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Nigerian Financial Institutions Face Increased Scrutiny Over Money Laundering and Terrorist Financing Compliance

New Regulations Mandate Enhanced Monitoring of Transactions, Reporting, and Risk Assessment to Combat Illicit Activities

Lagos, Nigeria - In a bid to combat money laundering and terrorist financing (ML/TF), the Nigerian government has issued new regulations requiring financial institutions to implement robust Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) compliance programs.

Overview of the Regulations

According to industry sources, the new regulations aim to strengthen the country’s AML/CFT framework by:

Enhancing transaction monitoring
Improving reporting requirements
Conducting regular risk assessments

The move is expected to significantly impact Nigerian financial institutions, which are now required to establish a dedicated AML/CFT compliance function.

Key Requirements

OFAC Licenses

Financial institutions must obtain OFAC licenses for transactions with sanctioned entities or individuals. The licenses will be granted upon satisfactory review of the institution’s compliance program and risk assessment.

Reporting Requirements

Institutions must report suspicious transactions to the Financial Intelligence Unit (FIU) within 24 hours. The reports must include detailed information about the transaction, including:

Parties involved
Amount transacted

Risk Assessment

Financial institutions are required to conduct regular risk assessments to identify potential ML/TF risks and develop strategies to mitigate them.

Internal Controls

Institutions must establish internal controls to prevent fraudulent transactions and ensure compliance with AML/CFT regulations.

Expanded Examination Overview

The Central Bank of Nigeria (CBN) has launched an expanded examination program to assess the effectiveness of financial institutions’ AML/CFT compliance programs. The program will focus on identifying weaknesses and providing guidance on best practices for compliance.

Industry Impact

Industry experts predict that the new regulations will significantly increase the cost of doing business in Nigeria, particularly for small and medium-sized enterprises (SMEs). However, they also recognize the importance of combating ML/TF and the need for financial institutions to prioritize AML/CFT compliance.

Quotes from Industry Experts

“The new regulations are a welcome development,” said Olamide Adediran, CEO of Lagos-based bank. “They demonstrate the government’s commitment to fighting corruption and money laundering. We will work closely with our customers to ensure that we meet the new requirements and maintain our reputation as a trusted financial institution.”

“Nigeria’s Financial Sector Faces Increased Scrutiny Over AML/CFT Compliance”
“CBN Launches Expanded Examination Program to Assess AML/CFT Compliance”
“Financial Institutions Warn of Increased Costs Amidst New Regulations”