Anti Money Laundering (AML) in Nigeria

Although Nigeria has taken many initiatives to enhance its Anti-money laundering (AML) remains a significant issue. Advance fee fraud was first made famous by Nigerian criminals, but, in recent years, natives of several African countries and others from all around the globe have begun to commit advance fee fraud. Internationally, this kind of fraud is known as "Four-One-Nine" (419 refers to the Nigerian criminal code's fraud section). While there are numerous variants, the fundamental purpose of 419 fraud is to deceive victims into paying an advance charge by convincing them that they would get a substantial advantage if they do so. Some victims have lost money, kidnapped, or murdered because of these "get rich quick" scams. 419 scammers have attacked businesses and individuals worldwide via the Internet, and they continue to do so. The Economic and Financial Crimes Commission (EFCC) has attempted to prevent 419-related cybercrimes, although only a few achievements have been reported as a consequence of its efforts.  

AML Regulations in Nigeria  

The key Nigerian AML laws and regulations are as follows:  

• The Money Laundering Act.  
• 2012 Terrorism Prevention Act (as amended).  
• Regulations on Terrorism Prevention (Freezing of International Terrorist Funds and Other Matters), 2013.  
• The Economic and Financial Crime Commission (Establishment) Act of 2004 established the Economic and Financial Crime Commission.  
• The Banks and Other Financial Institutions Act (BOFIA) of 1991 regulates financial institutions.  
• AML/CFT Regulations of the CBN, 2013.  
• The CBN Act of 2017  
• CBN Risk-Based Supervision Framework for AML/CFT, 2011.  
• CBN Circulars and other regulatory messages  
• The Drug Enforcement Administration's National Drug Law Enforcement Act (1990).  

Nigeria implemented three pieces of legislation in December 2002 after being placed on the NCCT list and facing a FATF recommendation for countermeasures, which are:  

• A reformation to the 1995 Money Laundering Act that broadens the law's application to include all consequences of crime
• A modification to the Banking and Other Financial Institutions (BOFI) Act of 1991 that extends the law's scope to stock brokerage businesses and foreign currency exchange services  

The Economic and Financial Crimes Commission Act establishes the EFCC and coordinates AML prosecutions and sharing of information, gives the Central Bank of Nigeria (CBN) wider power to deny bank licenses, and enables the CBN to freeze suspicious accounts.   

Who Are Nigeria's AML Regulatory Authorities? 

Several regulatory bodies monitor a range of activities across sectors to guarantee compliance with AML laws:

Commission on Economic and Financial Crimes (EFCC) 

Nigeria's main law enforcement organisation for combating financial and economic crimes is the EFCC. It was founded in 2003 and looks into and prosecutes cases involving money laundering, tax evasion, cybercrime, fraud, and corruption. To combat transnational financial crimes, the EFCC collaborates closely with international agencies like the Financial Action Task Force (FATF) and Interpol. Recovering embezzled public funds and guaranteeing accountability in the public and private sectors are also part of its mandate. 

The Financial Intelligence Unit of Nigeria (NFIU) 

The NFIU is an independent division of the EFCC that is vital to the fight against terrorist financing and money laundering. It is in charge of spotting and examining questionable financial transactions. 

Financial intelligence reports are gathered, processed, and distributed by the NFIU to law enforcement, regulatory bodies, and international anti-money laundering organisations like the Egmont Group. 

Nigeria's Central Bank (CBN) 

All financial institutions falling under its purview, including commercial banks, microfinance organisations, and payment service providers, are subject to the Central Bank of Nigeria's enforcement of AML compliance. The CBN mandates that these organisations carry out risk-based assessments, submit regular AML reports, and put strong Know Your Customer (KYC) protocols in place. Additionally, it guarantees that financial institutions have internal mechanisms in place to identify and report any suspicious activity. 

The Securities and Exchange Commission (SEC) 

SEC oversees anti-money laundering compliance in Nigeria's capital markets, making sure that brokers, asset managers, and securities companies all closely follow AML/CFT regulations. 

Mandatory customer due diligence, ongoing transaction monitoring, and timely reporting of questionable activity are all included in this. In order to confirm compliance and punish non-compliant entities, the SEC also regularly audits and inspects businesses. 

Special Control Unit Against Money Laundering (SCUML)

Since these industries are frequently used for money laundering, SCUML is entrusted with keeping an eye on Designated Non-Financial Businesses and Professions (DNFBPs), which include real estate agents, attorneys, accountants, jewellers, and casinos. SCUML makes sure that these companies follow AML rules, which include reporting transactions over predetermined thresholds, maintaining accurate records, and adhering to KYC requirements. 

What Are Nigeria's AML Requirements?

