Nigeria’s rapidly expanding fintech industry is entering a more demanding phase, with companies facing growing pressure to demonstrate that their systems can keep pace with the scale of digital transactions, increasingly sophisticated fraud schemes and tighter regulatory expectations.
As millions of Nigerians increasingly rely on digital platforms for payments, transfers and other financial services, fintech companies are being required to do more than satisfy licensing conditions. Their responsibilities now span customer identification, transaction monitoring, anti-money laundering and counter-terrorism financing controls, fraud prevention, consumer protection, data privacy and cooperation with regulators and law enforcement agencies.
For operators processing large volumes of transactions every day, the challenge is particularly complex. Fraudsters are also becoming more sophisticated, deploying technology to manipulate identities, bypass traditional verification measures and exploit weaknesses in digital financial systems.
At OPay, one of Nigeria’s major fintech operators, these challenges are handled through a combination of technology, regulatory controls and human oversight.
Speaking with The Guardian, OPay’s Chief Compliance Officer, Chukwudinma Okafor, said compliance has become an integral part of the company’s operations, rather than a function limited to satisfying regulators.
“I am responsible for ensuring that all the conditions for licensing are adhered to. This primarily includes complying with all regulations of the Central Bank of Nigeria, including rules related to Anti-Money Laundering/Combating the Financing of Terrorism/Combating Proliferation Financing (AML/CFT/CPF), Customer Due Diligence, Consumer Protection, and Data Privacy and Data Protection,” Okafor said.
He explained that his responsibilities also include ensuring that customer information is complete and verified during onboarding, while accounts are monitored continuously to identify changes in customer behaviour or risk.
“My role also involves liaison with regulatory authorities and cooperating with law enforcement agencies in their investigations. Also, I have to keep Management and the Board informed of all Compliance-related occurrences,” he added.
Compliance at scale
The sheer volume of transactions processed by large fintech platforms means that conventional, entirely manual approaches to compliance are no longer sufficient.
According to Okafor, maintaining compliance at OPay’s scale requires significant investment in technology, skilled personnel and continuous training.
“For the level at which OPay operates, world-class compliance standards are required,” he said.
He added that the company’s Board has backed the compliance function with technology and personnel, while compliance training extends beyond specialist staff.
“The Board provides full backing to Compliance and has ensured the deployment of technology that compares with the best globally to support the compliance function, while also ensuring that the Compliance Department has staff with adequate skills,” Okafor said.
“Training is provided not just to Compliance staff but to all staff members, including Senior Management and the Board.”
That approach, he said, is intended to create a culture in which compliance is embedded across the organisation rather than treated as the responsibility of a single department.
“For all employees, engagement with Compliance commences at onboarding. Also, Board-approved compliance policies are available to all staff,” he said.
“There are also established communication channels through which compliance matters can be escalated to the Compliance Team and Management. At OPay, Compliance is not just about meeting regulatory requirements. To ensure the sustainability of operations, compliance is designed into every procedure.”
Identity verification at the front line
Customer identification remains one of the most important points of defence against fraud and other financial crimes.
As fraudsters develop new ways of creating or manipulating identities, fintech companies are increasingly combining government-issued identity information, biometrics and automated systems to establish whether customers are who they claim to be.
Okafor said OPay uses direct integrations with issuers of identity documents to verify information supplied by customers.
“OPay has integrated APIs to issuers of identity documents. The APIs have enabled the verification of identity data, such as the Bank Verification Number and National Identity numbers, directly from the issuers of the identity documents,” he said.
The company also uses biometric technology and liveness checks, which are designed to determine whether a person attempting to open an account is physically present rather than using a photograph or other static image.
“Technology has also been deployed to confirm liveliness checks, and this ensures that still images cannot be used to open accounts,” Okafor said.
The verification process does not, however, depend entirely on automated technology.
“OPay relies on a hybrid of automated verification systems and reviews by KYC analysts in verifying KYC documentation,” he said.
