O
Omoleye Omoruyi
Guest
A recent incident involving the arrest of a Point of Sale (POS) operator by men of the Nigerian Police Force (NPF) has sparked discussions about the security risks and responsibilities of the POS industry stakeholders in the country.
The operator, whose identity remains undisclosed, unknowingly processed a ₦4 million transaction that was later discovered to be part of a ransom payment in a kidnapping case. This incident sheds light on the delicate balance between convenience and security in Nigeria’s thriving POS industry.
In a widely circulated video, the Nigeria Police addressed the public, emphasising that POS operators must be vigilant when handling transactions. The Police PRO, Delta Command, Bright Edafe, noted that operators should adhere to a maximum transaction limit of ₦500,000 per person, a figure supposedly based on banking regulations.
He also urged operators and the public to be conscious of the source and purpose of large transactions to avoid inadvertently facilitating criminal activities.
He wrote on X:
“My message to POS operators, transactions above ₦500k can get you into trouble. Don't be a tool for kidnappers to collect ransom. It must be traced to you. She received ₦4,000,000 ransom from kidnappers and her profit was just ₦40,000. Can you imagine? Be wise, you may argue that you are doing business, but before your lawyer will get you out, you may spend some time cooling off in prison.”
Note: We reached out to the Police PRO for more details about the case but Bright did not respond to our enquiries.
Many POS operators in Nigeria are now grappling with increased scrutiny and the need to implement security measures. During interviews with two operators, they highlighted the challenges of navigating large transactions while ensuring they comply with banking rules.
Kingsley, one POS Operator who Technext spoke to said, “Yes, I have a limit. ₦500,000 is the maximum amount I process per transaction, based on First Bank’s rules.” He says the bank offers some security tips to help operators avoid fraudulent transactions.
“For First Bank, before now, it was cards or nothing. This is for easy identification of users. But now, they’ve also created a Rapid Wallet system and that system helps protect users,” he added.
Despite these measures, Kingsley exercises caution when handling unfamiliar customers.
“I avoid large sums from people I don’t know—a lot of it is just common sense. If anything suspicious happens, I’ll go to the bank to report it, and I’ll alert people around.”
In this light, the Chief Operating Officer, Fintech Association of Nigeria, Dr. Babatunde Obrimah said it would be a breach of regulation not to escalate huge transaction sums. “This is a breach of regulation by the operator. I also think there is a need for POS operators to have a means of escalating such huge transactions that are beyond limits when they see them.”
Another POS operator interviewed also emphasised the importance of adhering to transaction limits.
“I always ask for an ID when someone tries to do a large transaction,” she said. “The POS machine itself will reject any amount above ₦500,000 or prompt me to verify the user’s ID.”
For operators like her, maintaining a balance between customer service and security is key.
“It’s better to be safe than sorry. I make sure to snap a picture of the ID card for documentation before proceeding with large transactions,” she shared.
The growing number of POS operators in Nigeria, while providing much-needed financial access, also presents a potential weak spot for financial crimes. The incident highlights the need for enhanced regulatory oversight and training for operators to better detect and prevent the facilitation of illicit transactions.
The guidelines are usually broad and do not focus on POS operations. For instance, the “Guidance Note on Anti-Money Laundering and Combating Financing of Terrorism Regulations for Other Financial Institutions” released by the CBN does not specifically mention POS operations. But, it says in 5.2 of the guideline:
“Suspicious transactions are defined as those transactions in respect of which there are reasonable grounds to suspect that the transaction or attempted transaction is related to the commission or attempted commission of an ML or FT offence. It should be noted that there is no monetary threshold applicable to suspicious Transactions.”
It was referring to 5.1 which says:
“OFIs (Other Financial Institutions) are required to render Currency Transaction Report (CTR) to NFIU for each transaction in cash (deposit, withdrawal, exchange or other payment or transfer) of ₦5,000,000 and above or ₦10,000,000 and above for individuals or corporate bodies respectively. All types of currency transactions are to be reported, there are no exempt persons.”
The concerns regarding POS transaction limits in Nigeria highlight the need for a comprehensive review of the regulatory framework governing these systems. While the CBN has not set a nationwide limit of ₦500,000, individual banks may have their restrictions in place. This inconsistency can lead to confusion and inconvenience for customers.
No doubt, the CBN has outlined specific responsibilities for POS operators in combating fraud and preventing crime. These responsibilities include:
Compliance with Regulations: POS operators must adhere to all applicable CBN regulations and guidelines related to electronic payment systems.
Know Your Customer (KYC) Compliance: POS operators must verify the identity of customers and businesses using their services to prevent fraudulent transactions.
Transaction Monitoring: Operators should closely monitor transactions for suspicious activity and report any unusual patterns to the relevant authorities.
Security Measures: POS operators must implement robust security measures to protect customer data and prevent unauthorised access to their systems.
Staff Training: Operators should provide adequate training to their staff on fraud prevention techniques and best practices for handling customer transactions.
