Lawmakers Probe Surge In POS Fraud, Illegal Crypto Transactions

The Chairman of the House of Representatives adhoc committee investigating the economic, regulatory and security risks linked to cryptocurrency adoption and Point-of-Sale, POS, operations has raised alarm over rising fraud and unlicensed digital-asset activities across the country.

Speaking at a resumed investigative hearing in Abuja, Chairman of the adhoc Committee, Olufemi Bamisile said recent engagements with stakeholders revealed deep gaps in Nigeria’s fast-expanding digital finance sector.

Bamisile said the committee had received reports of unprofiled POS agents, cloned terminals, anonymous transactions and weak Know-Your-Customer practices, warning that such lapses expose Nigerians to financial loss, cybercrime and security breaches.

He also expressed concern over what he described as a “disturbing trend” of POS operators engaging in cryptocurrency-related services without regulatory approval, activities which raise serious questions about money laundering, terrorism financing, data integrity and the misuse of payment instruments.

Bamisile disclosed that the committee had been alerted to the registration of false companies at the Corporate Affairs Commission using the National Identification and Bank Verification Numbers of unsuspecting Nigerians to open accounts and launder illicit funds.

Another issue under investigation is the storage of sensitive customer data on foreign servers by major fintech companies.

He warned that offshore data storage undermines regulators’ ability to trace suspicious transactions or conduct timely audits.

Despite the concerns, Bamisile said the engagement with operators was not adversarial and noted that the industry also faces regulatory overlaps, policy inconsistencies and multiple compliance requirements.

“Our mandate is to recommend legislation that will deliver a harmonised regulatory framework, stronger safeguards, improved consumer protection and an environment where innovation can flourish responsibly,” he said.

The committee will continue its interface with regulators, fintech companies and security agencies before submitting its recommendations to the House.

Also speaking, National president of the Association of Digital Payment and POS Operators of Nigeria, Paul Okafor, warned that the POS ecosystem had reached a “critical emergency point,” with fraud escalating to levels that threaten national security.

Okafor said the industry’s growth from 50,000 operators in 2017 to more than 2.3 million today had outpaced regulatory capacity.

Citing data from the Nigeria Inter-Bank Settlement System, he said POS, banking and digital-payment channels lost N17.67 billion to fraud in 2023, rising sharply to N52.26 billion in 2024.

He noted that criminals increasingly use POS agents as cash-out points for ransom payments and illicit funds pointing out that in some states, about 40% of kidnap ransom payments pass through informal POS channels.

Okafor urged lawmakers to compel the Central Bank of Nigeria to introduce urgent reforms, including mandatory police cybercrime clearance certificates for POS operators, compulsory business registration and statutory membership of recognised associations.

He referenced global best practices in India, Kenya, Brazil, South Africa, and the United Kingdom, where strict oversight and continuous verification significantly reduced fraud.

Oduyemi Odumade, Edited By Grace Namiji