Mercury, a US-based Neobank that operates accounts for startups globally, has announced its decision to terminate accounts of Nigerian startups and founders on August 22, 2024, following compliance changes.
This decision is coming after checks on the company’s website listed Nigeria as one of the prohibited countries where it currently can’t open accounts for founders living in the region. The prohibition means businesses and individuals living in Nigeria can no longer open new accounts or conduct transactions through the bank.
This move has sent shockwaves through the local tech ecosystem, leaving many scrambling for alternatives, which is expected to impact a substantial number of Nigerian startups that have relied on the bank’s services for their financial operations.
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It is worth noting that Mercury has been very important to Nigerian tech startups that raise dollar funding from foreign and local investors. The recent decision to restrict the African country comes amid heightened regulatory scrutiny of the fintech sector and Nigeria’s placement on the Financial Action Task Force (FATF) greylist.
It has also sparked widespread reactions after two Nigerian founders living in the U.S. narrated their experiences to TechCrunch. According to the founders, who asked not to be named, disclosed that Mercury will close their accounts in the next 30 days despite their startups being domiciled in the U.S. “It’s unclear if Mercury is using passports, rather than local addresses, in making such decisions”, they stated.
Also commenting in a post made on X, founder of HRtech startup Synergyy, Alexander H. wrote,
“Losing our Mercury Bank account because ‘Nigeria’ is a huge blow. The continued discrimination of African Startups in the global market is not a welcome development.”
This isn’t the first time Mercury has come under criticism from Nigerian startup founders. In March 2022, the bank without warning, restricted the accounts of over a dozen tech startups, including those backed by notable American accelerator Y Combinator. At the time, the bank told some users their accounts had been flagged and placed under review by its compliance team due to “unusual activity.”
It is worth noting that Mercury has also been subject to numerous regulatory and compliance checks by their authorities. The latest development bringing wholesale account closures has raised concerns about the broader treatment of African startups in the global tech ecosystem.
With Mercury’s recent compliance decision, countries on the list are subject to additional scrutiny because of deficiencies in money laundering and terrorism financing regulations.
Burundi, Cameroon, Central African Rep, DR Congo, Congo, Liberia, Mali, Mozambique, Nigeria, Somalia, South Sudan, Sudan, and Zimbabwe are the thirteen African countries affected by the restrictions.
Check out the full list of countries affected below;
- Afghanistan
- Albania
- Belarus (Republic of Belarus)
- Bosnia & Herzegovina
- Burundi
- Cambodia
- Cameroon
- Central African Rep
- Congo (the Democratic Republic of the)
- Congo (the)
- Croatia
- Cuba (Republic of Cuba)
- Eritrea
- Haiti
- Iran (Islamic Republic of Iran)
- Iraq
- Lebanon
- Liberia
- Libya
- Mali
- Mozambique
- Myanmar (Burma)
- Nicaragua
- Nigeria
- North Korea (DPRK – Democratic People’s Republic of Korea)
- Pakistan
- Palestine (State of)
- Philippines
- Russia (Russian Federation)
- Somalia
- South Sudan
- Sudan (the)
- Syria (Syrian Arab Republic)
- Ukraine
- Venezuela (Bolivarian Republic of)
- Yemen
- Zimbabwe