October Regulatory Roundup

Welcome to the October regulatory round up. We provide you with the latest regulatory news and insights across Nigeria, Africa and beyond. Let’s dive into a thoughtful and comprehensive update on recent developments.

Regulatory Update in Nigeria

Forex Game-Changer as CBN Launches Electronic Foreign Exchange Matching System.

NDPC Extends Deadline for Registration of DCPMI’s, Tightens Rules on Unregistered Processors.

CBN Strengthens Global regulatory ties: Signs MOU with Host Countries of Nigerian Bank Subsidiaries.

FIRS Moves to Enhance Ease of Doing Business, Launches USSD Code to Simplify Tax Administration.

National Assembly Deliberates Bill to Increase VAT to 10% by 2025.

Court Orders Release of Binance Executive as EFCC Withdraws Money Laundering Charges.

CBN Unveils Plan to Introduce BVN platform for Non-resident Nigerians.

PenCom Directs LPFA’s to Suspend Investment in Commercial Papers involving Non-Bank CMOs.

NCC NIN Sim verification Directives Births Significant Loss for Nigeria Telcos.

Across Africa

Huawei Unveils Plans to Open Cloud Region in Nigeria by end October.

Kenyan Lawmakers Revive Push to Split Safaricom and M-PESA.

South Africa’s FSCA Withdraws Banxso’s FSP License Amidst Regulatory Scrutiny.

Egypt Telecom Regulator Rolls out New Set of 5G Licenses to Telcos, Gears up for 5G Technology Adoption.

South Africa Moves to Amend 30% Ow.nership Requirements for Global Communication Giants.

South Africa Insists Mandatory Registration and Licensing for Forex Trading Signal Providers.

Kenya Revenue Authority to Launch Whatsapp Chatbot for Tax invoicing by 2025.

Bank of Ghana Opens Applications for New Primary Market Dealers in Government Securities Auctions.

Algeria Cosob Considers Allowing Insurers Function as Stock Market Intermediaries.

Deals and Raises

Yellow Card Closes Series C Funding with a $33 Million Equity Financing.

Open AI Secures $6.6 Billion in Record Breaking Venture Round.

Imprint Secures $75 Million in Series C Funding to Support Advancements in Cloud-based Credit Card and Risk Platforms.

Moniepoint Closes Series C funding with a US$ 110 Million Equity Financing.

Across the World

TD Bank faces $3 Billion in Penalties over AML Compliance Failures.

UAE Unveils Regulatory Framework for DAOs.

UK FCA Launches AI Lab to Promote Safe and Ethical AI usage in UK Financial Markets.

Crypto Scoop

Crypto.com Files Lawsuit Against SEC, Alleges Regulatory Overreach in U.S. Digital Asset Oversight

UAE to Introduce Tax-Free Crypto Transactions in November

Mergers and Acquisitions

Lesaka Acquires ? Adumon for $96 million.

Stripe Acquires Bridge, Expands into the Stablecoin Sector

News in Nigeria

Forex Game-Changer as CBN Launches Electronic Foreign Exchange Matching System.

The Central Bank of Nigeria has announced the? introduction of the Electronic Forex Matching System for? forex transactions in the interbank forex market. The CBN’s new Electronic Foreign Exchange Matching System offers companies improved transaction speed, transparency, and market stability, enhancing customer trust and operational efficiency. It also demands tighter compliance with forex reporting and data security standards due to increased regulatory oversight.?

NDPC Extends Deadline for Registration of DCPMI’s, Tightens Rules on Unregistered Processors.

The Nigeria Data Protection Commission has extended the deadline for the mandatory registration of data controllers and processors of major importance? to October 31, 2024. More importantly, the commission has mandated the disengagement of processors or controllers without registration. This appears like a first enforcement step requiring regulated entities to reassess their vendors for potential exposure.?

