applicable to the dispute at hand.

The enactment of the AMA has further solidified the legal framework supporting private dispute resolution in Nigeria. By aligning with international standards, the AMA enhances the enforceability of such agreements and awards, providing parties with greater confidence in choosing this method as their preferred dispute resolution mechanism.

Conclusion

Arbitration plays a crucial role in resolving commercial disputes by offering parties a flexible, efficient, and enforceable alternative to litigation. As an ADR mechanism, it provides confidentiality, expert decision-making, international enforceability and cost-effectiveness, making it a preferred choice for businesses seeking to protect their commercial interests.

By including well-drafted dispute resolution clauses in commercial agreements, parties can ensure that disputes are resolved in a structured manner, avoiding the delays, costs and uncertainties of court litigation.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

Therefore, any person or entity desiring to provide inbound cross-border money remittance in Nigeria is required to be licensed as an IMTO with the CBN. Under the previous regime provided by the Guidelines on International Money Transfer Services in Nigeria, 2014, IMTOs were able to engage in both inbound and outbound international money transfer but this is no longer the case following the new Guidelines issued by the CBN in January 2024 which restrict IMTOs only to inbound international money transfers.

To obtain an IMTO license in Nigeria, an applicant must meet specific eligibility requirements. These requirements would usually include share capital, policies and other documentary requirements.

The key regulatory framework applicable to IMTOs in Nigeria is the CBN Guidelines on International Money Transfer Services in Nigeria, 2024. These Guidelines outline the permissible and non-permissible activities for IMTOs, requirements to obtain IMTO license, etc.

Permitted Operations for IMTOs

IMTOs are now permitted to process only inbound international money transfer transactions.  This means that IMTOs can only accept and transfer monies to persons resident in Nigeria or render money transfer services towards family maintenance or in favour of foreign tourists visiting Nigeria, etc.

Non-Permitted Operations

IMTOs are prohibited from engaging in outbound transactions and purchasing foreign exchange from the domestic foreign exchange market for settlement. IMTOs are strictly limited to the permitted activities and any activity beyond the permitted operations is prohibited.

Procedure for Obtaining IMTO License from the CBN

The application for IMTO license is made in two stages which are Approval-in-Principle (AIP) and Final Approval.

1. Approval-in-Principle

An applicant of an IMTO license is required to first apply to the CBN for the grant of an Approval-in-Principle. The application is made to the Director of the Trade and Exchange Department of the CBN. At this stage, the applicant is required to pay a non -refundable application fee to the CBN and submit the required supporting documentations. The documents required for the purpose of obtaining Approval-in-Principle include:

1. Approval to operate in other jurisdictions or agency agreement
2. Evidence of tax clearance and incorporation documents in Nigeria
3. Ownership structure of the IMTO
4. Board of Director’s approval to operate international money transfer services
5. Profile of the company which shall include the Curriculum Vitae, biodata and contact details of the board and management of the company.
6. Credit reports on shareholders and other key officers obtained from a licensed credit bureau
7. Minimum share capital requirement of $1,000,000 (One Million USD) for foreign IMTOs and the equivalent in Naira for local IMTOs.
8. Any other information or documents as may be required by the CBN.

The CBN will review the application together with the supporting documents and decide whether or not to grant Approval-in-Principle. The grant of Approval-in-Principle by the CBN does not authorize the commencement of business operations but only allows the applicant to proceed to open bank account and process pre-operational requirements and processes.

2. Final Approval

No later than three months of obtaining Approval-in-Principle, an IMTO is required to apply to the CBN for a final approval to enable it commence business operations. To obtain final approval from the CBN, the applicant must submit the following information and documents to the CBN:

1. Names of Authorized Dealer Banks
2. Detailed business plan which addresses the nature of business, internal control systems and monitoring procedures, security features, three years financial projections, illustration of transaction flows, dispute resolution mechanism, information technology policy, etc.
3. Enterprise risk management framework
4. Business continuity plan
5. Project deployment plan
6. Any other information which the CBN may require.

If the CBN is satisfied that the applicant has met the requirements for the grant of a final licence, a licence shall be granted for a period of one year.