The post Nigeria Police’s arrest of POS operator over a ₦4 million deposit shows a regulation gap first appeared on Technext.
The operator, whose identity remains undisclosed, unknowingly processed a ₦4 million transaction that was later discovered to be part of a ransom payment in a kidnapping case. This incident sheds light on the delicate balance between convenience and security in Nigeria’s thriving POS industry.
In a widely circulated video, the Nigeria Police addressed the public, emphasising that POS operators must be vigilant when handling transactions. The Police PRO, Delta Command, Bright Edafe, noted that operators should adhere to a maximum transaction limit of ₦500,000 per person, a figure supposedly based on banking regulations.
He also urged operators and the public to be conscious of the source and purpose of large transactions to avoid inadvertently facilitating criminal activities.
He wrote on X:
“My message to POS operators, transactions above ₦500k can get you into trouble. Don't be a tool for kidnappers to collect ransom. It must be traced to you. She received ₦4,000,000 ransom from kidnappers and her profit was just ₦40,000. Can you imagine? Be wise, you may argue that you are doing business, but before your lawyer will get you out, you may spend some time cooling off in prison.”
Note: We reached out to the Police PRO for more details about the case but Bright did not respond to our enquiries.
Insight from POS Operators
Many POS operators in Nigeria are now grappling with increased scrutiny and the need to implement security measures. During interviews with two operators, they highlighted the challenges of navigating large transactions while ensuring they comply with banking rules.
Kingsley, one POS Operator who Technext spoke to said, “Yes, I have a limit. ₦500,000 is the maximum amount I process per transaction, based on First Bank’s rules.” He says the bank offers some security tips to help operators avoid fraudulent transactions.
“For First Bank, before now, it was cards or nothing. This is for easy identification of users. But now, they’ve also created a Rapid Wallet system and that system helps protect users,” he added.
Despite these measures, Kingsley exercises caution when handling unfamiliar customers.
“I avoid large sums from people I don’t know—a lot of it is just common sense. If anything suspicious happens, I’ll go to the bank to report it, and I’ll alert people around.”
In this light, the Chief Operating Officer, Fintech Association of Nigeria, Dr. Babatunde Obrimah said it would be a breach of regulation not to escalate huge transaction sums. “This is a breach of regulation by the operator. I also think there is a need for POS operators to have a means of escalating such huge transactions that are beyond limits when they see them.”
Another POS operator interviewed also emphasised the importance of adhering to transaction limits.
“I always ask for an ID when someone tries to do a large transaction,” she said. “The POS machine itself will reject any amount above ₦500,000 or prompt me to verify the user’s ID.”
For operators like her, maintaining a balance between customer service and security is key.
“It’s better to be safe than sorry. I make sure to snap a picture of the ID card for documentation before proceeding with large transactions,” she shared.
Gaps in POS regulation and security
The growing number of POS operators in Nigeria, while providing much-needed financial access, also presents a potential weak spot for financial crimes. The incident highlights the need for enhanced regulatory oversight and training for operators to better detect and prevent the facilitation of illicit transactions.
The guidelines are usually broad and do not focus on POS operations. For instance, the “Guidance Note on Anti-Money Laundering and Combating Financing of Terrorism Regulations for Other Financial Institutions” released by the CBN does not specifically mention POS operations. But, it says in 5.2 of the guideline:
“Suspicious transactions are defined as those transactions in respect of which there are reasonable grounds to suspect that the transaction or attempted transaction is related to the commission or attempted commission of an ML or FT offence. It should be noted that there is no monetary threshold applicable to suspicious Transactions.”
It was referring to 5.1 which says:
“OFIs (Other Financial Institutions) are required to render Currency Transaction Report (CTR) to NFIU for each transaction in cash (deposit, withdrawal, exchange or other payment or transfer) of ₦5,000,000 and above or ₦10,000,000 and above for individuals or corporate bodies respectively. All types of currency transactions are to be reported, there are no exempt persons.”
Moving forward: What can be done?
The concerns regarding POS transaction limits in Nigeria highlight the need for a comprehensive review of the regulatory framework governing these systems. While the CBN has not set a nationwide limit of ₦500,000, individual banks may have their restrictions in place. This inconsistency can lead to confusion and inconvenience for customers.
No doubt, the CBN has outlined specific responsibilities for POS operators in combating fraud and preventing crime. These responsibilities include:
Compliance with Regulations: POS operators must adhere to all applicable CBN regulations and guidelines related to electronic payment systems.
Know Your Customer (KYC) Compliance: POS operators must verify the identity of customers and businesses using their services to prevent fraudulent transactions.
Transaction Monitoring: Operators should closely monitor transactions for suspicious activity and report any unusual patterns to the relevant authorities.
Security Measures: POS operators must implement robust security measures to protect customer data and prevent unauthorised access to their systems.
Staff Training: Operators should provide adequate training to their staff on fraud prevention techniques and best practices for handling customer transactions.
The post Nigeria Police’s arrest of POS operator over a ₦4 million deposit shows a regulation gap first appeared on Technext.