CBN Tightens Scrutiny Of Banks Over Terrorism Financing Risks

CBN Tightens Scrutiny Of Banks Over Terrorism Financing Risks

The Central Bank of Nigeria CBN has intensified its supervision of banks and other financial institutions as part of efforts to prevent the country’s financial system from being exploited to finance terrorism, money laundering and other illicit activities. The apex bank has elevated terrorism financing supervision to a current supervisory priority, signalling increased scrutiny of how financial institutions identify, monitor and report transactions that could be linked to illicit activities. The development was disclosed by the CBN in a statement signed by its Acting Director, Corporate Communications and Investor Relations Department, Hakama Sidi-Ali. According to the regulator, the enhanced supervision will focus on four major areas: terrorism financing risk management, transaction monitoring, implementation of targeted financial sanctions and the reporting of suspicious transactions associated with terrorism financing. The CBN said the move forms part of its broader commitment to protecting Nigeria’s financial system from abuse by illicit actors and strengthening the resilience of financial institutions against money laundering, terrorism financing and proliferation financing risks. Under the new supervisory focus, banks and other regulated institutions are expected to maintain effective systems for identifying unusual or suspicious financial activities and ensuring compliance with existing anti-money laundering and counter-terrorism financing requirements.The CBN said it would continue to adopt a risk-based supervisory approach, combining on-site examinations with off-site monitoring to assess the effectiveness of financial institutions’ anti-money laundering, counter-terrorism financing and counter-proliferation financing controls. The latest action builds on other measures introduced by the CBN this year to strengthen Nigeria’s financial safeguards. In June, the apex bank directed banks, payment service banks and other regulated financial institutions to implement updated sanctions relating to terrorism and terrorism financing. The June directive followed fresh designations by the Nigeria Sanctions Committee and the United States Treasury’s Office of Foreign Assets Control, requiring affected institutions to take appropriate action against designated individuals and entities. The CBN has also been strengthening its broader anti-money laundering framework, including the use of automated systems and enhanced monitoring tools designed to identify and manage financial crime risks. The regulator said the heightened focus on terrorism financing also supports Nigeria’s domestic and international cooperation on counter-terrorism financing, counter-proliferation financing and wider efforts to protect the integrity of the financial system. The latest development comes amid continued efforts by Nigerian authorities to ensure that banks and other financial institutions do not become channels through which funds are moved to support terrorism or other criminal activities. For financial institutions, the CBN’s renewed scrutiny is expected to place greater emphasis on compliance, customer due diligence, transaction monitoring and timely reporting of suspicious activities. The apex bank said further supervisory engagements would be undertaken where necessary as it continues efforts to maintain a safe, sound and resilient Nigerian financial system.