CBN Strengthens Global regulatory ties: Signs MOU with Host Countries of Nigerian Bank Subsidiaries

The Central Bank of Nigeria (CBN) has signed a memorandum of understanding (MOU) with host countries of Nigerian bank subsidiaries to enhance oversight and strengthen regulatory coordination. The partnership seeks to ensure compliance with local and international banking regulations. Regulatory and compliance risk assessments across group and multinational structures are becoming more expedient with banking regulators expressing a willingness to collaborate to enforce compliance.?

FIRS Moves to Enhance Ease of Doing Business, Launches USSD Code to Simplify Tax Administration.

The Federal Inland Revenue Service, on October 9 2024, announced the launch of an unstructured supplementary service data (USSD) code *892#, to enhance tax administration and ease of doing business in the country. The USSD code allows taxpayers to retrieve tax payer identification numbers, verify tax clearance certificates, access information on tax types and rates, locate the nearest FIRS office and get clarification on tax-related enquiries. This comes as part of the agency’s effort towards boosting the country’s ease of doing business.

National Assembly Deliberates Bill to Increase VAT to 10% by 2025

The National Assembly has reportedly received an executive bill proposing an increase in the value added tax (VAT) paid by Nigerians from 7.5% to 10% from 2025 and to 12.5% from 2026 through to 2029. The bill also proposes to increase the VAT rate to 15% from 2030 upwards. In addition, the bill seeks to reduce the corporate income tax rate from 30% to 27.5 from 2025 onwards and a further reduction down to 25% by 2026.?

Court Orders Release of Binance Executive as EFCC Withdraws Money Laundering Charges

The Federal High Court, Abuja, has ordered the release of Binance executive after the Economic and Financial Crimes Commission (EFCC) withdrew the money laundering charges brought against him, noting that this decision was based on a need to allow him access to medical treatment abroad, considering his deteriorating health. The detention of Tigran raises questions as to the culpability of lower-level employees for criminal allegations against a company as Nigeria continues to walk a tightrope in its approach to regulating crypto. These events and the outcome of the litigation against Binance may be telling for the future of local crypto regulation especially with precedents that may potentially be laid by the court.?

CBN Unveils Plan to Introduce BVN platform for Non-resident Nigerians

One big headache for compliance teams is onboarding of foreigners due to variations in ID, access to BVN registration platform and other blockers. The Central Bank of Nigeria has announced plans to introduce a non-resident Bank Verification Number (BVN) Platform by December to potentially solve or mitigate this compliance issue.?

PenCom Directs LPFA’s to Suspend Investment in Commercial Papers involving Non-Bank CMOs

The Nigerian Pension Commission (PenCom) has ordered the licensed pension fund administrators (LPFA’s) to suspend investment in commercial papers, where non-bank capital market operators are engaged as issuing and placing agents. This decision was based on the ground that the Securities and Exchange Commission (SEC) is yet to issue any guideline or regulation on the issuance of commercial papers.? With the subsequent release of an exposure draft on issuance of commercial papers ,we anticipate the possibility of the ban being lifted soon.

NCC NIN Sim verification Directives Births Significant Loss for Nigeria Telcos

With the final deadline for NIN SIM verification now passed, telecoms have recorded a massive decline in the total number of subscribers as a result of the blockage of all unlinked mobile SIM cards, with Telcos like Globacom recording a loss of close to 70% of its subscribers. Moving forward, while the directive invariably ensures stronger security protocols for the telecom industry, it could cause significant changes in the industry, as telcos continue to struggle to adapt to the new regulatory requirements.

Across Africa

Huawei Unveils Plans to Open Cloud Region in Nigeria by end October.

Forex is scarce and expensive. So local cloud service consumers are beginning to switch to local alternatives for cost reduction. While this has seen a rise in local adoption of Africa owned players like Zoho, there is rising international interest in the continent as well. Huawei Technologies may be leading this charge through its recently unveiled plans to open a data center in Nigeria to comply with the country’s? data localization requirements. This is coming at a time where African regulators are increasingly considering mandatory localisation requirements particularly for sensitive data.

