The need to strengthen anti-money laundering compliance was introduced to the Nigerian financial world in the 1980s when Nigeria lost about USD100 billion to money launderers.

With the consistent increase in money laundering and cybercrimes, it has become critical for governments and financial service institutions to create strategies and processes to ensure anti-money laundering compliance and safeguard their organisations.

Globally, the most recognised method to prevent money laundering and combat the financing of terrorism is by implementing policies that prevent the sneaking and reintegration of illicitly gotten assets to the economy.

Different countries have their respective anti-money laundering regulation to ensure that every monetary institution guards against money-related crimes.

Anti-Money Laundering and Combating the Financing of Terrorism Rules in Nigeria

In 2018, The Central Bank of Nigeria (CBN) issued a new set of penalties for organisations that go against its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) guidelines.

Now, in addition to financial service institution sanctions, key officials would also be fined for 31 of the 48 money laundering infractions. 

Each of the 31 infractions would attract a fine ranging from N500,000 to N1.2 million on chief compliance officers, the internal auditor, or other officials and penalties ranging from N1 million to N20 million on the offending bank. However, these sanctions differ between deposit money banks and other financial institutions.

As an official in charge of Compliance, you need to go the extra mile in ensuring that your organisations and employees comply with the current policies, participate in practical AML/CFT training and remain vigilant to the activities of money launderers.

The CBN developed these rules as part of Nigeria’s compliance with the Financial Actions Task Force’s (FATF) recommendation 35 and the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) Mutual Evaluation for Nigeria.

What Is Money Laundering?

Money laundering is when a person directly or indirectly conceals or disguises the origin of; converts or transfers; or takes control of; any fund or property, knowingly which is, or forms part of the proceeds of an unlawful act.

The creativity of the perpetrators and their network has dramatically increased; therefore, you need to continuously monitor, assess, strengthen and enforce AML/CFT compliance within your organisation.

Anti-money laundering (AML) involves all policies and pieces of legislation designed to ensure that financial institutions monitor their clients and prevent money laundering.

AML regulations require that financial institutions report any financial crime they detect to relevant regulators using the suspicious activity reporting framework, perform customer due diligence, develop and adopt AML compliance programmes.

Anti-Money Laundering and Combating the Financing of Terrorism Compliance 

Anti-Money Laundering and Combating the Financing of Terrorism Compliance 

Anti-money laundering compliance is the background screening and ongoing monitoring of customers to identify and eliminate any efforts of money laundering.

Background screening enforcement should be part of your Know your customer (KYC) verification. AML/CFT training is mandatory for organisations such as deposit money banks, fintech, stock exchanges, bureau de change, microfinance banks, real estate, art and precious metals dealers, cryptocurrency, gaming platforms, primary mortgage banks etc.

Simply put, If your organisation engages in monetary exchange, then you (and your employees) need to stay updated about anti-money laundering and combating the financing of terrorism act and keep careful records of your customers’ accounts and transactions.

Your employees should also know that if they come across any data that gives off an impression of criminal suspicion, they are required to report it to the relevant governing bodies for further examination through the appropriate steps.

You also need to be knowledgeable about AML/CFT regulations to avoid fines and sanctions as the new rule empowers the Governor of the Central Bank of Nigeria to impose a penalty of not less than one million Naira. Your operating license may also be suspended if you fail to comply with the provisions.

Complying with AML/CFT instructions helps protect your organisation against reputational risks, minimise the risks faced by your organisation from proceeds of crime, protect the integrity of the securities market against all forms of abuse and instil confidence in your operations.

With the technological shift in financial service infrastructure, rise of online payments, highly increased risk of fraud and the stringent measures by the Central bank of Nigeria, you and your employees need frequent and consistent  AML/CFT training to stay conversant with AML regulations.

Four Ways to Safeguard Your Organisation and Strengthen AML/CFT Compliance

Four Ways to Safeguard Your Organisation and Strengthen AML/CFT Compliance

Design an Effective AML Compliance Framework

Before you think of strengthening compliance, you need to design a new AML/CFT compliance framework that properly safeguards your organisation or validate that your existing AML policy is effective.

For an effective AML policy, you need to:

  • Designate an AML chief compliance officer at management level;
  • Identify all AML regulations and offences;
  • Clearly state the nature of money laundering;
  • Highlight money laundering ‘red flags’ and suspicious transactions;
  • Define reporting requirements;
  • Perform customer due diligence;
  • Adopt a risk-based approach to AML;
  • Effective record-keeping and retention policy; and
  • Close monitoring of employees accounts.

If you complied with the AML/CFT Act, you still need to review/update your AML/CFT policies and procedures every three years and enrol your employees in recurrent and effective AML/CFT training programmes

Document your AML Compliance Policies

AML compliance is not something to improvise. After thinking through and designing your policies carefully, you should write them out clearly for your executives, staff, and regulators to see.

Also designate a responsible party who would “own” the system and ensure that processes are followed and updated, reports are filed, training is consistent and that the system is running smoothly. 

Consistent Training

All employees who deal with customers or transactions in any way should know and have access to your company’s policies and procedures.

They need to understand the legal requirements of the AML Act, modern techniques used by money launderers, checks to ascertain suspicions, and steps to report suspicious activities correctly.

Training isn’t a one-time thing, so you need refresher programmes to keep staff vigilant and informed. 

At Digital learning Africa, our AML/CFT training programmes equip employees with the knowledge and skills required to identify and prevent money laundering activities in financial service institutions.

Click here to download our anti-money laundering and compliance training programme brochure.

Review Consistently

You need to review and update your AML compliance framework consistently. Have an independent expert or third-party review your programme periodically.

You also need to update the red-flags that your employees should look out for by downloading our 45 AML Red-Flags that your employees should know.

Anti-Money Laundering and Combating the Financing of Terrorism in the Hospitality Industry

The hospitality industry consists of hotels, gaming and betting, restaurants, travel and tours, night clubs, amusement and theme parks, event planners and casinos, etc.

This industry is highly prone to money laundering as their operations are cash-intensive, and income can be acquired from this sector with no apparent legitimate source.

Criminals can also pay their bills with ill-gotten cash, cancel bookings and get refunds, collect false proofs of “winnings” while gambling or use false identification to layer the source of their transactions thereby making laundered money untraceable.

You need to protect the credibility of your hospitality establishment by training all your employees to be keen observers, track suspicious financial transactions,  and report any behaviour that deviates from the usual expected process in the hospitality industry.

Finally, the best way to prevent money laundering is to detect and manage suspicious accounts or customers before they become a risk. Fraudsters are becoming more sophisticated.

Money launderers and terrorists are scrutinising your AML/KYC (Anti-Money Laundering/Know Your Customer) processes and identifying weak links that could help them hide the true source of funds and their connection to it.

With the wide range of sanctions and penalties on anti-money laundering and combating the financing of terrorism (AM/CFT) infractions under the regulatory purview of the central bank of Nigeria, it has become more crucial to block access to those that want to bypass your safeguards. It would be best if you made your prevention systems more robust.

We have designed a practical and intensive AML/CFT virtual training programme that would sensitise your workforce on anti-money laundering systems and teach them to conduct proportionate risk-based Customer Due Diligence. Explore modern strategies to combat money laundering within organisations by registering here.

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