Renewal of IMTO License

IMTO licenses are subject to renewal annually upon the payment of the license renewal fee to the CBN on or before 31^st January of the year. The CBN allows the IMTO’s agent bank to cease further transactions with the IMTO where the IMTO fails to make a copy of its renewal license available to the agent bank within the first quarter of the year.

Prohibited Entities

The prevailing CBN IMTO regulations prohibit all banks and financial technology (FinTech) companies from providing IMTO services. However, banks can act as agents to IMTOs. The implication is that banks and FinTech companies cannot apply to the CBN to obtain IMTO licenses.

Under the previous IMTO regulatory regime, banks and FinTech companies were eligible to obtain IMTO license and provide IMTO services.

Conclusion

International money transfer services in Nigeria are regulated by the CBN and it is required that IMTO license is obtained from the CBN before any person or entity can provide international money transfer services in Nigeria. The CBN has set the minimum shared capital and documentations required for applicants of IMTO license in Nigeria. Banks and FinTechs are prohibited from operating an IMTO License.

IMTOs can now only engage in inbound international money transfer services and are prohibited from outbound money transfers. IMTO license is processed in two stages of “Approval-in-Principle” and “Final Approval”. The IMTO license is valid for one year and subject to renewal on or before the 31^st of January each year. 

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

Significant judicial decisions were also delivered by the courts which shaped the tax and gaming landscapes in Nigeria. This legal recap is divided into four parts representing the four quarters of the year, highlighting what we think are the most impactful laws and regulations, reforms, and judicial decisions in 2024.

Q1 2024 Legal Recap: Key Developments in Nigerian Law (January – March)

As part of this Legal Recap, it is important to note that forex policy reforms were implemented by the Central Bank of Nigeria (CBN) with the aim of stabilizing the Naira, fostering economic growth and the provision of agricultural funding to support food production.

Financial policy and regulations were revised by the CBN to ensure the financial industry players operate within a well-regulated environment ensuring the integrity of the financial services sector.

• On 5 January 2024, the Supreme Court of Nigeria delivered a judgment in the case of National Inland Waterways Authority (NIWA) v. The Lagos State Waterways Authority (LASWA).
  The Supreme Court reaffirmed the power of the Federal Government through the National Inland Waterways Authority (NIWA) to control the activities on the country’s waterways.
  The decision of the court settled the dispute between NIWA and Lagos State over the appropriate party with regulatory rights over the country’s waterways with the decision of the court in favour of NIWA.
• On 18 January 2024, the National Agency for Food and Drug Administration and Control (NAFDAC) launched the Narcotic Drugs Serializations Pilot Project, in a bid to strengthen the quality and security of medical products in the country’s drug distribution network.
  NAFDAC disclosed that the initiative was aimed at combatting the proliferation of substandard and falsified medicines by implementing a traceability system, addressing challenges posed by unscrupulous elements in the pharmaceutical supply chain.

• On 29 January 2024, the CBN issued the Financial Market Price Transparency circular requiring all Authorized Dealers that the CBN has permitted financial markets transactions to be conducted on a ‘’willing buyer will seller’’ basis.

  The CBN therefore expects prices to be quoted and displayed in a transparent manner.

• On 31 January 2024, the CBN issued the Reviewed Guidelines on International Money Transfer Services in Nigeria. The Guidelines stipulate the regulatory requirements that must be met to process and obtain license to provide international money transfer services in Nigeria.
  The Guidelines revised upward the application fees, capital requirements, etc.
• On 31 January 2024, the CBN issued the Harmonising of Reporting Requirements on Foreign Currency Exposure of Banks to address the growth in foreign currency exposures of banks through their Net Open Position (NOP).
  Therefore, to ensure the risks are well managed and avoid losses, the CBN issued the guidelines to address it.
• On 2 February 2024, the CBN issued the Cash Reserve Requirement Framework Implementation Guidelines which stated the implementation of a significant policy change by revising the Cash Reserve Ratio (CRR) framework.

  This update included a reduction in the Loan-to-Deposit Ratio (LDR) compliance requirement from 65% to 50%, aiming to address lending shortfalls among deposit money banks. The revised framework requires banks falling short of this new LDR threshold to allocate 50% of the shortfall as part of their CRR with the CBN.