According to him, customer documents are checked against information from the relevant issuing authorities, while biometric verification and liveness checks provide additional layers of authentication.
“KYC analysts also review and verify documents submitted by customers prior to approval. These controls ensure that attempts to circumvent KYC requirements are identified and onboarding of such parties is halted.”
Monitoring millions of transactions
While customer verification takes place at the point of onboarding, compliance does not end when an account is opened. Transactions are continuously assessed for patterns that could indicate fraud, money laundering or other suspicious activity.
Okafor said OPay uses automated monitoring systems configured around a range of potential red flags.
“A combination of automated tools. Monitoring rules are configured based on several red flag scenarios,” he said.
However, technology does not make the final determination in every case. Alerts generated by the systems are reviewed by trained analysts who assess the circumstances surrounding the transactions.
“Alerts generated by the automated tools are reviewed by analysts who have also been trained on the identification of suspicious transactions,” Okafor explained.
Where transactions are considered suspicious, the necessary reports are made and the customer’s risk profile can be reassessed in light of the activity.
The growing volume of digital transactions makes automation particularly important.
“Today, it is impossible for any financial institution to manually monitor transactions,” Okafor said.
“Technology has been deployed to monitor transactions in real time. AML/CFT/CPF and anti-fraud rules have been deployed to ensure automated real-time monitoring.”
He said such systems are designed not only to identify potentially suspicious activity but also to prevent transactions suspected to be associated with fraud and other financial crimes.
An alert does not automatically mean criminal activity
One important distinction in the compliance process, according to Okafor, is the difference between a transaction being flagged and a transaction being established as suspicious.
He cautioned that triggering an alert does not automatically mean that a customer has committed a crime.
“First, I must state that when transactions trigger a compliance alert, it does not immediately imply that the transaction is linked to criminal activity,” he said.
Flagged transactions are subsequently reviewed to determine whether there are grounds for further action.
“Where no suspicions are found, then the alert is closed,” he said.
Where investigators establish grounds to suspect criminal activity, however, the company can reassess the customer’s risk profile and make the required reports.
“However, where transactions are suspected to be linked to criminal activities, then actions taken include a reassessment of the customer profile and also reporting such transactions to all relevant parties as required by regulations and laws.”
Staying ahead of evolving fraud
The challenge for fintech companies is that compliance systems must evolve alongside the threats they are designed to counter.
Fraud patterns can change rapidly, requiring financial institutions to regularly review transaction data and modify their controls.
Okafor said OPay periodically analyses transaction patterns to identify emerging risks and updates its systems accordingly.
“OPay proactively updates compliance systems to evolve in a manner that ensures the continued effectiveness of the controls,” he said.
“Also, transaction patterns are analysed periodically to identify and mitigate any new risks from new trends. Compliance systems and monitoring rules are also reviewed periodically to ensure new emerging threats are mitigated.”
Consumer protection as a compliance tool
For Okafor, compliance also extends beyond identifying financial crime. Protecting customers from losing money in the first place is another important component of the framework.
OPay has introduced several security features aimed at reducing the risk of unauthorised transactions, including controls that require biometric authentication for certain transactions.
“Consumer Protection is key in OPay’s prevention of financial crimes,” Okafor said.
He cited features including the Large Transaction Shield and Night Guard, which require biometric verification before transfers can be completed.
“This ensures only the customers can authenticate withdrawals from their accounts,” he said.
The company also offers an Emergency Lock feature that can stop withdrawals from an account.
For customers who lose a phone or debit card, Okafor said OPay provides USSD options that can be used independently to block an account or card.
“The USSD codes are particularly useful when there is a loss or theft of the customer’s phone or debit card. These USSD codes allow customers to independently stop all transactions without the need to contact OPay.”
Investigating unauthorised transactions
When customers report transactions they did not authorise, Okafor said investigations are conducted in cooperation with the financial institutions that received the funds.
