House committee warns of rising POS, cryptocurrency fraud threatening Nigeria’s financial system

House committee warns of rising POS, cryptocurrency fraud threatening Nigeria’s financial system

The House of Representatives Ad-hoc Committee investigating cryptocurrency adoption and Point-of-Sale (POS) operations has raised fresh alarms over a worsening financial fraud crisis that threatens Nigeria’s financial system.

At a resumed investigative hearing on Monday, Committee Chairman Hon Olufemi Bamisile said engagements with stakeholders exposed “deep gaps” in the digital finance ecosystem, putting citizens at significant financial and security risks.

Bamisile highlighted reports of unprofiled agents, cloned terminals, anonymous transactions, and weak Know-Your-Customer (KYC) practices, which have fueled rising POS fraud nationwide. He also expressed concern over unlicensed cryptocurrency operations infiltrating POS networks, noting the serious risks these pose, including money laundering, terrorism financing, data breaches, and misuse of platforms intended for basic payments.

The Committee was further alerted to cases of fraudulent companies registered at the Corporate Affairs Commission (CAC) using stolen National Identification Numbers (NIN) and Bank Verification Numbers (BVN) to launder funds through unverified POS channels. The storage of sensitive financial data on foreign servers by some fintech firms, Bamisile said, undermines regulatory oversight and national security.

Despite the warnings, he stressed that the investigation aims to strengthen consumer protection, harmonise regulation, and support responsible digital finance innovation rather than stifle growth.

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Speaking at the hearing, Paul Okafor, National President of the Association of Digital Payment and POS Operators of Nigeria (ADPPON), warned that Nigeria’s POS ecosystem has reached a “critical emergency point.” Fraud levels, he said, now constitute a direct national security threat.

Okafor revealed that the number of POS operators grew from 50,000 in 2017 to over 2.3 million today, overwhelming regulatory capacity, which expanded by less than 10 percent in the same period. Data from the Nigeria Inter-Bank Settlement System (NIBSS) showed that POS, digital payment, and banking channels lost N17.67 billion to fraud in 2023, rising sharply to N52.26 billion in 2024 — an increase of N34.59 billion in a single year.

He noted that POS-related fraud incidents surged by 95 percent in Q4 2024, with more than 38,000 cases officially reported and an estimated 70,000 unreported cases. Criminals are increasingly using POS agents as cash-out points for illicit funds, including kidnap ransom payments, with some states reporting that nearly 40 percent of ransom payments pass through informal POS channels.

Okafor urged the Committee to compel the Central Bank of Nigeria (CBN) to implement systemic reforms to restore trust, improve financial inclusion, and secure the nation’s payment ecosystem. His recommendations included:

1. Mandatory Nigeria Police Force–NCCC Cybercrime Clearance Certificates for all POS operators.
2. Compulsory CAC registration for every POS business to ensure traceability.
3. Mandatory membership of recognised trade associations for discipline, training, and self-regulation.

He cited global best practices from India, Kenya, Brazil, South Africa, and the UK, which enforce strict oversight, police vetting, and continuous certification to curb financial fraud.

Okafor concluded that POS services now touch virtually every household, market, and community, making urgent reforms critical to protecting Nigeria’s digital payment infrastructure.

House committee warns of rising POS, cryptocurrency fraud threatening Nigeria’s financial system