Kenyan Lawmakers Revive Push to Split Safaricom and M-PESA.

Competition law is still very nascent in Africa when compared with developed countries. However, we are seeing recent traction in Kenya with the proposed split of one of its biggest technology companies, Safaricom into two, telco and mobile money companies. This regulator dream may be a reality if the Information and Communications Amendment Bill, eventually passes into law. It may send a signal to other African countries particularly mobile money led ones and some bank led ones like Nigeria where Mobile Money is still gaining traction.?

South Africa’s FSCA Withdraws Banxso’s FSP License Amidst Regulatory Scrutiny

The South African Financial Sector Conduct Authority (FSCA) has announced the provisional withdrawal of Banxso’s Financial Service provider (FSP) license due to concerns about the firm’s operational practices and the potential risks it could pose for clients. The FSCA concerns revolve around the firm’s alleged association with deep fake advertisements and aggressive sales tactics employed by its agents. The provisional nature of the license withdrawal however indicates that the regulator could possibly overturn its decision, if the firm is cleared of the charges.

Egypt Telecom Regulator Rolls out New Set of 5G Licenses to Telcos, Gears up for 5G Technology Adoption

Egypt’s Minister of Communications and Information Technology, Amr Taalat, has announced the approval of a new set of 5G licenses to major telecom operators in the country, namely, Orange, E& Egypt, and Vodafone Egypt. These three telecom giants join Telecom Egypt which had earlier secured its 5G license in January 2024. This comes at such a significant time as the country gears up for 5G technology adoption, as part of its plans to revolutionize the digital landscape and drive growth in key economic sectors.

South Africa Moves to Amend 30% Ownership Requirements for Global Communication Giants

The South African Minister for the Department of Communications and Digital Technology has indicated plans to amend provisions of the Electronic Communications Act, mandating telecommunications companies to have at least 30% ownership interest to be held by historically disadvantaged groups.? The proposed amendments seek to ensure the recognition of equity equivalent programs as an alternative to the requirement to have at least 30% ownership interest held by historically? disadvantaged groups. This comes as part of the country’s effort to lower the regulatory hurdles to investment in cheap and reliable broadband.

South Africa Insists Mandatory Registration and Licensing for Forex Trading Signal Providers

The South African Financial Service Conduct Authority (FSCA) has clarified the status of Forex trading signal providers as falling within the regulatory oversight of the FSCA. The regulator mentioned that the practice of providing and publishing online trading signals falls within the definition of financial services under the Financial Advisory and Intermediary Services (FAIS) Act. By implication, Forex trading signal providers are required to possess a financial service provider license before they can validly operate in the country.?

Kenya Revenue Authority to Launch Whatsapp Chatbot for Tax invoicing by 2025.

Efforts to boost tax compliance have witnessed an increase from African regulators. The Kenya Revenue Authority (KRA) announced plans to launch a whatsapp chatbot to enhance tax invoicing using the Electronic Tax Invoice Payment systems (e-TIMS). The initiative is intended to boost tax compliance, particularly amongst micro, small and medium sized businesses (MSMEs). The platform, which is expected to launch before or by July 2025, will allow tax-payers to generate tax invoices via the Whatsapp messaging platform.

Bank of Ghana Opens Applications for New Primary Market Dealers in Government Securities Auctions

The Bank of Ghana, in collaboration with the ministry of finance, has announced its call for applications from qualified banking and non-banking financial institutions to apply for selection as primary market dealers for participation in the wholesale auction of government’s securities. Successful applicants will be able to trade securities with the government and also engage in sale of treasury securities purchased from the central bank.

Algeria Cosob Considers Allowing Insurers Function as Stock Market Intermediaries.

