The Central Bank of Nigeria (CBN) has issued a new AML/CFT sanctions regime. The regime outlines tougher sanctions against financial institutions and top officials in case of money laundering infraction.
The new circular, “CBN Anti-Money Laundering and Combating the Financing of Terrorism (administrative sanctions) Regulations, 2018”, outlines 48 required AML/CFT actions for banks and other financial institutions. The required actions include but are not limited to reviewing/updating AML/CFT policies and procedures at least every three years, supervising and ensuring effective implementation of AML/CFT programme and communicating AML/CFT agendas of the financial institutions to employees.
If a financial institution fails to comply with 31 out of the 48 listed requirements, the financial institution, as well as directors and senior management, will be sanctioned. Minimum fines range from N500,000 to N1.2 million on board members or senior management and N1 million to N20 million on deposit money banks.
For example, if a deposit money bank fails to review/update AML/CFT policies and procedures at least every three years, a minimum penalty of
- N750,000 is placed on the Executive Compliance Officer in the first instance and N750,000 for each year that the contravention continues
- N500,000 is placed on the Chief Compliance Officer in the first instance and N500,000 for each year the contravention continues
- N5 million on the bank in the first instance and N1 million for each year that the contravention continues.
These administrative sanctions differ between deposit money banks and other financial institutions.
The new regime aims to ensure Nigeria’s compliance with the Financial Actions Task Force’s (FATF) recommendation 35 which indicates the need for effective, proportionate and dissuasive sanctions to those that fail to comply to AML/CFT requirements. It also emphasizes that sanctions be placed on financial institutions, designated non-financial business or profession (DNFBP) and their top officials. This circular also comes after a recommendation by the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) 2007 Mutual Evaluation for Nigeria to review their AML/CFT sanctions regime and make them proportionate and dissuasive.