How AI and RegTech Are Transforming Compliance for Nigerian Startups – Expert Insight from Kayode Opeyemi
As Nigeria’s fintech industry matures, startups are experiencing increasing regulatory scrutiny from agencies like the Central Bank of Nigeria (CBN) and the Nigerian Financial Intelligence Unit (NFIU). According to fintech and risk expert Kayode Opeyemi, the once loosely regulated space has become subject to the same rigorous standards imposed on traditional banks, particularly around anti-money laundering (AML), terrorism financing, and consumer protection. This shift reflects the sector’s growth and the rising volume of financial transactions managed by fintechs. Startups must now embed proactive compliance strategies to stay competitive and compliant in a fast-evolving regulatory environment.
Many fast-growing startups make the mistake of scaling operations without investing in adequate compliance infrastructure. Opeyemi highlights that weak Know Your Customer (KYC) procedures, undertrained staff, and inconsistent monitoring often lead to lapses in suspicious transaction reporting (STR). He referenced 2024 sanctions against major players like Monie point and Opay as a wake-up call. Treating compliance as a box-ticking exercise, rather than a core strategic pillar, can halt a startup’s growth. A solid tone from leadership, robust systems, and staff training are essential to avoid the reputational and financial risks of noncompliance.
To navigate overlapping and sometimes conflicting rules from agencies like the CBN, SEC, and NFIU, startups are increasingly turning to Regulatory Technology (RegTech). Opeyemi explains that tools like modular reporting and automated reconciliation help simplify compliance across jurisdictions, while AI is being trained to flag suspicious transactions, monitor Key Risk Indicators (KRIs), and even pre-populate STRs. However, he warns against over-reliance on automation. Transparency, human validation, and governance must remain central, especially in sensitive areas like Politically Exposed Person (PEP) checks and dual-reporting requirements.
AI-powered KYC tools are improving onboarding by reconciling fragmented identity systems like BVN and NIN, with services like Smile ID leading the charge. However, Opeyemi stresses that these technologies are only as effective as the underlying data infrastructure. Local innovation is gaining ground in areas like mobile KYC, micro-AML services, and agency network monitoring—especially crucial in Nigeria’s cash-heavy economy. To maximize impact, Nigeria must continue consolidating identity systems and improving access to reliable databases, enabling AI and RegTech to function more effectively.
A significant barrier to RegTech adoption is the outdated view of compliance as a cost center rather than a value driver. Opeyemi draws a parallel between compliance systems and car brakes—tools that enable faster, safer growth. He notes that investors and banking partners increasingly see robust compliance as a sign of operational maturity and long-term viability. Startups that embed compliance from inception, invest in governance, and view regulators as allies stand to gain a competitive edge in fundraising and market trust. However, challenges remain, particularly around data sovereignty, local expertise, and aligning foreign-hosted tools with Nigeria’s data protection laws
Source: Punch