Financial Crime World

Banking Regulators Crack Down on Customer Due Diligence

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Nigeria’s banking regulators have issued fresh guidelines to ensure that financial institutions comply with stringent customer due diligence (CDD) requirements, aimed at preventing financial crimes such as money laundering and terrorist financing.

Prohibiting Anonymous Accounts

Under the new rules, online financial institutions (OFIs) are prohibited from establishing anonymous accounts for customers. If OFIs provide services such as account numbering or coding that shield the identity of a customer, they must ensure that they have properly identified the customer and made this information available to the relevant authorities.

Enhanced CDD for High-Risk Customers

OFIs are required to perform enhanced CDD measures where there are doubts about the veracity or adequacy of previously obtained customer identification and verification data. This includes subjecting customers whose identities have not been ascertained in accordance with anti-money laundering and combating the financing of terrorism (AML/CFT) regulations to appropriate customer identification measures.

Customer Identification and Ascertaining Identity

  • The AML/CFT Regulations specify the original documents that may be inspected to ascertain the identity of individuals and corporate entities.
  • OFIs must have a clear CDD policy that outlines when a customer’s identity must be ascertained, how it should be done, and which original identification documents should be used.

Additional Identification Requirements

OFIs are permitted to apply additional identification requirements to certain categories of customers based on an assessment of inherent risk. The Central Bank of Nigeria (CBN) has also listed specific identity cards issued by government agencies that can be accepted as proof of identity.

Corporate Customers and Beneficial Ownership

  • Identifying a corporate customer or entity may involve collecting substantial information, including the names, addresses, and occupations of its directors and ultimate beneficial owners.
  • OFIs must take reasonable measures to obtain this information, which could include requesting it directly from the entity or consulting public databases.

Determining Occupation and Identity of Signatories

  • OFIs must ensure that they obtain the principal occupation of a person signing a signature card for corporate accounts, rather than just their title in the entity.
  • They must also ascertain the identity of every person who signs a signature card.

Sources of Accumulated Funds or Wealth

  • OFIs are required to satisfy themselves that customers’ accumulated funds or wealth appears reasonable and consistent with the information provided.
  • Doubts about the origin of these funds or wealth should be satisfied before proceeding with a relationship or permitting transactions to occur.

The new guidelines aim to strengthen Nigeria’s anti-money laundering and combating the financing of terrorism regime, ensuring that financial institutions play a critical role in preventing illicit activities and maintaining public trust.