To encourage compliance with Anti Money Laundering, combating the financing of Terrorism laws and regulations, and protect financial institutions from being used for financial crimes, the Central Bank of Nigeria issued a new regulation in 2022 that is titled "Central Bank of Nigeria (Anti Money Laundering, Combating the Financing of Terrorism, and Countering Proliferation Financing of Weapons of Mass Destruction In Financial Institutions) Regulations." This article will address some of the frequently asked questions concerning the new regulation.
- WHAT IS THE AIM OF THE GUIDELINES?
The aim of the guidelines are provided for in SECTION1(a-c)1 of the Regulations, they are:
- To provide Anti-Money Laundering, Combating the Financing of Terrorism, and Countering Proliferation Financing ("AML, CFT, and CPF») compliance guidelines for Financial Institutions under the regulatory purview of the Central Bank of Nigeria ("CBN*) as required by relevant provisions of the Money Laundering (Prevention and Prohibition) Act (MLPPA), 2022, the Terrorism (Prevention and Prohibition) Act (TPPA), 2022, and other relevant laws and regulations;
- To enable the CBN to diligently enforce AML, CFT, and CPF measures and ensure effective compliance by Financial Institutions; and
- To provide guidance on Know-Your-Customer ("KYC) measures to assist Financial Institutions in the implementation of these Regulations.
- WHAT ARE THE OBJECTIVE OF THE GUIDELINES?
The Objectives of the guidelines are2 as listed below:
i. To Guide promoters in complying with Anti Money Laundering, Combating the Financing of Terrorism, and Countering Proliferation Financing requirements in license applications for banks and other financial institutions.
ii. Ensure that proceeds of crimes are not used to establish financial institutions.
iii. Ensure that criminals do not own or control financial institutions in Nigeria.
iv. Identify and verify the beneficial owners of financial institutions.
v. Ensure that promoters of financial institutions put in place appropriate and effective measures to mitigate ML/TF/PF risks.
- WHAT IS THE SCOPE OF THE GUIDELINE?
These Guidelines cover the minimum Anti Money Laundering, Combating the Financing of Terrorism, and Countering Proliferation Financing requirements for license applications for banks and other financial institutions under the regulatory purview of the Central Bank of Nigeria.
- WHO SHOULD ADHERE TO THE GUIDELINES?
The Guidelines must be adhered to by any individual or group (the Applicant) that submits an application to the CBN for a license to perform banking services or any other financial services subject to CBN regulation.
- AT WHAT STAGE ARE YOU EXPECTED TO COMPLY WITH THE GUIDELINES?
As compliance with the Guidelines is now a requirement for the issuance of a license, applicants will be asked to provide evidence of conformity with the Guidelines as part of the license application process.
- WHAT ARE THE REQUIREMENTS UNDER THE GUIDELINES FOR THE GRANT OF A CBN LICENCE?
In addition to adhering to other licensing requirements contained in the Guidelines by the CBN, The CBN'S FINANCIAL POLICY AND REGULATION DEPARTMENT3 gave requirements that promoters of financial institutions must submit in their application for approval-in-principle. They are:
- A completed and personally signed beneficial owners declaration Form
- A notarized statement of net worth for all beneficial owners
- A completed and personally signed Politically Exposed Persons (PEP) Declaration Form
- A comprehensive AML/CFT/CPF compliance policy which shall, at a minimum, cover
- Compliance structure, including designation and status of a compliance officer;
- Employee screening and monitoring.
- Customer identification and verification.
- Customer due diligence measures;
- ML/TF/PF Risk Assessment;
- AML/CFT/CPF training of the board, senior management, and other employees;
- Independent assessment of the AML/CFT/CPF Programme;
- Suspicious transaction monitoring, reporting, and record keeping
- WHAT ARE THE REQUIREMENTS FOR BENEFICIAL OWNERS UNDER THE GUIDELINES FOR THE GRANT OF A CBN LICENCE?
The following information/documents must be provided by financial institution promoters in order to identify and confirm the beneficial owners:
- The shareholding structure of the institution for which the license is sought.
- Where a shareholder or prospective shareholder is a legal person or legal entity, relevant incorporation documents detailing the current shareholding structure and directorship/trustee/fiduciary information.
- Curriculum vitae of the Beneficial Owners.
- Completed Beneficial Ownership Declaration Form. (Appendix 1).
- CAN THE CBN REFUSE THE ISSUANCE OF A LICENCE BASED ON THE GUIDELINES?
The CBN may refuse4 an application for a license or a party to an application, such as a beneficial owner, shareholder, director, or senior management staff, based on the grounds provided in the Guidelines.
- WHAT ARE THE GROUNDS FOR REFUSING THE ISSUANCE OF A LICENCE OR A PARTY WITHIN THE GUIDELINES?
The CBN may refuse an application for any of its licenses or refuse a party to an application if:
- The Applicant fails to demonstrate an understanding of the ML/TF/PF risks inherent in the business;
- The inability of the applicant to address the AML/CFT/CPF licensing requirements satisfactorily, especially during the capital verification exercise;
- Misrepresentation of facts and false declaration in the Applicant's application;
- Criminal record of a party to the application indicating conviction or any other offense that constitutes a financial crime;
- The Applicant has an Opaque ownership structure;
- Inability to address observed deficiencies in licensing application within specified timeline.
- Discovery that a party to the application is on the sanctions lists;
- United Nations Security Council ("UNSC");
- United States Office of Foreign Assets Control ("OFAC");
- Her Majesty's Treasury, United Kingdom ("HMT");
- European Union ("EU");
- French Ministry of Economy, Finance and Industry (MINEFI);
- Nigerian sanctions list; and
- Any other sanctions list as may be advised from time to time
- Any other condition that the CBN may specify.
- WHERE CAN I OBTAIN THE BENEFICIAL OWNERS DECLARATION FORM?
The CBN provided a template of the beneficial owner's declaration form in the Guidelines.5
Footnotes
1 https://www.cbn.gov.ng/Out/2022/FPRD/AML%20CIRCULAR%20AND%20REGULATIONS%20MERGED.pdf
2 https://www.cbn.gov.ng/Out/2022/FPRD/Circular_and_AML_Licensing_Guideline.pdf
3 https://www.cbn.gov.ng/Documents/FPRGuidelines.asp
4 https://www.cbn.gov.ng/Out/2022/FPRD/Circular_and_AML_Licensing_Guideline.pdf
5 Contained in Appendix 1
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
