The Central Bank of Nigeria (CBN) has stepped up supervision of terrorism financing risks across banks and other financial institutions in the country.
The move is part of wider efforts to strengthen Nigeria’s anti-money laundering and counter-terrorism financing framework and ensure financial institutions are better equipped to identify suspicious transactions.
Under the intensified supervision, banks and other regulated institutions are expected to strengthen transaction monitoring systems and ensure they comply with requirements relating to anti-money laundering, countering the financing of terrorism and countering proliferation financing.
The CBN is also placing greater emphasis on the implementation of targeted financial sanctions and the reporting of suspicious transactions.
Financial institutions are expected to maintain systems capable of identifying unusual or potentially suspicious financial activities and reporting them to the relevant authorities.
More scrutiny for financial institutions
The increased checks will include risk-based examinations conducted both on-site and off-site.
This approach allows regulators to assess institutions according to the level of risk they face rather than applying exactly the same level of scrutiny to every financial institution.
The CBN’s supervision is expected to focus on whether banks have effective internal controls, customer-monitoring systems and procedures for identifying transactions that could be linked to terrorism financing or other financial crimes.
The regulator’s renewed focus comes as Nigeria continues to strengthen its financial crime prevention measures and improve the ability of its financial system to detect illicit financial flows.
What it means for banks
For banks and other financial institutions, the stronger supervision is likely to increase pressure to ensure their compliance systems are effective and regularly updated.
Institutions that fail to properly monitor transactions or comply with financial sanctions could face regulatory action.
The CBN’s approach also highlights the growing importance of cooperation between financial institutions and regulators in preventing criminals and terrorist organisations from exploiting the formal financial system.
