Financial Crime World

Nigeria’s Regulatory Landscape Shifts: Open Banking, Data Protection, and Compliance in 2023

As we move into 2024, Nigeria’s business environment is set for significant changes due to various regulatory and legal developments that took place in the previous year. These transformative milestones underscore the importance of enterprise-wide compliance reviews and planning. Below, we explore some of the key regulatory shifts that business leaders should be aware of in the Nigerian corporate landscape.

Amendments to Laws for MSMEs

  • Business Facilitation (Miscellaneous Provisions) Act 2023: Enacted on 14th February 2023, this law amended 21 business-related laws to streamline processes and promote ease of doing business.
  • Changes to Corporate Affairs Commission (CAC) application processes: The Act brings full automation to application processes with the Corporate Affairs Commission, making it easier for businesses to register and operate in Nigeria.

Financial Services Sector: Open Banking and New Regulations

  • Open Banking: In March 2023, the Central Bank of Nigeria (CBN) introduced operational guidelines for Open Banking, signaling a significant shift in the country’s financial landscape.

    • Secure data sharing between financial institutions
    • Collaboration to create innovative financial products
    • Improved access to financial services
    • Stimulation of new business models supported by open financial data

  • SEC’s Regulation Incubation Program (RI): Beginning in April 2023, the Securities and Exchange Commission (SEC) launched a one-year pilot initiative, the Regulation Incubation Program, which allows the SEC to supervise new Capital Market service models for Fintech firms.

Corporate Governance and Financial Reporting

  • Financial Reporting Council of Nigeria (FRCN) (Amendment) Act 2023: Effective from 3rd May 2023, this act aims to promote transparency, accountability, and ethical conduct. Key changes include:
    • New financial reporting regulations
    • Improved standards for financial reporting
    • Enhanced corporate governance

Fiscal Framework and Tax Regulations

  • Nigerian Finance Act 2023: Signed into law on 5th May 2023, this act introduces significant changes to the Nigerian fiscal framework and focuses on ensuring fair and transparent tax regulations, stimulating economic activity, and enhancing tax collection and administration.

Consumer Protection, Data Protection, and Competition Regulations

  • Federal Competition and Consumer Protection Commission (FCCPC) and Anti-Trust Scrutiny: With the mutual execution of a Consent Order in December 2023, the FCCPC imposed a fine of $110 million on British American Tobacco following an investigation into alleged anti-competitive conduct and FCCPA violations. This enforcement action underscores the importance of observing and adhering to competition regulations.
  • Nigeria Data Protection Act 2023: Effective in 2023, this act introduces strict data protection regulations and penalties. Establishment of the Nigeria Data Protection Commission serves as a crucial mechanism for enforcing the law and ensuring businesses comply with data privacy standards.

Virtual Asset Service Providers (VASPs)

  • Regulatory Changes for Virtual Asset Service Providers (VASPs): In December 2023, the Central Bank of Nigeria (CBN) reversed its two-year restriction on virtual asset transactions, signaling a shift towards more nuanced regulatory frameworks for VASPs. New guidelines include account opening, enhanced KYC requirements, operational and transactional limits, and reporting obligations for transaction activities.

As businesses in Nigeria, particularly in the financial services sector, anticipate increased regulatory activities in 2024, staying informed, embracing proactive compliance strategies, and aligning with evolving regulatory expectations are essential elements for sustainable growth and success.