• On 27 March 2024, the Nigerian president issued a directive titled Implementation of a Single-Digit Tax System which aims to streamline Nigeria’s tax structure by reducing the number of taxes to a maximum of nine.
  This initiative seeks to simplify the tax code, alleviate the tax burden, and foster a more business-friendly environment. The directive will take effect following the completion of the Presidential Committee on Fiscal Policy and Tax Reforms’ work.

• On 28 March 2024 the CBN issued the Review of Minimum Capital Requirements for Commercial, Merchants and Non-Interest Banks in Nigeria which stipulated new minimum capital requirements for banks. It sets the minimum capital base for commercial banks with international authorization at N500 billion.

  The minimum capital base for commercial banks with national authorization is now N200 billion, while the requirement for those with regional authorization is N50 billion.
  Merchant banks are required to have a minimum capital base of N50 billion, while non-interest banks with national and regional authorizations must meet minimum requirements of N20 billion and N10 billion, respectively.

  All banks are required to meet these requirements within 24 months starting from 1 April 2024 and ending on 31 March 2026.

Q2 Legal Recap: Nigeria Regulatory Developments (April – June 2024)

The second quarter of this Legal Recap highlights continued legislative activity, particularly around fintech and digital assets. The Central Bank of Nigeria (CBN) issued revised guidelines for International Money Transfer Operators (IMTOs), while the Securities and Exchange Commission (SEC) proposed new rules for virtual asset service providers.

The Student Loans Access to Higher Education (Repeal and Re-enactment) Bill, 2024 was enacted.
The Cybersecurity levy was set for implementation by the CBN but was eventually suspended due to public outcry over the announcement and the proposed implementation of the levy.

The electricity market is also gradually being deregulated by states with some states receiving the approval of the NERC to regulate electricity market within their respective states.

• On 3 April 2024, the Nigerian president signed the Student Loans Access to Higher Education (Repeal and Re-enactment) Bill, 2024 into law. This revised legislation aims to provide financial assistance to indigent Nigerian students by offering interest-free loans through the Nigerian Education Loan Fund.
  The law is intended to promote accessible higher education and functional skill development for students across the country.
• On 22^nd April 2024, the Federal Government launched a ₦200 billion Intervention Fund Aimed at Supporting Micro, Small, and Medium Enterprises (MSMEs) and Manufacturers.
  This initiative, introduced by the Bank of Industry, is designed to stimulate local production, reduce import dependency, and enhance Nigeria’s industrial growth.

  Eligible businesses can access loans under favourable terms, including single-digit interest rates and flexible repayment conditions, to improve capacity, expand operations, and create jobs.

• On 2 May 2024, the Federal Inland Revenue Service (FIRS) issued a directive titled Implementation of Stamp Duty on Mortgage-Backed Loans and Bonds. The Nigerian government directed banks to deduct stamp duty charges on mortgages. This directive is aimed at improving revenue generation from the stamp duty on financial transactions.
  The charge is applicable to all mortgage transactions and is expected to support government revenue collection.
  It introduced a 0.375% stamp duty on mortgage-backed bonds. This charge applies to various types of mortgage and legal instruments as specified under the Stamp Duties Act (SDA).
• On 6 May 2024, the CBN issued the Cybercrimes (Prohibition, Prevention, etc) (Amendment) Act 2024 – Implementation Guidance on the Collection and Remittance of the National Cybersecurity Levy. The Guidance required the deduction of 0.5% cybersecurity levy on all electronic transactions.
  The Guidance exempted certain transactions including loan disbursements and repayment, salary payments, letters of credits, cheques clearing and settlement, etc.
  The implementation of the Guidance has now been temporarily suspended following protests by the public.
• On 7 May 2024, the Corporate Affairs Commission (CAC) issued a public notice titled CAC and Fintech Operators which mandated all Point of Sale (POS) operators in Nigeria to complete their business registration with the CAC by 7 July 2024 which was eventually extended by 60 days to 5 September 2024.
  This directive by the CAC aligned with the Companies and Allied Matters Act (CAMA) 2020 and the Central Bank of Nigeria’s (CBN) agent banking guidelines which aim to safeguard the operations of FinTechs, improve accountability, and strengthen the economy.
• On 22 May 2024, the CBN issued the Revised Regulatory and Supervisory Guidelines for Bureau De Change Operations in Nigeria. The Guidelines required existing Bureau De Change (BDC) operators to re-apply for a new license in accordance with any of the license categories and meet the minimum capital requirements within six months.
  New applicants are also required to comply with the Guidelines which supersedes the Revised Operational Guidelines for Bureau De Change in Nigeria dated November 2015.
  It also categorizes BDC license into tier 1 with permission to operate in any state and tier 2 with permission to operate in only one state.

