CBN issues guidance to mitigate money laundering in financial service sector

Written by on April 29, 2022

The Central Bank of Nigeria (CBN) has developed guidance on anti-money laundering/combating the financing of terrorism (AML/CFT) for other financial institutions (OFIs).

In a circular signed by Chibuzo Efobi, director, financial policy and regulation department, this is to assist the sub-sector in the identification, assessment, as well as mitigation of money laundering and terrorist financing (ML/TF) risks in their operations.

These risks may arise from customers, product and services, business practices or delivery methods and jurisdictions or geographical presence.

The CBN said in carrying out its supervisory activities, it observed that OFIs have uneven challenges in the implementation of effective risk-based approach to AML/CFT programme that meets the standard of regulatory requirements.

The application of the Guidance Note is expected to assist the institutions take appropriate measures to review, monitor and mitigate the identified risk. OFIs could use more stringent tools to identify and assess ML/TF risks in their institutions. However, irrespective of the method adopted, the risk assessment should be updated regularly, the CBN said.

According to the CBN the determination of criminals and criminal organizations to use other financial institutions (OFIs) to launder funds and finance terrorist activities poses threats to the financial system globally. “This threat continues to be a source of concern to the Central Bank of Nigeria,” the note stated.

“OFIs understand their business better and thus, are best placed to identify and determine the inherent risks their business faces from money laundering (ML) and terrorism financing (TF). They are therefore expected to develop appropriate strategies to manage, mitigate and control these risks,” the CBN said in the note.

The CBN explained that the Guidance Note does not constitute secondary regulation or new regulatory requirement. It is intended to assist OFIs to comply with measures contained in the CBN AML/CFT Regulations, 2013 (as amended) and other relevant AML/CFT laws.

It aims to further guide OFIs to meet the CBN’s governance and control expectations. It should be noted that the Guidance Note does not override any legal or regulatory requirements. In the event of any discrepancy between the Guidance Note and relevant AML/CFT laws and regulations, the provisions of the latter will apply.

“OFIs should develop and administer an AML/CFT programme that is commensurate with their size, complexity of operations and the requirements of extant AML/CFT Laws and Regulations in Nigeria,” the CBN said in the guidance note.

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