Financial Crime World

Nigerian Central Bank Issues Guidance Note on AML/CFT Regulations and ML/TF Risks

The Central Bank of Nigeria (CBN) has issued a new Guidance Note to Other Financial Institutions (OFIs) in Nigeria, aimed at assisting them in complying with Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations.

Strengthening Nigeria’s Financial System

The Guidance Note, published in April 2023, comes as part of recent efforts by the CBN to strengthen Nigeria’s financial system and mitigate money laundering and terrorism financing risks. OFIs are expected to:

  • Review, monitor, and mitigate identified risks
  • Use more stringent tools as necessary
  • Update the risk assessment regularly

Compliance with this Guidance Note is not a new regulatory requirement but rather a minimum guide for OFIs on identifying and assessing ML/TF risks according to CBN AML/CFT Regulations, 2013 (as amended).

Key Components of AML/CFT Compliance

The Guidance Note covers several aspects of AML/CFT compliance:

  1. Risk Management and Assessment
  2. Customer Due Diligence (CDD)
  3. Higher Risk Customers
  4. Transaction Reporting
  5. Monitoring and Internal Controls
  6. Return Rendition, Maintenance of Records, and Sanctions

Developing an AML/CFT Program

OFIs must develop an AML/CFT program based on their size and complexity of operations, including:

  • Establishing a Risk Management function and ML/TF risk assessment system
  • Identifying specific types or categories of products and clients as high risk
  • Implementing a screening mechanism for PEPs and other high-risk customers
  • Maintaining proper identification and verification of customers

Training and Procedures for Employees

Another essential component is:

  • Having Enhanced Due Diligence (EDD) procedures in place
  • Providing adequate training for all employees
  • Covering institution’s AML/CFT Business Risk Assessment, their AML/CFT policy,
  • Procedures for recognizing and addressing potential instances of money laundering or terrorist financing
  • Employees’ obligations under the CBN AML/CFT Regulations.

Implementing Effective Transaction Monitoring and Reporting

Additionally, OFIs must:

  • Have an internal system for detecting and reporting unusual and suspicious activities
  • Implement specific monitoring systems for terrorism financing
  • Maintain a system for monitoring unusual and suspicious activity on a group-wide basis from branches and subsidiaries.

In summary, the Nigerian Central Bank’s Guidance Note provides a comprehensive framework assisting OFIs in complying with the CBN AML/CFT Regulations, 2013 (as amended), while meeting the CBN’s governance and control expectations.