What do fintech giants, Kuda, Moniepoint, and PalmPay know that other startups don’t? TechCabal recently reported how Kuda and Moniepoint are expanding their compliance teams to meet CBN’s strict fraud monitoring rules.
Why? Because non-compliance isn’t just a risk—it’s a recipe for running out of business.
For startups and their business stakeholders, this means one thing: ignoring compliance risks means losing everything.
In this article, we’ll explore the essential compliance areas, key regulations, practical steps, and common pitfalls to avoid, with insights from compliance expert Theophilus Oladipo, CCAS, CFCS, CKC and opportunities for professionals looking to work in fintech.
What is Fintech Compliance?
Compliance in fintech isn’t just about following the law—it’s about ensuring that your financial products and services meet the required industry standards and mitigate risks like financial crime, fraud and data breaches.
It’s important to understand that compliance covers a broad spectrum, including:
- Industry Standards (ISO, SWIFT for money transfers)
- Financial Crimes Compliance (anti-money laundering, fraud prevention)
- Data Protection and Privacy Compliance (NDPR, GDPR)
- Licensing and Regulatory Compliance (CBN, SEC)
We asked Theophilus about his take on the scope of compliance for fintech startups; here is what he has to say:
Compliance is quite wide. Inside compliance, you’ll find financial crimes, privacy and information security. Even within that privacy and information security, you’ll find people that specialize only in data protection; find those that specialize in information security. You’ll find tax as well, and a lot of other items that could fall inside the compliance bucket. — Theophilus Oladipo, CCAS, CFCS, CKC.
He further emphasised that compliance involves establishing internal policies and controls to mitigate legal and operational risks.
This requires building cross-functional teams that understand the implications of non-compliance, can identify potential risks and threats and promptly escalate issues when necessary.
Now, let’s explore the key regulatory areas that Nigerian and African fintech startups must prioritise as you and your team work toward building a compliant and robust operation.
Key Regulatory Areas Fintech Startups Must Understand
1. Financial Crimes Compliance
Anti-money laundering (AML) regulations are critical for Nigerian fintech companies. The Nigerian Financial Intelligence Unit (NFIU) enforces AML laws and failure to comply can result in severe penalties and damage to business credibility.
We asked Theophilus for trends in that direction and he highlights below the current state of Africa’s fintech landscape, which explains why compliance has become a top priority for regulators in Nigeria and other African countries.
A notable trend is the increased supervision of financial crimes in Africa, driven by some major markets being placed on the Financial Action Task Force (FATF) gray list. This list identifies countries with deficiencies in meeting international compliance standards. While many African nations, like Nigeria and Kenya, align their laws with global standards-such as the Money Laundering and Proceeds of Crime Acts-they often include slight local variations. Recently, countries like Nigeria, Kenya, and South Africa have ramped up efforts to address gaps in their systems to improve global perceptions and strengthen compliance. — Theophilus Oladipo, CCAS, CFCS, CKC.
Key Points for Action:
- Conduct regular reporting to the Nigerian Financial Intelligence Unit (NFIU).
- Set up tech systems and human processes to detect suspicious transactions early and prevent them.
- Comply with the CBN Anti-Money Laundering and Combating the Financing of Terrorism guidelines.
2. Data Protection and Privacy Laws (NDPR)
In Nigeria, the Nigeria Data Protection Regulation (NDPR) governs how fintech companies handle customer data. The NDPR imposes strict rules for storing and processing personal data and penalties for data breaches.
An example close to home is how the NDPR fined Fidelity Bank ₦555.8 million in 2024 for a customer data breach, proving that data protection and privacy laws are a significant concern in Nigeria and worldwide.
With tighter regulations and substantial monetary penalties for defaulting, it’s no surprise that TechCabal reports that Moniepoint, Opay, and PalmPay are now doubling down on their data collection and compliance processes.
Key Points for Action:
- Be transparent with customers about their data usage and consent processes. That would mean having a privacy policy, cookie policy and other data policies accessible to customers during onboarding and other interactions with your product.
- Implement strong data encryption and access control policies.
- Conduct regular data audits and ensure your team is trained on NDPR requirements.
3. Licensing and Regulatory Compliance (CBN, SEC, NFIU)
In Nigeria, the Central Bank of Nigeria (CBN) is the main regulatory body overseeing the banking and lending sectors. If your fintech product involves money transfers or lending, obtaining the necessary licenses from the CBN is crucial. Failure to comply can result in fines or the revocation of your license.
The Securities and Exchange Commission (SEC) now plays a significant role in regulating crypto-related fintech companies. As Theophilus says below, offering unlicensed global services doesn’t work:
In case you missed it, Techpoint Africa recently broke down how the SEC’s classification of crypto as a security could change the game for crypto businesses in Nigeria. From licensing requirements to stricter compliance expectations,
One major issue I’ve noticed is limited awareness of the legal risks tied to offering unlicensed services. There’s often heavy reliance on partnerships without fully considering how this affects compliance risk in different countries. For instance, if you want to provide a wallet service, you need to ensure you either have the required licenses or partner with a licensed institution. But even then, you need to assess your partner-do they have their own license, or are they relying on someone else’s? Also, check whether such partnerships are even allowed or if regulatory approvals are needed in those regions. — Theophilus
Key Points for Action:
- Ensure you have the proper licenses before launching any financial product.