• On 14 June 2024, the SEC issued a circular titled Implementation of Enterprise Risk Management. It provides that all Capital Market Operators (CMOs) are required to implement an Enterprise Risk Management (ERM) framework that conforms to international standards such as the Committee of Sponsoring Organizations of the Treadway Commission (COSO), the International Organization for Standardization (ISO 31000),

  Financial Action Task Force (FATF) Recommendations and any other internationally recognized risk management standards.

  The adoption of comprehensive risk management practices is important in minimizing systemic impact and safeguarding the interests of all stakeholders.

• On 24 June 2024, The Securities and Exchange Commission released a circular titled Revamped E-Dividend Mandate Management System Portal which launched the revamped e-Dividend Mandate Management System (e-DMMS) Portal.
  This is noted to be an important step towards curbing the growth of unclaimed dividend and generally improving investor experience in the Nigerian Capital market.

  The revamped e-DMMS Portal introduces a “self-service interface” that allows investors apply to mandate their accounts for e-dividend virtually, without having to visit a Registrar or a Bank.

• On 28 June 2024, the Nigerian president signed an executive order eliminating tariffs, excise duties, and VAT on imported pharmaceutical inputs. This is part of a broader initiative to support local drug manufacturers and improve the availability of essential medicines in Nigeria.
  The executive order is intended to make local pharmaceutical producers more competitive by reducing costs, thereby ensuring more affordable healthcare for Nigerians.

Q3 2024 Legal Recap (July – September 2024)

This Nigeria Legal Recap for Q3 reflects a dynamic policy environment. The CBN, SEC and NCC were all very active as they issued regulations and initiated reforms applicable to operators in the various sectors which they regulate.

The Federal Government introduced the Deduction of Tax at Source Regulations 2024, aligning with the National Tax Policy and exempting certain sectors like telecommunications. Significant judicial decisions were also handed down as in the case of the Federal High Court allowing companies to have single shareholder regardless of the incorporation date.

