CBN Warns Banks and Fintechs: Strengthen Sanctions Compliance or Face Penalties

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The Central Bank of Nigeria (CBN) has issued a firm warning to banks, payment service providers, and fintech companies, urging them to strengthen their sanctions compliance frameworks or risk facing penalties.

In a letter signed by Amonia Opusunju on behalf of the CBN’s Compliance Department, the regulatory body reminded financial institutions of their obligation to adhere to both local and international sanctions lists.

These include the United Nations Consolidated Sanctions List and the Nigerian Sanctions List, which is aligned with the Terrorism (Prevention and Prohibition) Act 2022. The CBN also highlighted the importance of complying with guidelines on financial sanctions aimed at curbing terrorism and its financing.

The central bank stressed that financial institutions must stay vigilant, ensuring their systems are regularly updated to identify and block transactions involving individuals or entities listed under these sanctions.

“Financial Institutions are required to maintain a robust and dynamic sanctions compliance framework,” the letter stated, adding that institutions should be ready to respond to updates across applicable sanctions lists.

This includes conducting real-time screenings of customers, transactions, and beneficial owners to ensure no illicit activity is allowed to slip through.

Furthermore, the CBN made it clear that any suspicious activities must be reported to the Nigerian Financial Intelligence Unit (NFIU) and, when necessary, directly to the bank. Institutions failing to meet these compliance obligations could face enforcement actions or regulatory penalties, the letter warned.

Read: CBN Orders Resignation of Bank Directors with Non-Performing Loans

This call for stronger compliance comes at a time when global attention on financial crimes, particularly money laundering and terrorist financing, is intensifying.

The CBN’s directive signals Nigeria’s commitment to aligning with international financial standards, including those set by the Financial Action Task Force (FATF), as the country seeks to bolster its standing in global anti-financial crime efforts.

For fintechs and emerging players in Nigeria’s fast-evolving financial landscape, the CBN’s message is clear: integrating effective compliance measures into technology and customer onboarding processes is no longer optional.

The bank concluded by reminding all financial institutions that continued compliance with the law is non-negotiable, urging them to act swiftly to ensure they meet these updated requirements.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.