Senate Probes Ponzi Schemes After CBEX Collapse, Moves to Amend BOFIA

Senate Probes Ponzi Schemes After CBEX Collapse, Moves to Amend BOFIA

The Senate on Tuesday began a public hearing on proposed amendments to the Banks and Other Financial Institutions Act 2020 while also launching an investigation into the rising activities of Ponzi schemes in the country following the collapse of the Crypto Bullion Exchange.

The hearing was declared open at the National Assembly by Senate President Godswill Akpabio, who was represented by the Senate Leader, Opeyemi Bamidele.

The session focused on a bill seeking to amend the banking law and a motion calling for an investigative hearing into the operations of Ponzi schemes across Nigeria, with particular attention to the recent CBEX incident that reportedly left thousands of investors affected.

The engagement was jointly organised by several Senate committees, including those on banking, insurance and other financial institutions, ICT and cyber security, capital market, as well as anti-corruption and financial crimes.

Speaking at the hearing, Akpabio said the initiative demonstrates the Senate’s commitment to protecting Nigeria’s financial system while supporting innovation in the digital economy.

He noted that the country’s financial sector has witnessed rapid transformation in recent years, largely driven by digital technology, the growth of fintech companies and increasing cryptocurrency activities.

According to him, the proposed amendment to the BOFIA law would strengthen the supervisory authority of the Central Bank of Nigeria over financial institutions operating in the country.

The amendment, he explained, would also provide a clearer legal framework for identifying and regulating systemically important institutions, including technology-driven financial service providers.

“Enhanced supervision is not a constraint on growth; it is a safeguard for sustainable growth,” he said.

Akpabio noted that although some stakeholders have suggested the creation of a separate regulatory commission for fintech companies, the Senate believes the responsibility should remain largely within the Central Bank’s oversight structure.

He warned that establishing an additional regulator could lead to duplication of duties and fragmented supervision in the financial sector.

The Senate President further explained that while cryptocurrency-related investment activities and the licensing of exchanges fall under the responsibility of the Securities and Exchange Commission Nigeria, issues relating to transaction monitoring and financial system stability remain within the mandate of the Central Bank.

Akpabio also expressed concern over the increasing spread of Ponzi schemes and fraudulent online investment platforms, which he said continue to exploit Nigerians seeking quick financial returns.

He described the collapse of the CBEX platform as a stark reminder of the vulnerability of many citizens to fraudulent schemes promising unrealistic profits.

“Ponzi schemes exploit economic hardship and limited financial literacy,” he said. “They undermine trust in legitimate institutions and inflict severe financial and emotional harm.”

He added that the Senate would examine existing regulatory gaps, enforcement challenges and whether stronger legal penalties are needed to discourage financial fraud in the country.

“The financial system operates fundamentally on trust,” he said. “Strengthening oversight of systemically important institutions and addressing fraudulent schemes are essential to preserving stability and restoring confidence in Nigeria’s financial system.”

Chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions, Mukhail Adetokunbo Abiru, said the proposed amendment would empower the Central Bank to formally designate certain fintech companies and digital financial institutions as systemically important.

According to him, the bill also proposes the establishment of a national registry aimed at improving transparency and strengthening risk-based supervision tailored to technology-driven financial services.

Representing the Central Bank, Deputy Governor in charge of financial system stability, Philip Ikeazor, expressed support for the amendment, noting that some fintech companies now process transaction volumes comparable to those of mid-sized banks.

He said the development makes closer regulatory oversight necessary to protect the financial system.

Similarly, Orekia Opemi-Yusuf, Director of Payment Systems Supervision at the Central Bank, cautioned against creating multiple regulatory bodies for the fintech sector, warning that duplication could slow the growth of Nigerian technology-driven financial firms that are expanding internationally.

Other stakeholders also made submissions during the hearing. Isa Amadu, representing the Bank of Industry, urged lawmakers to define clear criteria for identifying systemically important institutions in order to avoid regulatory overreach.

Ondaje Ijagwu, representing the Federal Competition and Consumer Protection Commission, supported stronger supervision by the Central Bank but advised that the responsibilities of different regulatory agencies should remain clearly defined.

Meanwhile, Dein Whyte, who represented the Economic and Financial Crimes Commission, revealed that investigations into the CBEX scandal have uncovered massive financial losses.

According to him, about N1.3 trillion involving roughly 1,200 victims has been traced to the fraudulent scheme.

He added that the anti-graft agency has already seized several assets linked to the operators of the platform and is pursuing legal processes to forfeit them to the federal government.

The Senate is expected to review submissions from stakeholders before taking further legislative action on the proposed amendment and recommendations aimed at curbing the growing threat of financial scams in Nigeria.