• On July 2024, some states including Imo, Enugu, Ekiti, and Ondo received the approval of the Nigerian Electricity Regulatory Commission (NERC) to regulate their electricity markets in line with the provisions of the Electricity Act, 2023. This allows the states to oversee power generation, transmission, and distribution within their jurisdictions, marking a significant step towards decentralizing electricity regulation in Nigeria.
• On 11 July 2024, the Supreme Court of Nigeria delivered judgment in the case between the Attorney General of the Federation v. Attorney General of Abia State & 35 Others. This landmark decision reinforced the financial autonomy of local governments, declaring it unconstitutional for state governors to withhold funds allocated to local governments, dissolve local government councils, or appoint caretaker committees. The court mandated that funds meant for local governments be paid directly into their accounts, ensuring their independence and strengthening democratic governance at the grassroots level.
• On 19 July 2024, the CBN issued the Guidelines on Management of Dormant Accounts, Unclaimed Balances and Other Financial Assets in Banks and Other Financial Institutions in Nigeria. The Guidelines revised the 2015 guidelines on the subject matter. The Guidelines aim to reunite beneficial owners with unclaimed balances and financial assets, holding funds in trust for beneficial owners, etc. It also states the roles of key stakeholders including the CBN, Nigeria Deposit Insurance Commission (NDIC), financial institutions, account owners and beneficial owners, etc.
• The Nigerian Communications (Consumer Code of Practice) Regulations, 2024 with a commencement date of 29 July 2024 was issued by the Nigerian Communications Commission (NCC). The Regulations aim to prescribe the procedures to be followed by licensees in determining the contents and features of a consumer code of practice and preparing same for approval.
• The NCC issued the Nigerian Communications (Type Approval) Regulations, 2024 with a commencement date of 29 July 2024. The regulations apply to every person providing communication services, manufactures or supplies communications equipment. It also prescribes the processes for the type of approval of communications equipment and identify applicable technical standards while ensuring that communications equipment used in communications networks are safe and do not compromise national security.
• On 29 July 2024, the Nigerian president signed the National Minimum Wage Act 2019 (Amendment) Bill into law, raising Nigeria’s national minimum wage from ₦30,000 to ₦70,000 per month, following extensive negotiations between the Federal Government, labour unions, and the private sector.
• On 30 July 2024, the Federal High Court ruled in Primetech Design and Engineering Nigeria Limited v. The Corporate Affairs Commission (CAC) in favour of allowing all private companies in Nigeria regardless of their incorporation date, to have a single shareholder under the Companies and Allied Matters Act 2020 (CAMA 2020).
  This decision clarifies that section 18(2) of CAMA 2020 applies universally to both new and older private companies. Previously, there was uncertainty about whether this provision applied only to companies incorporated before the enactment of CAMA 2020.
  The ruling is significant as it removes restrictions on private companies transitioning to a single shareholder structure without the risk of being wound up by the regulator, offering greater flexibility for business growth.
• On 2 September 2024, the Nigerian Investment Promotion Commission (NIPC) Revised Service Fee Schedule for Business Registration and Pioneer Status Incentives (PSI) Applications. This increased the fees for applying for business registration and obtaining pioneer status incentives, conducting due diligence, introduced an annual business registration renewal fee, etc.
• On 3 September 2024, the Securities and Exchange Commission (SEC) introduced an electronic filing system to improve the efficiency of the Nigerian capital market. This system aims to reduce listing time for securities and enhance liquidity, enabling quicker access to capital for companies. This is expected to streamline approvals, increase transparency, boost investors’ confidence, and ultimately contributing to the growth of the Nigerian economy.
• On 30 September 2024, the Federal Government introduced the Deduction of Tax at Source (Withholding) Regulations, 2024 which was published in the official gazette and followed by a public notice issued by the FIRS on 2^nd October 2024. These regulations, set to take effect on 1 January 2025 exempt items such as telephone charges, internet data, airline tickets, and out-of-pocket supplier expenses from withholding tax, aligning with the National Tax Policy.

Q4 2024 Legal Recap (October – December 2024)

As the year concluded, this Legal Recap of 2024 observed a series of landmark judicial decisions, regulatory developments, and advancements in Nigeria’s economic and financial landscape.
Landmark court decisions signalling a shift toward greater accountability and adherence to the rule of law. Regulatory agencies introduced policies aimed at fostering transparency. These developments collectively highlight Nigeria’s strides toward modernization, sustainable growth, and global competitiveness.

• On 2^nd October 2024, the Federal High Court sitting in Abuja ruled in the case between Abubakar Marshal v. Vehicle Inspection Officers (VIO) that VIOs lack statutory authority to stop private vehicles, demand roadworthiness certificates, impound vehicles, or impose fines on motorists. The court clarified that the requirement for roadworthiness certificates applies exclusively to commercial vehicles under existing laws. The court described the actions of the VIOs, including the imposition of fines and confiscation of private vehicles as oppressive, unlawful, and without legal foundation.
• Value Added Tax Modification Order 2024 and Notice of Tax Incentives for Deep Offshore Oil & Gas Production in accordance with the Oil & Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024 were issued by the Federal Government. The VAT Modification Order 2024 exempts energy products including diesel, LPG, CNG and clean energy infrastructures from VAT while the Notice of Tax Incentives introduces new tax reliefs to attract investments into Nigeria’s deep offshore Oil & Gas projects.
• On 3 October 2024, the Federal Inland Revenue Service (FIRS) issued a public notice notifying taxpayers that The Deduction of Tax at Source Withholding (WHT) Regulations, 2024 would take effect from 1^st January 2025 ending the current withholding tax regime contained in the Companies Income Tax Act.
• The FIRS launched an Unstructured Supplementary Service Data (USSD) Code on 9 October 2024 for the purpose of improving taxpayers’ satisfaction. The USSD enables taxpayers to retrieve their Taxpayers Identification Number (TIN) verify Tax Clearance Certificate (TCC), etc.
• On 7 October 2024, the Federal High Court, Lagos struck out the suit commenced by the Manufacturers Association of Nigeria (MAN) v. National Electricity Regulatory Commission (NERC) & 11 Others which challenged the implementation of electricity tariff review on the grounds of the suit being an abuse of court process having not being commenced in accordance with due process and no disclosure of reasonable cause of action.
• In October 2024, Moniepoint, a Nigerian FinTech startup became a unicorn by getting a $1 billion valuation after raising $110 million in Series C funding which highlights the rapid growth and importance of FinTech payment providers in Nigeria.
  In November 2024, the Federal Government announced its plan to establish a national data bank to serve as a centralized platform for the collection, analysis and dissemination of transport-related data for the purpose of informed decision-making and policy formulation.
• On 15 November 2024, the Supreme Court of Nigeria declined to declare the Economic and Financial Crimes Commission (EFCC), Nigerian Financial Intelligence Unit (NFIU) and Independent Corrupt Practices and Other related offences Commission (ICPC) as illegal and unconstitutional in the suit between Attorney General of Kogi State & 18 Ors v. Attorney General of Federation suit No: SC/CV/178/2023).

