Money laundering is making illegally obtained money seem legal by moving it through various transactions to hide its source. Money laundering in Nigeria facilitates corruption, tax evasion, funding terrorism, and economic instability. It also frustrates efforts to address these issues, negatively impacting the country's development and reputation.
To address this issue, Nigeria has implemented several anti-money laundering laws and regulations to prevent and prohibit money laundering activities, but their effectiveness has been stunted by weak political will and institutions to enforce them.
Understanding AML requirements is essential for financial institutions because it helps them spot and stop illegal activities quickly. Following these rules not only keeps them on the right side of the law but also protects the financial system, prevents legal issues, and supports global efforts to fight financial crimes.
AML Regulatory Bodies in Nigeria
There are several regulatory bodies responsible for implementing anti-money laundering measures in Nigeria. The primary regulatory agencies include the Central Bank of Nigeria (CBN), the Economic and Financial Crimes Commission (EFCC), and the Nigerian Financial Intelligence Unit (NFIU). The CBN issues guidelines and regulations for financial institutions operating in Nigeria, ensuring compliance with anti-money laundering requirements. The EFCC is Nigeria's primary agency responsible for investigating and prosecuting money laundering, while the NFIU is the central national agency responsible for Anti-Money Laundering, Counter-Terrorist Financing, and Counter-Proliferation financing in Nigeria.
AML Laws and Regulations in Nigeria
The key Nigerian AML laws and regulations include the following:
Money Laundering (Prevention and Prohibition) Act, 2022.
The Terrorism (Prevention and Prohibition) Act, 2022.
The Proceeds of Crime (Recovery and Management) Act, 2022.
Independent Corrupt Practices and Other Related Offenses Commission (ICPC) Act, 2000.
Economic and Financial Crimes Commission (Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction for Designated Non-Financial Businesses and Professions, and Other Related Matters) Regulations, 2022.
The Banks and Other Financial Institutions Act (BOFIA).
Central Bank of Nigeria (CBN) Regulations on Anti-Money Laundering, 2022.
Nigeria Financial Intelligence Unit Act, 2018.
Advance Fee Fraud and Other Related Offenses Act (AFF) 2006.
Economic and Financial Crime Commission Act 2004.
National Drug Law Enforcement Agency (NDLEA) Act.
The CBN Act etc.
AML Requirements in Nigeria
The main anti-money laundering requirements in Nigeria include:
Customer Due Diligence and Know Your Customer (KYC)
Financial institutions and other reporting entities must conduct due diligence (i.e. mandatory Know Your Customer onboarding requirements) to make sure that the identities of people paying for services or using their platforms are known and verifiable. They must also continuously observe the transactions they handle, and fake accounts should not be formed.
Transaction Monitoring and Reporting Obligations
Financial institutions and other reporting entities must effectively monitor all transactions and report suspicious transactions to the Nigerian Financial Intelligence Unit (NFIU) and the Special Control Unit Against Money Laundering (SCUML) within 24 hours of the transaction happening. This obligation applies to transactions that are suspected to be related to money laundering or terrorist financing, regardless of the amount involved.
Record Keeping
Financial institutions and other reporting entities must maintain accurate and complete records of their transactions, including the identity of the parties involved, the amount and type of transaction, and the purpose of the transaction for a minimum of five years following the transaction's completion or the business relationship's termination. Upon request, such records have to be provided to the appropriate regulatory bodies.
Internal Policies and Procedures
The Money Laundering Act mandates Financial Institutions and other reporting entities to develop internal policies and measures against money laundering. These include appointing a compliance officer, conducting employee training, centralizing information, and establishing an internal audit unit. Failure to implement these measures may result in penalties, such as license suspension or fines, varying based on the type of institution.
Risk Assessment
Financial institutions and other reporting entities must conduct regular risk assessments for new products, services and technologies before introducing them to the public in order to identify and mitigate the risks of money laundering and terrorist financing then take the necessary actions to manage and reduce any risks that have been identified.
How Regfyl Can Help You
Regfyl's all-in-one solution streamlines compliance, maintains records, and enforces internal controls.
Using Regfyl's platform, financial institutions can actively improve their ability to spot and report suspicious transactions, ensuring AML compliance and actively contributing to the fight against financial crimes in Nigeria.
Want to see how Regfyl can actively enhance your organization's compliance? Click here to schedule a demo and consult with our experts.
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