To stay in compliance, companies and financial institutions need to meet certain AML requirements:

Customer Due Diligence (CDD): Using official identification documents, such as utility bills, passports, driver's licenses, or Bank Verification Numbers (BVNs), to identify and validate customers is essential. This makes sure that organisations are aware of who they are interacting with in order to stop fraudulent or unlawful activity. 

Ongoing Transaction Monitoring: Monitoring client accounts continuously in order to identify and flag odd or suspicious activity is what is done for this requirement. It entails keeping an eye out for significant, odd, or frequent transactions that diverge from a client's typical conduct. It also entails spotting trends that might point to money laundering or other illegal activity. 

Suspicious Transaction Reporting (STR): Submitting STRs to the Nigerian Financial Intelligence Unit (NFIU) as soon as possible after spotting questionable activity is another requirement. These reports are essential for allowing authorities to look into possible financial crimes. This is because they highlight transactions or patterns of behaviour that raise red flags. One example is money being transferred to high-risk jurisdictions or unusual cash deposits. 

Record-keeping Requirements: To support audits, investigations, or regulatory reviews, thorough transaction records must be kept for at least five years. Account statements, communications, transaction information, and customer identification documents should all be included in these records to guarantee complete traceability. This is done since that it becomes necessary for legal or compliance reasons. 

AML Risk Assessments: Applying risk-based methodologies to pinpoint organizational weaknesses is what we do for this requirement. In order to reduce exposure to money laundering or terrorism financing, this entails assessing goods, services, and clientele that might present greater risks, developing risk profiles, and proactively filling in any gaps with strong controls.

Enhanced Due Diligence (EDD) is applicable to high-risk organisations, including foreign corporations, politically exposed persons (PEPs), and non-governmental organisations (NGOs). 

Internal controls and employee training: Ensuring that staff members receive frequent training to guarantee they are well-versed in AML laws, warning signs, and appropriate reporting protocols is crucial. 

Nigerian Sector-Specific AML Requirements 

Depending on their risk profiles and legal needs, different sectors in Nigeria have different AML compliance requirements: 

Financial Institutions & Banking 

In order to prevent fraud and guarantee transparency in financial transactions, banks must: 

• Adhere to the BVN (Bank Verification Number) system for customer identification. 
• Send monthly Anti-Money Laundering (AML) reports outlining large cash flows, suspicious transactions, and compliance measures to the Nigerian Financial Intelligence Unit (NFIU) and the Central Bank of Nigeria (CBN).

Operators of Fintech and Mobile Money 

Fintech companies must: 

• Establish tiered Know Your Customer (KYC) processes based on transaction limits, guaranteeing lower thresholds for basic accounts and more thorough checks for higher-value transactions as a result of the growing digitisation of the market. 
• Comply with the supervision of the Nigeria Deposit Insurance Corporation (NDIC) and the CBN in order to safeguard client funds, guarantee adherence to financial regulations, and reduce the possibility of fraud or misuse. 

Providers of Virtual Asset Services (VASPs) 

Cryptocurrency and other emerging technologies require: 

• Registration with regulatory agencies, such as the National Information Technology Development Agency (NITDA) for compliance with data privacy laws and the Securities and Exchange Commission (SEC) for compliance with investment laws.
• Strict KYC procedures for every transaction, guaranteeing user identity verification to stop illegal activities like fraud, money laundering, and financing terrorism. 

Real estate, solicitors, casinos, and other DNFBPs 

In order to comply with AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism) regulations and maintain transparency in their business practices, these Designated Non-Financial Businesses and Professions (DNFBPs) must:

• Register with the Special Control Unit Against Money Laundering (SCUML). 
• To stop the abuse of cash-intensive industries for money laundering or other financial crimes, keep an eye on cash transactions over ₦5 million and report them to the NFIU.

The Nigerian AML Framework's Risk-Based Approach and Ongoing Monitoring 

Ongoing customer activity monitoring is necessary to identify red flags in a strong AML framework. Among the crucial elements are: 

• Grouping clients according to risk levels. 
• Monitoring transactional trends. 
• To reduce vulnerabilities, yearly AML/CFT risk self-assessments (RSATs) are conducted.

In Nigeria, how are suspicious transactions reported?

The following channels are used to report suspicious activity:

• Suspicious Transaction Reports (STRs): These must be sent to the NFIU within twenty-four hours of the suspicion being raised. In the past year, more than 10,000 STRs have been submitted. 
• goAML System Integration: With more than 15,000 active users nationwide, this online platform enables rapid and secure report submission. 
• CTRs, or cash transaction reports: The thresholds are ₦10 million for businesses and ₦5 million for individuals. Over 20,000 CTRs were reported in a variety of sectors in 2022.