• On 22 November 2024, the Supreme Court of Nigeria in the case between Lagos State Government & Ors v. Attorney General of Federation & Anor suit No SC/1/2008 nullified the National Lottery Act, 2005 and limited its application to only the Federal Capital Territory (FCT). The National Lottery Act, before the decision of the Supreme Court, applied in the entire country to sports betting and lottery licensing.

• On 29 November 2024, the Central Bank of Nigeria (CBN) released Revised Guidelines for The Nigerian Foreign Exchange Market (NFEM), marking a significant overhaul of the country’s FX operations. The new framework consolidates all FX windows, redefines the roles of market participants, and introduces stricter compliance and transparency measures.

  Key provisions address the roles of Authorized Dealers, Bureaux de Change (BDCs), pricing mechanisms, interbank trading, compliance, and reporting standards. The guidelines mandate that all BDC transactions comply with licensing terms and be reported in real time.

  Furthermore, all FX transactions must now be priced through the Electronic Foreign Exchange Matching System (EFEMS), a centralized platform that also publishes daily FX rates for public access, underscoring a strong emphasis on pricing transparency and rigorous reporting requirements.

• On 3 December 2024, the Lagos State Governor signed the Lagos Electricity Bill 2024 into law, marking a significant step toward energy independence for Lagos State. This legislation establishes the Lagos State Electricity Regulatory Commission to oversee the electricity market, regulate power generation, and set tariffs.

  It also created the Lagos State Electrification Agency to promote off-grid solutions and enhance electricity access in underserved areas. Additionally, the bill introduces the Lagos Electrification Fund to finance the state’s grid expansion and off-grid projects with a focus on renewable energy, energy efficiency, and decarbonization.

• On 11 December 2024, the Central Bank of Nigeria (CBN) imposed a fine of ₦1 billion each on Moniepoint and OPay for regulatory non-compliance.
  These penalties were part of the CBN’s routine audits of the activities of FinTechs which identified compliance issues within these companies.
  The fines underscore the CBN’s commitment to enforcing strict regulatory standards in Nigeria’s rapidly expanding digital financial services industry. On 16 December 2024, the Federal Competition and Consumer Protection Commission (FCCPC) rejected Coca-Cola Nigeria Limited’s appeal against a N186 million fine.
  The fine was imposed due to deceptive branding practices, including misleading product descriptions and unfair marketing tactics. The FCCPC’s decision underscores its commitment to protecting consumers and ensuring fair and honest practices in the Nigerian market.
• On 16 December 2024, the Securities and Exchange Commission published the Re-exposure of Amendments to Rules on Digital Assets Issuance, Offering Platforms, Exchange and Custody.
  The proposed amendment is to extend the rules to cover new virtual assets activities and business models such as cross chain transfer services, on/off-chain transmission orders, advisory on virtual assets investment, placing and distribution of virtual assets, etc.

Conclusion: Insights from the 2024 Legal Recap

This legal recap underscores how 2024 shaped the rule of law and business environment in Nigeria. The government introduced impactful rules and regulations including policy changes in areas such as tax, financial services sector, capital markets, electricity, minimum wage, with regulations like the Deduction of Tax at Source (Withholding) Regulations 2024, Lagos Electricity Law 2024 and the National Minimum Wage Act reflecting efforts to improve economic conditions.

