CBN Gives Banks 18 Months to Comply with New AML Standards

The Central Bank of Nigeria has set an 18-month deadline for Deposit Money Banks to fully comply with newly introduced baseline standards for automated anti-money laundering solutions.

In a circular dated March 10, the apex bank also stated that other financial institutions will have 24 months from the same date to meet the requirements.

The timeline extends the earlier 12-month compliance period initially proposed when the guidelines were first introduced.

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The circular, titled Issuance of Baseline Standards for Automated Anti-Money Laundering Solution for Financial Institutions in Nigeria, was signed by the Director of the Banking Supervision Department, Akinwunmi Olubukola, and Olubunmi Ayodele-Oni on behalf of the Director of the Compliance Department.

It was addressed to banks, mobile money operators, international money transfer operators, payment service providers, and other financial institutions.

“The implementation of these guidelines shall start from the date of issuance, while full compliance shall be 18 months for Deposit Money Banks and 24 months for other financial institutions from the date of issuance,” the circular stated.

Financial institutions are also required to submit implementation roadmaps to their compliance departments within three months of the issuance of the guidelines.

Under the framework, all financial institutions supervised by the CBN must operate automated anti-money laundering systems. The complexity of these systems will depend on each institution’s size, risk profile, business model, transaction volume and operational complexity.

The standards are anchored on the CBN Act 2007 and the Banks and Other Financial Institutions Act 2020 and are intended to complement existing regulatory requirements.

According to the apex bank, manual monitoring processes are no longer sufficient as financial services become increasingly digitised and complex. Institutions are therefore required to deploy systems capable of supporting risk-based customer due diligence, detecting suspicious transactions promptly and facilitating accurate reporting to regulators.

The CBN noted that the standards were introduced to strengthen financial system stability and integrity, covering automated solutions for anti-money laundering, counter-terrorism financing and counter-proliferation financing.

“The Baseline Standards provide a framework for implementing automated solutions that strengthen the detection and reporting of suspicious transactions in real time and enhance compliance with applicable AML/CFT/CPF laws and regulations,” the bank stated.

The framework aligns with recommendations from the Financial Action Task Force and includes requirements covering transaction monitoring, customer due diligence, know-your-customer and know-your-business processes, sanctions screening, politically exposed persons monitoring, reporting systems, case management, audit trails, data protection and vendor management.

High-risk sectors are required to adopt enhanced monitoring systems that integrate with customer identification and risk profiling processes.

The guidelines also encourage the use of artificial intelligence, machine learning and advanced analytics to improve financial crime detection, provided that such technologies undergo independent validation, accuracy checks and fairness assessments.

The CBN further directed financial institutions to maintain tamper-proof audit trails, implement role-based access controls and secure authentication systems, while ensuring compliance with the Nigeria Data Protection Act.

Institutions using third-party technology providers must also establish vendor management policies covering procurement, system implementation, support services, incident response and exit strategies.

The apex bank warned that failure to comply with the standards could attract remedial directives, administrative sanctions and penalties under existing financial regulations.

“All stakeholders are required to ensure strict compliance with the guidelines and all other regulations as the CBN continues to monitor developments and issue further guidance where necessary,” the bank added.