It is important for Point of Sale, POS, operators in Nieria to stay informed, especially with the recent demand from the Corporate Affairs Commission, CAC.
The CAC now requires that all POS operators and fintech merchants in Nigeria register their businesses according to Central Bank of Nigeria, CBN, guidelines by July 7, 2024. Failure to meet this deadline could result in fines or even arrest.
Understanding these demands from CAC not only helps you avoid legal issues, but also ensures your business runs smoothly and gains a solid reputation.
Here are five important details every POS operator should know about CBN registration:
1. CAC registration
It is important to know that every POS operators is expected to first register with CAC. Thereby getting the firm a legal identification.
Importance: As a POS operator, if you plan to work with banks and Mobile Money Operators (MMOs), obtaining legal identification for your firm through CAC registration is essential. It also ensures that you are acknowledged by the law as a genuine entity.
Requirements: In order to meet the requirements with the CBN, you must present your Certificate of Incorporation, also known as your Business Name Registration Certificate, from the CAC.
Completion of your CAC registration sets the stage for all of your ensuing obligations and business engagements.
2. KYC compliance
Every point-of-sale operator has to comply with the Know Your Customer (KYC) policy as mandated by the CBN. In order to enhance security and avoid deceit, it is necessary to validate the credentials of the business and the people behind the business.
Importance: KYC implementation protects your clients and your business from potential threats and builds their confidence. It also ensures safety and predictability in business processes.
Requirements: You will need to provide proof of a registered office of your business, including other personal data, such as valid identification documents (for example an international passport or a National ID).
You shield your business and consolidate your client and partners’ trust in your imprint by complying with KYC requirements.
3. Capital requirements and financial stability
In order to fulfill POS operators obligations, they must adhere to capital requirements set by the CBN (Central Bank of Nigeria).
By fulfilling capital requirements, companies can rest assured they have the capital in place to accommodate the volume of transactions they are processing for the month or the year.
Importance: Having sufficient funds assures your company will be able to consummate transactions as intended. Especially during peak transaction times, genuine operational functionality relies on having funds available.
Having funds to settle transaction on behalf of customers does not only guarantee that your business can handle transactions, but also reassures your customers and the CBN that you are a reliable source of cash.
Requirements: All business accounts held with a regulated financial institution must have a maintained capital balance meeting the minimum amount prescribed by the CBN and it could vary depending on your company size.
Having sufficient capital not only assures the sustainability or growth of your point-of-sale (POS) operations but also decreases the risk of service interruptions altogether!
4. Respecting transaction limits
The Central Bank of Nigeria (CBN) has imposed limitations on transactions for POS transactions to reduce the likelihood of illegal activity, such as money laundering. Adhering to these limitations is critical to avoid
tangling with the law.
Importance: Exceeding transactional limitation or violating AML, could result in business fines and/or suspension of business license. In addition, you need to report any suspicious looking transaction.
Compliance with AML procedures can help protect your operation from inadvertently engaging in criminal activities.
Requirements: Select a Licensed Organization: Collaborate with a CBN-licensed bank or MMO. Check the CBN website to confirm their validity.
Give the Required Documents: Give your partner your proof of capital, KYC documentation, and CAC registration certificate.
Observe the Compliance Guidelines: Observe your partner’s instructions, maintain correct documentation, and report any questionable transactions.
Observe Transaction Limits: To stay out of trouble with the law, stick to the transaction restrictions set by CBN and report any unusual activity.
Continue to Communicate: Keep your financial partner updated and interact with them on a regular basis to resolve any concerns.
You can safeguard your business from legal hazards and enable efficient operation management by adhering to AML and transaction limits regulations.
5. Collaborating with MMOs or licensed banks
You must collaborate with a licensed financial institution or Mobile Money Operator (MMO) to support your registration and make sure that all applicable requirements have been followed in order to complete the CBN registration procedure.
Importance: By partnering with a licensed bank or MMO, a business can expedite the registration process and establish an ongoing support relationship. The financial institution will take care of both your registration and continuing adherence to regulations.
Requirements: Select an Authorized Organization: Verify if the bank or MMO you deal with has a CBN license. Check their status directly with them or on the CBN website.
Provide the Required Documents: Provide your partner with your KYC paperwork, proof of capital, and CAC registration certificate.
Adhere to the Compliance Guidelines: Follow the instructions and processes provided by your partner; this includes maintaining correct documentation and reporting any questionable transactions.
Continuous support: To make sure you stay compliant with changing legislation, your financial institution will provide you with continuous training and assistance.
Working with a trustworthy financial institution helps you with the application process and provides ongoing assistance for businesses to comply with the rules.
Conclusion
Since the July 7, 2024, deadline has passed, it is now essential for Nigerian Point-of-Sale (POS) operators to ensure they understand and comply with all applicable CBN rules.
To operate legally and successfully, POS businesses must adhere to regulations covering CAC registration, KYC compliance, maintaining adequate working capital, adhering to transaction limits, and collaborating with financial institutions.