Nigerian AML Developments (2024–2025) 

Nigeria is actively working with international organisations and enhancing its AML systems in the future. Among the major developments are: 

• Integration with the FATF Digital Transformation Roadmap. 
• Modifications to the CBN Fintech Regulatory Sandbox. 
• Updated DNFBP SCUML onboarding procedures. 
• Improved collaborations with the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) and INTERPOL. 

FATF Status and The Latest FATF Statement  

On February 24, 2023, the Financial Action Task Force (FATF), an international organization focused on combating money laundering and terrorism financing, placed South Africa and Nigeria on its grey list. This move by FATF is essentially a warning to investors and the global community, signaling concerns about the adequacy of these countries' AML and CFT regulations, which could potentially enable money laundering and terrorist financing activities.  

As a result of this development, the Rand's value in South Africa fell, reaching its lowest level against the US dollar since November, and the Johannesburg Stock Exchange experienced a week-long decline of almost 3%. It's important to note that the addition of South Africa and Nigeria to the "grey list" was not a surprise for many investors because it had already been taken into account in their investment plans months earlier.  

The Nigerian Financial Intelligence Unit's (NFIU) Chief Executive Officer, Modibbo Tukur, highlighted the country's engagement with FATF in February 2023. Following this interaction, the FATF acknowledged the advancements made by Nigeria; as a result, a consensus was reached on a list of 15 specific actions that would make up the action plan for the nation. Compared to the 84 deficiencies initially noted in Nigeria's evaluation report, which was published in August 2021, this represents a sizable reduction.  

Despite the Nigerian government's efforts to combat financial crimes, the country remains a major drug transit hub and a key center for financial and cybercrime. Nigeria has recently made a concentrated effort to overcome some issues in enforcing its anti-money laundering and counter-terrorist financing framework.  

Is Nigeria Compliant with the FATF Grey List in 2025? 

Nigeria had to fix flaws in its AML/CFT framework after FATF placed the country under heightened scrutiny in 2023 (often referred to as the "grey list"). Nigeria has since enacted significant reforms, such as increased supervisory oversight and better beneficial ownership transparency. Challenges associated with staying on the FATF grey list include diminished investor confidence and heightened scrutiny of foreign banking relationships. Significant strides have been made, though, as FATF has recognised Nigeria's dedication to completing its action plan. 

Bribery and Corruption in Nigeria  

In Nigeria, corruption seriously hinders industry: enterprises are extremely likely to meet bribes and other corrupt acts. Corruption is a concern in all institutions but is particularly prevalent in the oil business. The Criminal Code and the Corrupt Practices and Other Related Offenses Act are the primary laws that criminalize corruption. Accepting or donating gifts and facilitation fees is unlawful, and people can face up to seven years in jail. Despite a powerful legal foundation, Nigeria's anti-corruption law is poorly enforced: gifts, bribes, and facilitation payments are widespread.   

Based on the assessment of AML and CFT measures conducted during the on-site visit to the Federal Republic of Nigeria from September 2019 to October 2019, the primary predicate crimes for ML in Nigeria encompass a range of activities. These include pervasive issues like corruption, various forms of fraud (notably cybercrime such as advance fee fraud), drug trafficking, maritime offenses, armed robbery, arms trafficking, kidnapping, oil bunkering, and human trafficking. Of particular concern is the endemic and systemic nature of corruption, which permeates all sectors of Nigeria's economy, presenting both a standalone threat and facilitating other illicit activities.  

It's important to note that most of these criminal activities have domestic origins, with the proceeds being laundered both within the country and abroad. While there are instances of funds from criminal activities conducted outside Nigeria being laundered into the country, the bulk of the proceeds originates within Nigeria and is subsequently transferred overseas. Despite these international elements, the focus remains on the significant scale of illicit financial flows within Nigeria itself.  

Significant Nigerian Money Laundering Cases (2010–2025)

What Are the Penalties for AML Non-Compliance in Nigeria?

Nigeria enforces stringent penalties for AML violations, including:

These penalties highlight the critical need for businesses to prioritize compliance to avoid financial and reputational consequences.

Anti-Money Laundering Solutions for Nigeria   

Nigeria has struggled for a long time with pervasive corruption, which has affected many industries. Financial institutions must be cautious and proactive in ensuring compliance with AML regulations because the challenge of corruption extends to AML efforts. Institutions can use Sanction Scanner's advanced features to address these issues and navigate Nigeria's complicated AML landscape. Our AML solutions enable businesses to fulfill their commitments successfully while gaining insightful knowledge about Nigeria's changing AML landscape. To see how Sanction Scanner's solutions can support AML compliance efforts in the face of Nigeria's particular challenges, such as corruption and its inclusion on the FATF grey list, contact us to request a demonstration.