CBN tightens scrutiny of banks over terrorism financing risks

The Central Bank of Nigeria (CBN) has elevated terrorism financing risk to a current supervisory priority, signalling tighter scrutiny of financial institutions as regulators intensify efforts to prevent the banking system from being exploited by illicit actors.

The apex bank said its enhanced supervisory focus would cover terrorism financing risk management, transaction monitoring, implementation of targeted financial sanctions and the reporting of suspicious transactions linked to terrorism financing.

The move forms part of the CBN’s ongoing efforts to strengthen the resilience of Nigeria’s financial system against money laundering, terrorism financing and proliferation financing risks.

Read also: Why CBN is pushing to ring-fence banks from non-banking risks

In a statement signed by Hakama Sidi-Ali, acting director, Corporate Communications and Investor Relations Department, on Tuesday, the CBN said it would continue to apply a risk-based supervisory approach in monitoring financial institutions’ compliance with anti-money laundering and counter-terrorism financing requirements.

The approach will include both on-site and off-site supervisory engagements to assess the effectiveness of controls across the financial sector, in line with existing legal and regulatory obligations.

“The Central Bank of Nigeria has elevated terrorism financing supervision to a current supervisory priority, as part of its ongoing commitment to protecting the Nigerian financial system from abuse by illicit actors,” the bank said.

The CBN said the supervisory focus also supports Nigeria’s domestic and international cooperation on counter-terrorism financing, counter-proliferation financing and broader financial integrity efforts.

It added that further supervisory engagements would be undertaken where necessary as it continues to strengthen safeguards around the financial system.

The development comes as Nigerian financial regulators and institutions face increasing pressure to ensure that the country’s financial system does not provide channels for the movement or concealment of funds linked to terrorism and other illicit activities.

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