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Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Regulations in Nigeria

The Central Bank of Nigeria (CBN) has outlined essential guidelines for financial institutions to implement effective Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) measures. These regulations aim to prevent money laundering and terrorist financing while promoting a secure financial environment.

Customer Due Diligence (CDD)

Customer Due Diligence is a crucial aspect of AML/CFT regulations in Nigeria. It involves detecting, monitoring, and reporting suspicious transactions. The key components of CDD include:

Customer Identification

  • Verifying a customer’s true identity
  • Legitimate purpose for entering or maintaining a business relationship with the OFI

Information Gathering

  • Obtaining sufficient knowledge about the customer through various means, such as:
    • Requesting documentation
    • Consulting public databases

CDD Policies and Procedures

OFIs must have comprehensive CDD policies, procedures, and processes in place to:

  • Assess a customer’s risk profile and update it when necessary
  • Assign personnel responsible for reviewing or approving changes in customer risk profiling
  • Obtain information at account opening (onboarding) and ensure current customer information is maintained
  • Implement enhanced due diligence (EDD) procedures for high-risk customers

Customer Identification and Ascertaining Identity

OFIs must ascertain the identity of individuals using original and valid identification documents, as outlined in Regulation 14 and Schedule II of the AML/CFT Regulations. This includes:

  • Verifying the existence of corporate entities by collecting substantial information, including:
    • Names
    • Addresses
    • Occupations of directors
    • Individual beneficial owners

Sources of Accumulated Funds or Wealth

OFIs must satisfy themselves that a customer’s accumulated funds or wealth appears to be reasonable and consistent with the provided information. This can be achieved through:

  • Obtaining and evaluating more detailed information from the customer
  • Verifying information obtained from other financial institutions or references

Conclusion

In summary, these regulations outline essential guidelines for OFIs in Nigeria to implement effective CDD measures, including identifying customers, gathering information, and verifying sources of accumulated funds or wealth. These requirements aim to prevent money laundering and terrorist financing while promoting a secure financial environment.