“When customers report unauthorised transactions, investigations are conducted in collaboration with the financial institution where funds were received,” he said.
The objective, he explained, includes attempts to recover money lost through unauthorised transactions.
“Efforts are made to recover funds lost due to unauthorised transactions. Punitive actions are also taken against parties that are the recipients of unauthorised transactions.”
Regulatory engagement
As Nigeria’s financial technology ecosystem develops, fintech companies are also operating under increasing regulatory scrutiny.
Okafor said OPay maintains communication channels with the Central Bank of Nigeria and other regulatory bodies, adding that regulatory engagement is an important part of the company’s approach to compliance.
“OPay has established communication channels with the Central Bank of Nigeria and other regulatory agencies,” he said.
“A cordial and professional relationship exists with the regulators, and the regulators are always open to engagement by operators like OPay.”
He said the company seeks clarification from regulators where necessary and obtains regulatory approval before introducing new products.
“Clarification is always sought from regulators, and regulatory approvals are always obtained before launching new products.”
Compliance before commercial opportunity
One of the more significant changes in the fintech environment is the extent to which compliance considerations are being brought into product development from the beginning.
Okafor said OPay does not wait until a product is ready for launch before assessing its regulatory implications.
“Compliance is part of every new product and service from the ideation stage,” he said.
This approach, according to him, is intended to identify potential conflicts between commercial objectives and regulatory requirements early enough for them to be addressed.
“Conflicts in commercial objectives and compliance requirements are identified early and addressed. This ensures that products, services and operations are designed in a compliant manner with all necessary amendments made by the business teams in line with compliance rules.”
Ultimately, he said, compliance and commercial growth should not be treated as opposing objectives.
“Ultimately, all commercial objectives align with compliance requirements, and this alignment is key to sustained commercial growth.”
Investment in people and technology
Maintaining such systems requires sustained investment, particularly as financial crime becomes increasingly technology-driven.
Okafor said OPay has invested in technology to support its compliance operations and continues to train employees.
“OPay has deployed world-class technology to support the Compliance function. Also, staff are trained on an ongoing basis to ensure that knowledge and skills remain up to date.”
AI and the next compliance challenge
Looking ahead, Okafor expects Nigeria’s fintech industry to face two major challenges: increased regulatory scrutiny and the need to modernise systems for combating financial crime as artificial intelligence becomes more sophisticated.
He said the growing importance of fintech companies as channels for financial transactions would inevitably attract greater attention from government agencies.
“Firstly, with the adoption of Fintechs, we are already experiencing increased regulatory compliance oversight from multiple government establishments,” he said.
“Fintechs must therefore improve regulatory compliance oversight to ensure coverage of regulations of all relevant government agencies.”
According to him, the growing role of fintechs in the financial system means companies should expect more examinations and supervision.
“This is because, as fintechs become the primary channel for financial transactions, oversight by government agencies will increase,” he said.
“Fintechs must therefore be prepared to manage increased examination and supervision from regulatory authorities and other government agencies.”
But regulatory scrutiny is only one side of the challenge.
The rapid development of artificial intelligence is also creating new opportunities for fraudsters, potentially allowing them to generate more convincing identities and manipulate existing safeguards.
Okafor said the industry must therefore modernise its anti-money laundering, counter-terrorism financing and anti-fraud frameworks.
“Also, there is the need for the modernisation of AML/CFT/CPF and anti-fraud measures due to the rapid advancements of AI models,” he said.
“Fintechs must therefore proactively implement measures to mitigate emerging risks from new and emerging technologies.”
For Nigeria’s fintech sector, the message is increasingly clear: growth brings not only more customers and transactions but also greater responsibility. As digital finance becomes more deeply embedded in everyday economic activity, the ability of fintech companies to verify identities, detect suspicious behaviour, protect consumers and respond to emerging technological threats will become an increasingly important measure of the sector’s maturity.