Dr. Monday O. Ubani
The Point of Sale (POS) system has, without question, revolutionized financial transactions across Nigeria, particularly in rural and underserved communities.
With limited access to formal banking structures, POS agents have filled a crucial gap, empowering everyday citizens with ease of access to deposits, withdrawals, and transfers.
However, this innovation is now being misused in ways that threaten our national security, financial system, and judicial integrity. Recently, I was approached by a respected Judge of the High Court in the Eastern Region of Nigeria, who expressed grave concern about the alarming rate at which POS machines are being exploited by criminals, particularly kidnappers and fraud syndicates. According to His Lordship, several cases involving untraceable financial transactions running into tens of millions of naira have come before his court. In most of these cases, the inability to trace the flow of funds or the identities of POS operators and beneficiaries has frustrated litigants, prosecutors, and even the court itself.
It was this judge’s concern, and his earnest suggestion, that prompted me to author this article as a means of sensitizing the Central Bank of Nigeria (CBN), policymakers, and security agencies about the urgent need to regulate this increasingly abused financial ecosystem.
The convenience of POS transactions is now being weaponized. In one harrowing incident, the family of a kidnapped victim was forced to pay over ₦90 million in ransom via POS transactions, yet the criminal trail vanished into thin air. Without proper checks and balances, these machines have become unregulated financial conduits, operating outside the reach of law enforcement or traceability frameworks.
A particular and even more disturbing dimension is the unchecked withdrawal of money transferred to POS account holders, often without requiring any form of identification from the ultimate beneficiaries of these funds. The Hon. Judge recounted multiple cases where funds were disbursed by POS agents to individuals, sometimes acting under false identities without any verifiable documentation. In the event of a crime, both the origin of the funds and the identity of the receiver become impossible to establish. This, in effect, renders the justice system impotent.
There is no doubt that the current legal and regulatory environment is grossly ill-equipped to address this emerging threat. Many POS agents are not properly vetted, often operating without clear identification, fixed business address, or adherence to Know Your Customer (KYC) protocols. There is also no existing law that holds POS agents accountable for failing to obtain documentation from recipients of disbursed funds.
This loophole is what allows criminals to channel massive funds through POS terminals, unrecorded, unmonitored, and untraceable.
To safeguard our justice system and national financial integrity, decisive and urgent regulatory actions are needed:
1. Immediate CBN Intervention:
The Central Bank of Nigeria must urgently issue and enforce strict regulations mandating registration, licensing, and operational procedures for all POS operators. This should include mandatory transaction limits, geo-tagging of POS devices, real-time monitoring, and compliance checks.
2. BVN/NIN Linkage for POS Operators:
Every POS terminal and the bank accounts linked to them must be associated with the operator’s BVN and NIN. This will provide a direct line of accountability and aid law enforcement in tracing suspicious activity.
3. Identification Before Withdrawal of Transferred Funds:
A critical regulatory provision must now mandate that any individual seeking to withdraw transferred funds through a POS terminal must present verifiable identification, such as a NIN slip, Voter’s Card, Driver’s License, or International Passport. POS agents must retain a copy (digital or photocopied) of this identification along with a photograph of the individual, to be made available upon lawful request by law enforcement.
4. Accountability of POS Operators for Disbursed Funds:
POS operators who fail to obtain and retain this verifiable identity documentation must be held criminally and civilly liable for aiding and abetting the crime committed by either the transferor or the beneficiary. This will ensure stricter compliance and deter the indiscriminate release of funds to anonymous individuals.
Furthermore, POS agents should be prohibited from receiving funds into their personal or business accounts on behalf of customers unless the end-user is physically present and has complied with mandatory KYC requirements. This will close the backdoor currently used by criminal networks to move illicit funds.
5. Integration with Security Infrastructure:
Law enforcement agencies (EFCC, DSS, Police) and the Financial Intelligence Unit (NFIU) must be empowered with secure access to a centralized POS transaction database. This integration will allow early detection of abnormal patterns, suspicious transactions, and help in preempting criminal activity.
6. Geo-Fencing and AI Surveillance:
The CBN and fintech stakeholders must deploy AI-backed monitoring and geo-fencing technologies to track the usage of POS machines, especially in locations known for recurring criminal activity. High-volume agents in rural areas should receive heightened regulatory scrutiny.
7. Public Education and Community Vigilance:
The public must be educated on the proper and safe use of POS services. Communities should be sensitized to demand identification when engaging in POS-based financial transfers and to report suspicious agents or transactions to appropriate authorities.
A Wake-Up Call to Policy Makers
The situation we face today is unsustainable. We must not wait until the criminal misuse of POS becomes a full-blown national emergency. The Hon. Judge’s courtroom experiences reflect a painful reality: our justice system is paralyzed where there is no verifiable data trail. The law cannot function in the absence of proof, and neither can justice be served in a system that enables criminal anonymity.
This is, therefore, a direct and urgent call to the CBN, the National Assembly, financial institutions, the Financial Intelligence Unit, and indeed all well-meaning Nigerians: Let us close this gaping hole in our financial and security architecture. Let us restore integrity, transparency, and accountability to one of the most widely used and increasingly abused financial systems in Nigeria today.
Ubani, SAN is a
Legal Practitioner and Public Affairs Analyst
