Nigeria's eNaira stablecoin becomes focus of new IMF report | CryptoSlate

The International Monetary Fund (IMF) warns Nigeria about the possible compromise of its central bank digital currency, the eNaira, and its usage for illicit transactions such as money laundering and terrorism financing.

The warning contained in a new report by the IMF following the conclusion of its

2021 Article IV Consultation with the West African country.

According to the IMF, the risks are imminent and could entail lawsuits. And this is despite the many

benefits of the eNaira such as financial inclusion and the potential for easy cross-border fund transfers.

It, therefore, recommended some solutions, stressing the need for the Central Bank of Nigeria to quickly address the perceived problems.

Part of the report by the IMF said:

“Prospective expansion of eNaira use to cross-border fund transfers and agency bank networks may cause new money-laundering/financing of terrorism risks… There are financial integrity risks that are mitigated by using a tiered identity verification system and applying more stringent controls to relatively less verified users.

“There are cyber security risks associated with the eNaira. Unforeseen legal issues, including for private law aspects of its operations (e.g., the exact nature of legal relationship between the wallet providers

and CBDC holders), may subject eNaira to litigation and operational risks.

“While preventive measures and the planned AML/CFT regulations for eNaira intermediaries are welcome,

a money laundering/terrorist financing risk assessment of domestic and cross-border uses of eNaira and

the adoption and implementation of the regulation along with putting in place risk-sensitive mitigation measures should be a priority.”

Recall that in October 2021, Nigeria became the first African country to launch a central bank digital currency and one of the first in the world. Since then, other countries are considering doing same.

In December 2021, Governor of the Bank of Tanzania Florens Luoga disclosed that plans for the East African country’s digital currency are underway.

By Taiyelolu A

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