- Work closely with a compliance officer to stay updated on changing regulations.
- Regularly check for updates from the CBN and the SEC on any new fintech regulations.
4. Industry Standards (ISO, SWIFT)
Fintechs offering international money transfer services must adhere to industry standards, such as SWIFT for secure global money transfers and ISO 27001 for information security management.
The ISO 27001 standard is a big deal in today’s IT world. Honestly, if you’re a financial infrastructure service provider without it, no one’s really going to take you seriously. It’s all about giving that assurance that you’re handling information security at the highest level-in your processes, systems, how you deal with data, and all that. It’s a serious thing, really. — Theophilus
Key Points for Action:
- If you handle international payments, ensure your system supports SWIFT messaging standards.
- ISO 27001 certification is a key indicator of information security, particularly for fintech companies operating in data-sensitive sectors such as banking and payments.
How to Stay Ahead with Proactive Compliance
Africa’s fintech sector has grown rapidly in recent years, introducing innovative solutions like mobile money, digital lending, and crypto-based platforms. While this growth has improved financial access, it has also raised regulatory concerns around fraud, compliance, and consumer protection.
As a result, according to Theophilus, regulators across the continent are increasingly engaging with the fintech space.
Regulators are starting to wake up in Africa. Of course, they’ve been on, but they are getting a lot more interested in understanding how the fintech space works, a lot better.”—Theophilus
Theophilus emphasizes that fintech founders and product managers should consider compliance early—during the product ideation phase. Proactive compliance can save time and resources later by ensuring that your product is designed with regulations in mind.
Proactive Steps for Fintech Startups:
- Involve Compliance Professionals Early: Bring in compliance consultants or in-house officers to review your product concept and flow.
- Build a Compliance-First Culture: From the outset, start creating policies for data protection, anti-money laundering, and customer privacy.
- Stay Informed: Follow local regulatory bodies, such as the CBN and SEC, for updates on new regulations. Build relationships with key stakeholders within the regulatory system to stay up-to-date with the latest updates.
Common Compliance Mistakes and How to Avoid Them
Many fintech startups make critical mistakes with compliance, says Theophilus, often because founders and even product managers have limited awareness of legal risks.
He explained that non-compliance can lead to serious consequences, such as license revocation, financial penalties, reputational damage, and even removing your app from publishing platforms like the App Store and Google Play Store.
Theophilus also shares the most common pitfalls he has seen among fintech startups in Nigeria and Kenya where he currently operates professionally.
1. Waiting for Issues to Arise
Proactive monitoring isn’t just a suggestion—it’s a necessity. Relying on reactive measures invites risks that can be easily avoided by staying ahead of potential problems.
2. Blind Trust in Third Parties
Don’t assume that your third-party affiliates and partners have everything under control. Failing to check for clarity, alignment and compliance, especially with marketing affiliates and merchant partners, leaves your fintech vulnerable to regulatory risks.
3. Assuming Trust Without Proof
Just because your partner works with you doesn’t mean they trust your compliance program. Without clear audits, monitoring programs and proof of adherence to federal and state regulations, you’re undermining the partnership. Build confidence by showing your compliance efforts in action.
4. Delaying Product Disclosures
Are you holding back on key product disclosures? Regulators will not hesitate to penalise you. Any delay in sharing critical information can result in hefty fines and a damaged reputation. Ensure timely and accurate disclosures to stay ahead of regulations.
How to Avoid These Mistakes:
- Set up a compliance monitoring system that flags regulatory changes.
- Schedule regular compliance audits.
- Work with a lawyer who specialises in risk, compliance and fintech regulations.
How to Handle Compliance on a Budget
For many early-stage companies, the compliance process can seem expensive. However, Theophilus recommends three ways to access affordable compliance services, especially for early-stage startups:
- Leverage Compliance Software: Numerous tools, such as AML detection software and data protection management tools, can help you stay compliant.
- Consult with Freelancers or Smaller Firms: Instead of hiring large, expensive firms, you can work with experienced consultants at a lower cost.
- Offer Equity or Stock Options: As Theophilus suggests, offering equity or stock options can be an incentive to attract compliance professionals in the early stages when funds are tight.
Rising Demand in Fintech Compliance: What You Should Know
Fintech compliance is gaining serious momentum—on social media, in boardrooms, and within regulatory circles. Legal professionals, fraud monitors, and fintech insiders are weighing in on the rising demand for compliance skills and the urgent need for strategic regulation.
Here’s what’s fueling the buzz:
- Regulations: With the CBN tightening its grip, compliance is no longer optional for fintechs.
- Career Growth: There’s a surge in demand for compliance talent—ideal for legal and risk professionals looking to level up.
- Fraud Risks: Combating fraud isn’t just a tech problem; it’s a compliance strategy.
Opportunities are opening up across board:
- Legal teams can deepen expertise in AML, KYC, and data protection laws.
- Fraud analysts can explore smarter tools and tactics for detection.
- Fintech professionals can build credibility with certifications and masterclasses in compliance.
This can be said to be one of the reasons fintech giants in Africa are poaching compliance professionals from other fintech companies and commercial banks.
Compliance isn’t something you want to leave to chance. Get the knowledge, skills, and tools you need to build it right from the start.
Explore our Fintech Compliance Course designed for fintech teams and professionals ready to learn, grow, and scale products that users and regulators trust.