Financial Crime World

CBN Unveils New Rules for Customer Due Diligence

The Central Bank of Nigeria (CBN) has introduced new guidelines for Customer Due Diligence (CDD), aimed at enhancing the country’s fight against money laundering and terrorist financing.

New Requirements for Financial Institutions

Under the new rules, all financial institutions in Nigeria are required to conduct CDD on their customers, including:

  • Identifying and verifying the identity of individuals and businesses
  • Prohibiting the opening of anonymous accounts
  • Ensuring that customer information is accessible by the Head Office (HOC)

Enhanced Customer Identification and Verification

According to the guidelines, financial institutions must ensure that they have ascertained the identity of their customers and maintain records of this information. Where there are doubts about the veracity or adequacy of previously obtained customer identification and verification data, enhanced CDD measures must be performed.

Identification and Verification of Corporate Entities

The new rules also provide for the identification and verification of corporate entities, including:

  • Collection of substantial information such as:
    • Names
    • Addresses
    • Occupations of directors
    • Individuals who are the ultimate beneficial owners of the entity

Reasonable Measures to Determine Customer Intentions

In addition, financial institutions are required to take reasonable measures to determine whether an individual customer is acting for or on behalf of a third party. They must also satisfy themselves that customers’ accumulated funds or wealth appears to be reasonable and consistent with the information provided.

Emphasis on Meeting Minimum Prescribed Requirements

The CBN’s guidelines emphasize the importance of ensuring that customer identification and verification standards and policies meet minimum prescribed requirements, while also considering the assessment of inherent risk justifies the application of additional identification requirements to some categories of customers.

Purpose of the New Rules

The new rules are designed to help financial institutions in Nigeria comply with anti-money laundering and counter-terrorist financing regulations, and to prevent the misuse of financial systems for illicit purposes.