Fintech Law in Nigeria: everything you need to know
With this legislation, the authorities sought to have tools that regulate the healthy development of the Fintech sector...
Surely you have already heard that there is a law called: “Fintech Law”, do you know what this law refers to? Do you know what it regulates? Let’s delve a little deeper into the subject.
What is the Fintech Law?
The Fintech Law is the law specified to regulate financial technology institutions. This law, published nearly a decade ago, has its objective rooted to the capacity to increase the level of financial inclusion and improve the qualities of competition in the country’s economic system.
With this legislation, the Nigerian authorities sought to have tools that regulate the healthy development of the Fintech sector, with the aim of promoting better conditions of competition in the provision of financial services.
The law is aimed at financial technology institutions, which are understood as those platforms that facilitate the execution of financial operations and services.
What is a Fintech?
Fintechs are defined as emerging companies (startups), which provide financial services through the implementation of technology. Through web pages, applications or social networks. This with the purpose of speeding up and making your care process easier.
What services do these institutions offer? According to the Central Bank of Nigeria, Fintechs generally offer the following types of services:
- They provide insurance.
- They manage personal and business finances.
- They offer payment and remittance system.
- Online loans ( lending ).
- Collective financing (Crowdfunding).
- Buying and selling virtual assets.
Technological advances and the opening of new financial contexts created the need for legislation in this regard. It’s an already established fact that the CBN is the institution in charge of ensuring the stability, proper functioning and healthy development of the Nigerian financial system, including the technological field.
What regulates the Fintech Law?
The law seeks to regulate the organization, functioning and operation of this type of company, so that users are protected when using the services of Financial Technology Institutions. Through it, it is also tried to prevent and reduce the risk of money laundering, as well as the financing of terrorism.
In addition, it obliges the institutions of this branch to disseminate information that allows clients to better identify the risks to which they are exposed in the operations they carry out with them.
Within the Fintech Law, Collective Financing Institutions (financial Crowdfunding) and Electronic Payment Institutions are also regulated. These institutions are authorized, regulated and supervised by the CBN as well.
How does the Fintech Law operate?
One of the characteristics of this law is that it establishes regulations to enter, operate, protect the consumer and be supervised, so that startups that are authorized will be able to operate under the law.
The Institutions of this branch that seek to comply with the regulations, must:
- Request authorization from the CBN to be able to operate.
- They must present to their shareholders and administrators the notice of their operations.
- They also require a minimum capital for their operations and for assets subject to risk.
- Lastly, they must be legally constituted as public limited companies.
If you need to know more about the Fintech Law, since you are part of this type of financial technology institutions, approach the organizations that regulate and monitor their operation.
Remember that it is not only the entry requirements that need to be met.
There are operating provisions that you will have to follow, a series of efforts for the protection of the consumer and be under the constant supervision of the responsible Institutions.