The Central Bank of Nigeria, the Securities Exchange Commission and Federal Inland Revenue, the Nigerian Communications Commission, etc. also issued new and amended guidelines and regulations to provide updated regulatory requirements and obligations of players in the regulated industries.

The judiciary also delivered impactful decisions such as the Federal High Court’s ruling on the issue of single shareholder pursuant to the Companies and Allied Matters Act, 2020 and the decision of the Supreme Court nullifying the application of the National Lottery Act in the federating 36 states of the country.  As we approach the new year, we extend our sincere gratitude to all our clients for their continued trust in us and wish you a Merry Christmas and a prosperous New Year 2025.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

Gambling activities in Nigeria broadly include sports betting, lottery, gaming, casinos, lotto, etc. In order to legitimately operate any type of gambling activity in Nigeria, an operator must first obtain the appropriate licenses from the regulatory authorities. Using Lagos State as a case study, this article explains the regulatory requirements and processes involved in obtaining a betting license in Lagos State.

Regulatory Framework

Previously, a betting company wishing to operate within Nigeria required both a federal license issued by the National Lottery Regulatory Commission (NLRC) and a state licence from the state in which it wishes to operate from.

At the federal level, the NLRC, established under the National Lottery Act, 2005, served as the primary body overseeing gaming activities across the country. Concurrently, state governments regulated online betting within their jurisdictions through their respective regulatory authorities.

However, a recent landmark judgment in Lagos State Government & Ors v. Attorney General of Federation and Anor with suit number SC/1/2008 delivered by the Supreme Court of Nigeria in November 2024, has changed this position by nullifying the National Lottery Act, 2005 and declaring that the National Assembly lacks the jurisdiction to legislate on matters related to lotteries and games of chance, as such powers reside exclusively with state Houses of Assembly to legislate on lottery and gaming within their respective states.

Thus, the import of the Supreme Court judgement is that the National Lottery Act, 2005 now applies only within the Federal Capital Territory (FCT) where the National Assembly has the legislative power to enact laws on lottery and gaming matters. Therefore, lottery and online betting companies are now only required to obtain licenses solely from the state(s) in which they intend to operate.

In Lagos State, the regulatory body responsible for controlling and regulating betting activities is the Lagos State Lotteries and Gaming Authority (LSLGA). Sports betting companies must obtain the requisite license from LSLGA before commencing operations in the state.

With a large internet penetration and the rise of online betting, in practice, an online betting company can obtain a license in one state and be accessible online in another state thereby avoiding the need to apply for licences in multiple states.

Requirements for Obtaining a Sports Betting License/Permit from Lagos State Lotteries and Gaming Authority (LSLGA):

As stated above, the regulatory body responsible for issuing the said license/permit in Lagos State is the Lagos State Lotteries and Gaming Authority (LSLGA). The requirements for obtaining this permit from the LSLGA include:

1. Company Incorporation: The first step towards obtaining the license from the LSLGA is the incorporation of a local company in Nigeria with the Corporate Affairs Commission (CAC) as mandated under the Companies and Allied Matters Act, 2020 (CAMA). This is a compulsory regulatory requirement for any company wishing to do any business in Nigeria.
2. Share Capital: The company must meet the minimum share capital requirement of N20,000,000.00 (Twenty Million Naira) as prescribed by the LSLGA. Please note however that the CAC now requires that any company with foreign participation must have a minimum share capital of N100,000,000 (One Hundred Million Naira). If the company being set up has foreign participation either by shareholding or directorship, the minimum share capital from a CAC point of view must therefore be N100,000,000. Also note that this amount is merely the minimum value of the company shares at the time of registration and the shares do not have to be fully paid up.
3. Financial and Technical Ability: The company must demonstrate the financial and technical ability to operate an online betting business. The applicants must demonstrate financial stability and viability by submitting audited financial statements, proof of sufficient capital, and a detailed business plan. Regarding the technical ability, operators must invest in a robust technical infrastructure for their online betting platform, including secure servers, data protection, and reliable payment processing systems. Compliance with international online security standards is also very essential.
4. Applicant companies cannot be wholly-owned by foreigners as Nigerians are required to hold at least fifteen percent (15%) of the shares in foreign-owned companies to fulfil local content requirement and promote local participation.
5. Payment of application and license/permit fees.

