The Corporate Affairs Commission of Nigeria (CAC), has announced plans to take decisive action to shut down Point of Sales (PoS) businesses that have failed to register, following the expiration of its September 5 deadline.
The commission announced this via a public notice released on Friday, expressing concern over the lack of compliance by most of these PoS businesses despite its warning. The CAC further stated that those who have so far failed to register may be engaging in “unwholesome activities”.
The CAC notice reads,
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“The Corporate Affairs Commission wishes to remind the general public particularly Fintech operators also known as Point of Sale (POS) operators, that the 60-day deadline given in daily newspaper publications of July 7, 2024, for the registration of such businesses expired on September 5, 2024. The Commission notes inadequate compliance with the directive for formalization when viewed from the background of the large number of POS operators in the country.
“Those who have taken steps to formalize in line with the Commission’s directive are commended for their positive attitudes. Recalcitrant operators have refused to adhere to the advice for formalization due possibly, to engagements in unwholesome activities or for some reasons best known to them. We are to make it clear that the Commission is working with Law Enforcement Agencies and other relevant stakeholders to deploy comprehensive enforcement and sanction framework that may include not only possible shutdown but other severe legal Consequences.”
Following the CAC decision to shut down unregistered PoS businesses, the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), has taken legal action against the Commission over its directive requiring Point of Sale operators to register their activities, which ended on Thursday, September 5, 2024. With the deadline for registration already ended, AMMBAN is challenging the CAC’s directive in court, arguing that it is unfair and potentially harmful to their businesses.
The National General Secretary, AMMBAN, Oluwasegun Elegbede, argued that the registration requirements imposed by CAC, violated the provision of the Companies and Allied Matters Act, Laws of the Federation of Nigeria, 2004, which “explicitly states that the commission has no jurisdiction over individuals not operating as a company.
In his words,
“According to section 863(1) of the Companies and Allied Matters Act, 2004, the order to enforce CAC directive on individual PoS agents operating under their name is wrong and will be challenged, as it contravenes the Companies and Allied Matters Act, Laws of the Federation of Nigeria, 2004, which explicitly states that CAC has no jurisdiction over individuals not operating as a company.
“The matter is already in court and the court has scheduled this September for hearing. The court will have to intervene in the interpretation of the quoted section of the CAMA if individuals operating as a sub-agent (likened to a bank branch) must register with CAC”.
On his part, The National Vice President Association of Mobile Money and Bank Agents in Nigeria, Dr Obioha Oti, said CAC’s deadline was null and void.
Backstory
Recall that in 2013, the Central Bank of Nigeria (CBN) launched agent banking and point-of-sale systems to increase financial inclusion in the country. The financial system which aided in financial inclusion as well as easing financial transactions was however ravaged by fraudulent cases.
This spurred the CBN in January this year, to collaborate with the Association of Mobile Money and Banking Agents of Nigeria (AMMBAN) to create a new feature on PoS terminals to flag fraudulent transactions. Also, the initiative was created to eliminate the unauthorized utilization of mobile money wallets, bank accounts, or credit cards.
Fast forward to May 2024, the CAC introduced a regulation aimed at curbing financial fraud in Nigeria’s financial services sector, especially as carried on using POS operators. Under this new mandate, POS operators were mandated to register with the CAC to carry on business in Nigeria.
The directive came against the backdrop of frequent fraud incidents involving POS terminals. According to a report by the Nigeria Inter-Bank Settlement System (NIBSS) Plc, POS terminals accounted for 26.37 percent of fraud incidents in 2023, according to fraud. CAC said the move would curb fraud in the system, kidnapping, and payment of ransoms.