Algeria’s Securities Market Regulator, Commission for the Organization and Supervision of Stock Market Operations (Cosob), has made proposals to the ministry of finance to introduce provisions within the framework of a preliminary draft law on the financial market, allowing insurance companies the legal capacity to function as stock market intermediaries. If the proposal becomes law, insurance companies will be able to apply for and be issued approval to function as stock market intermediaries, alongside banks and other entities. This could mean a better access to capital for companies and diverse investment options for investors.

Deals and Raises

Yellow Card Closes Series C Funding with a $33 Million Equity Financing.

Open AI Secures $6.6 Billion in Record Breaking Venture Round.

Imprint Secures $75 Million in Series C Funding to Support Advancements in Cloud-based Credit Card and Risk Platforms.

Moniepoint Closes Series C funding with a US$ 110 Million Equity Financing

Across the World

TD Bank faces $3 Billion in Penalties over AML Compliance Failures.

The US Department of Justice has slammed TD bank with a $3 billion fine for its ‘long-term, pervasive and systemic deficiencies’ in its Anti-money laundering compliance operations. This comes after several signals from regulators and the bank’s internal audit reports, highlighting several deficiencies in its transaction monitoring system. The failures allowed the bank to be used as a conduit for illegal activities, facilitating the transfer of over $670 million by 3 different money laundering syndicates, through the bank’s account, between 2019 and 2023.

UAE Unveils Regulatory Framework for DAOs

The United Arab Emirates (UAE) has announced the launch of a regulatory framework for decentralized autonomous organizations (DAOs) operating within the RAK Digital Asset Oasis. The framework, known as the DAO association regime (DARe), provides a legal framework for DAOs to operate, including a legal personality, allowing them the legal capacity to own assets, enter contracts and interact with off-chain entities. The framework provides two models, namely the Startup DAO, catering for DAOs with less than 100 members, and the Alpha DAO, designed for more mature entities, with treasuries exceeding USD 1 Million.

UK FCA Launches AI Lab to Promote Safe and Ethical AI usage in UK Financial Markets

The United Kingdom (UK) Financial Conduct Authority (FCA) has announced the launch of its new Artificial Intelligence (AI) lab, designed to encourage innovative AI solutions in the UK financial markets. The AI lab is expected to serve as a platform for engagement with AI experts and stakeholders, showcase ground-breaking AI innovations and host various AI-focused tech sprints on its Supercharged Sandbox.

Crypto Scoop

Crypto.com Files Lawsuit Against SEC, Alleges Regulatory Overreach in U.S. Digital Asset Oversight

Crypto.com has instituted an action against the United States Securities and Exchange Commission (SEC) alleging regulatory overreach in its regulation of digital assets. This follows an initial receipt of a Wells notice from the regulator, indicating that some of the tokens traded on its platform qualified as securities. In addition, the company has also filed a separate petition with the Commodity Futures Trading Commission (CFTC) and SEC, requesting a joint interpretation to confirm the status of some specific derivative tokens as falling exclusively within the regulatory purview of the CFTC. The outcome of the suit could significantly affect the overall regulation of the cryptocurrency market in the United States as? industry experts have long called for clear and well-tailored regulations for the sector.

UAE to Introduce Tax-Free Crypto Transactions in November

As part of the United Arab Emirates’ (UAE) drive to become world’s most prominent crypto hub, in an amendment to the Executive Regulation of the Federal Decree Law on VAT, released on 4, October 2024, the country has exempted transactions involving conversion or transfer of virtual assets, including virtual currencies, from the mandatory 5% value-added tax (VAT). The amendment is expected to take effect from November 15, 2024, but to apply retroactively to transactions conducted from January 1, 2018.?

Mergers and Acquisitions

Lesaka Acquires ? Adumon for $96 million.

Stripe Acquires Bridge, Expands into the Stablecoin Sector

Join the Conversation

Have questions or insights about the regulatory landscape in your region? Reach out to us on any of our social media handles, email and we would be available to help. Also share your thoughts in the comments below and let's continue the conversation! Please note that the information provided in this article does not constitute legal advice and should not be construed as such. For legal advice specific to your situation, please consult a legal practitioner.