By David Akinmola
The Central Bank of Nigeria (CBN) has intensified its surveillance of banks and other financial institutions over terrorism financing risks, elevating the issue to a current supervisory priority as regulators step up efforts to prevent illicit actors from exploiting the financial system.
The apex bank said its heightened scrutiny would focus on terrorism financing risk management, transaction monitoring, implementation of targeted financial sanctions and the reporting of suspicious transactions linked to terrorism financing.
The development represents a further tightening of Nigeria’s anti-money laundering and counter-terrorism financing regime, with financial institutions expected to strengthen internal controls and ensure that potentially illicit transactions are detected and reported promptly.
In a statement signed by the Acting Director, Corporate Communications and Investor Relations Department, Hakama Sidi-Ali, the CBN said terrorism financing supervision had been elevated as part of its ongoing efforts to protect the Nigerian financial system from abuse by illicit actors.
The regulator said it would continue to deploy a risk-based supervisory approach involving both on-site and off-site engagements to assess the effectiveness of anti-money laundering, counter-financing of terrorism and counter-proliferation financing controls across the financial sector.
The latest action comes barely three months after the CBN directed banks, payment service banks and other regulated financial institutions to freeze accounts, assets and transactions linked to six individuals and four Bureau De Change operators designated for terrorism and terrorism-financing activities.
The June directive followed sanctions issued by the Nigeria Sanctions Committee (NIGSAC) and the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC), with the CBN directing regulated institutions to implement the updated Nigeria Sanctions List immediately.
The CBN’s latest position signals that its supervisory approach is moving beyond one-off sanctions enforcement towards closer and continuing scrutiny of how financial institutions identify, monitor and report terrorism-financing risks.
Industry analysts say the heightened supervision is likely to increase compliance demands on banks, particularly as digital payments, electronic transfers and other technology-driven channels continue to expand the volume and speed of financial transactions.
For banks and other financial institutions, the increased focus means stronger customer due diligence, more effective transaction-monitoring systems and faster escalation of suspicious activities will become increasingly important components of regulatory compliance.
The CBN had earlier in March issued baseline standards for automated anti-money laundering, combating the financing of terrorism and counter-proliferation financing solutions, requiring financial institutions to deploy systems capable of detecting and reporting suspicious transactions in real time.
Under the standards, deposit money banks have an 18-month implementation period, while other financial institutions have 24 months to achieve full compliance, with institutions required to submit implementation roadmaps to the CBN’s Compliance Department.
The latest supervisory emphasis therefore adds further urgency to ongoing investments by banks in compliance technology, customer identification and transaction-monitoring infrastructure.
Beyond domestic enforcement, the CBN said the intensified supervision would support Nigeria’s domestic and international cooperation on counter-terrorism financing, counter-proliferation financing and financial integrity.
The move is also expected to reinforce the credibility of Nigeria’s financial system as authorities seek to ensure that banks and other regulated institutions are not used as channels for financing terrorism or other illicit activities.
With the CBN warning that further supervisory engagements would be undertaken where necessary, banks are expected to face closer scrutiny of their AML/CFT controls and their ability to identify and respond to emerging financial crime risks.