Procedures for Obtaining a Sports Betting License/Permit from LSLGA:

The procedure for obtaining this license from the LSLGA is divided into three stages as follows: the application stage, the approval in principle stage and the final or grant of license stage.

Application Stage:

At this stage, an application for a license/permit is to be submitted to LSLGA together with the following documents:

1. A letter of intent.
2. Evidence of payment of non-refundable application fee
3. Company incorporation documents issued by CAC (Certificate of Incorporation, status report showing details of directors, minimum share capital and registered address and MEMART).
4. Detailed business plan/proposal on the betting scheme which should provide information and documentation on the following:
   1. Business structure information such as address of the registered office, branches, outlets and planned locations, particulars, profile and relevant qualification(s) of directors and key personnel, Tax Clearance Certificate (“TCC”) of Director(s) in the last three (3) years, description of operations and management structure, a betting industry analysis that clearly demonstrates an understanding of the industry, marketing and distribution plans, address of planned location, branches and outlet(s). Please note that these must be lock-up shops – kiosks and mobile vendors are not allowed.
   2. Proposed sports betting operations including details of planned games, relevant sports activities, approximate odds to be used, Operator’s game rules and participants’ Code of Practice, Number and frequency of sports/games and prizes and price structure.
   3. Financial projections including management account, company’s bank statement of the preceding year to support financing plans, five years projected profit and loss account, balance sheet, cash flow analysis which should provide for the annual licence fee and monthly gaming tax, capital investments, etc.
   4. Hardware and software information including servers, routers, firewalls, operating systems and database application specification.
   5. General information on the architectural diagram clearly illustrating the technical operational flow, the proposed platform (whether self-host or cloud based) and the contact information of the hosting company if cloud based.
   6. Detailed information about the applicant’s bookmaker, betting sites and technical consultants, proposed technical topography including a schematic diagram clearly illustrating the technical operational flow.

Due diligence will be conducted on every application to determine the suitability of the applicant for the license within a period of 10 to 15 working days. The applicant will also be required to make a presentation before the LSLGA to justify the grant of the license as part of the application process. Upon the satisfactory fulfilment of the requirements of the application stage and payment of the license fee, an Approval in Principle (AIP) will be granted.

Approval-in-Principle (AIP):

After a successful presentation and upon a satisfactory fulfilment of the pre-approval requirements, the applicant must pay a license fee currently N50,000,000.00 (Fifty Million Naira). Once this payment is made, the applicant is issued an Approval in Principle (AIP).

An AIP serves as a temporary licence allowing the company to operate for a period not exceeding three (3) months (90 days) during which the company will be excused from paying tax.  The AIP is typically granted with specific conditions that must be met before the issuance of a final or substantive license.

Grant of License:

Upon the expiration of the AIP and the applicant’s fulfilment of all stipulated conditions set on the AIP, a final license is issued to the applicant. This license is valid for one (1) year from the date of issuance and is renewable annually for a fee currently N10,000,000.00 (Ten Million Naira).

Post-Licensing Obligations

Following the issuance of the license and commencement of operations, licensed operators are required to fulfill certain post-license obligations, including the remittance of a monthly gaming tax of 2.5% of their sales revenue to the regulatory body. Additionally, licenses must be renewed annually upon expiration to maintain operational compliance.

There are also other tax obligations for e.g. income tax, Value Added Tax (VAT), company income tax, etc. that are payable by the company either to the state revenue authority or the Federal Inland Revenue Services. The licensed operators are also required to make the filings of their annual returns with the CAC to ensure their regulatory compliance.

Conclusion

With the rise of online betting, the Nigerian gaming industry has experienced extraordinary growth in recent years. Previously, sports betting was regulated at both the federal and state levels in Nigeria. However, a recent landmark Supreme Court judgment in November 2024 clarified that betting companies are now only required to obtain licenses exclusively from the states where they intend to operate as the licensing and regulatory powers and oversight of the NLRC is now limited only to the Federal Capital Territory. Upon obtaining the license, operators must comply with all post-license obligations, including remittance of fees to the regulatory body, renewal of license, payment of taxes, filing of annual returns with the CAC, etc.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact: