WHAT ARE THE
Money laundering and terrorism financing laws in Nigeria?
In Nigeria, money laundering and terrorism financing are serious offences and are governed by the Money Laundering (Prevention and Prohibition) Act, 2022 and the Terrorism (Prevention and Prohibition) Act, 2022. These laws are enforced by agencies such as the Economic and Financial Crimes Commission (EFCC) and the Nigerian Financial Intelligence Unit (NFIU) to combat financial crimes and enhance compliance with international anti-money laundering (AML) and counter-terrorism financing (CTF) standards.
WHAT ARE THE
Key obligations reporting entities have under the laws of Nigeria?
The key obligations under the AML/CTF laws in Nigeria include:
- Customer Due Diligence (CDD) – Reporting entities, including banks, financial institutions, real estate firms, casinos, and designated non-financial businesses and professions (DNFBPs), must implement risk-based CDD measures. This involves verifying customer identities, identifying beneficial owners, and assessing risks associated with each customer.
- Reporting Suspicious Transactions – Reporting entities are required to submit Suspicious Transaction Reports (STRs) to the Nigerian Financial Intelligence Unit (NFIU) when they detect transactions that may be linked to money laundering, terrorism financing, or other financial crimes.
- Record-Keeping – Entities must maintain records of transactions, customer identification data, and supporting documents for at least five years after the completion of the transaction. These records must be accessible for regulatory review.
- Compliance Programs – Covered entities must establish internal AML/CFT compliance programs, including the development of policies, procedures, and controls to prevent financial crimes. Regular staff training and independent audits are essential to ensure ongoing compliance.
- Politically Exposed Persons (PEPs) – Entities must conduct enhanced due diligence on PEPs, requiring additional scrutiny of transactions, ongoing monitoring, and obtaining senior management approval before establishing or maintaining a business relationship.
WHO ARE THE
ML/TF regulators in Nigeria and what functions do they perform?
In Nigeria, the regulators responsible for overseeing and enforcing anti-money laundering (AML) and counter-terrorism financing (CTF) measures are primarily:
- Nigerian Financial Intelligence Unit (NFIU) – The NFIU is the central authority responsible for receiving, analysing, and disseminating financial intelligence related to money laundering, terrorism financing, and other financial crimes. It operates independently but is domiciled within the Economic and Financial Crimes Commission (EFCC).
- Economic and Financial Crimes Commission (EFCC) – The EFCC is the principal law enforcement agency tasked with investigating and prosecuting money laundering and financial crimes. It works closely with the NFIU and other agencies to enforce AML/CTF regulations.
- Central Bank of Nigeria (CBN) – The CBN regulates banks and financial institutions to ensure compliance with AML/CTF regulations. It issues guidelines and monitors the implementation of risk-based AML measures within the banking sector.
- Securities and Exchange Commission (SEC) – The SEC oversees capital markets and ensures that investment firms and market participants comply with AML/CTF regulations.
- Corporate Affairs Commission (CAC) – The CAC is responsible for company registration and transparency in corporate structures. It assists in identifying beneficial ownership to prevent the misuse of corporate entities for money laundering.
- National Insurance Commission (NAICOM) – NAICOM supervises the insurance sector to ensure compliance with AML/CTF regulations.
Nigeria actively collaborates with international bodies such as the Financial Action Task Force (FATF) and the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) to strengthen its AML/CTF framework.
WHAT ARE THE
Industry sectors subject to ML/TF regulations?
The regulated industries and sectors in Nigeria subject to AML and CTF regulations include, but are not limited to:
Nigeria's AML/CTF regulations apply to both financial and designated non-financial businesses and professions (DNFBPs), ensuring broad coverage to prevent illicit financial activities.
WHAT ARE THE
Penalties for non-compliance with AML/CTF laws?
The penalties for non-compliance with AML/CTF laws in Nigeria can be severe and vary depending on the specific offence committed. Some of the key penalties include:
- Administrative Sanctions – Nigerian Financial Intelligence Unit (NFIU) and other regulators can impose administrative penalties on individuals and entities that fail to comply with AML/CTF regulations. These may include monetary fines, suspension of licenses, and restrictions on business operations.
- Criminal Penalties – Individuals or entities convicted of money laundering or terrorism financing can face substantial fines. The Money Laundering (Prevention and Prohibition) Act, 2022 prescribes fines that can be as high as ₦10 million for individuals and ₦25 million or more for corporate entities, depending on the nature of the offence.
- Imprisonment – Individuals found guilty of money laundering offences can face a minimum of seven years in prison, while terrorism financing offences may carry even harsher penalties, including life imprisonment in severe cases.
- Asset Forfeiture – Authorities can seize and forfeit assets linked to illicit financial activities. This may include bank accounts, real estate, vehicles, and other valuable assets found to be proceeds of crime.
Nigeria enforces strict penalties to ensure compliance and deter financial crimes, with enforcement carried out by agencies such as the Economic and Financial Crimes Commission (EFCC) and the Central Bank of Nigeria (CBN).
WHAT ARE THE
Largest fines for non-compliance with AML/CTF laws?
Nigerian regulators have demonstrated their commitment to enforcing AML/CTF laws, imposing significant fines on financial institutions and other entities for non-compliance. Some of the largest fines include:
- Stanbic IBTC Bank – In 2021, Stanbic IBTC Bank, a subsidiary of Standard Bank Group, was fined ₦200 million by the Central Bank of Nigeria (CBN) for failing to comply with AML regulations and not properly reporting suspicious transactions.
- Access Bank – In 2018, Access Bank was fined ₦500 million for violations related to AML/CTF compliance, including weaknesses in customer due diligence and transaction monitoring processes.
- First Bank of Nigeria – In 2022, First Bank was penalised ₦150 million by the CBN for failure to comply with regulatory directives on reporting suspicious transactions and implementing adequate AML controls.
- Zenith Bank – The Economic and Financial Crimes Commission (EFCC) imposed a fine of ₦250 million on Zenith Bank for inadequate compliance with AML reporting requirements and failure to detect and report suspicious transactions linked to fraudulent activities.
The Central Bank of Nigeria (CBN), the Nigerian Financial Intelligence Unit (NFIU), and the Economic and Financial Crimes Commission (EFCC) continue to monitor and enforce AML/CTF compliance, imposing strict penalties for violations.