The Central Bank of Nigeria (CBN) has issued a draft framework aimed at overhauling anti-money laundering (AML) practices across the country’s financial sector.
In its circular titled BSD/DIR/CON/AML/018/033, the apex bank stated that the initiative is a response to the increasing digitalisation of Nigeria’s financial system and the growing complexity of financial transactions.
Dated May 20, 2025, and sent to all regulated institutions, the circular outlines new baseline standards for automated AML solutions, leveraging artificial intelligence (AI) and machine learning (ML) to detect and prevent financial crimes.
Banks and other financial institutions have been given 12 months from the final issuance of the standards to comply fully.
The new standards are intended to promote efficiency, enhance detection accuracy, and ensure full regulatory compliance with both local guidelines and international frameworks, including those from the Financial Action Task Force (FATF).
The CBN said the draft was informed by a detailed assessment of existing AML tools currently in use across the sector and incorporates best practices from other jurisdictions. It added that stakeholder feedback is being sought to enrich the document, and comments are to be submitted by June 13, 2025.
The standards are designed to be comprehensive and will apply to a wide range of institutions regulated by the CBN. This includes deposit money banks, microfinance banks, primary mortgage banks, digital payment service providers, and any other entity that falls under the AML/CFT/CPF regulatory framework.
Transaction monitoring and risk-based analysis
- A central requirement under the new standard is the deployment of intelligent AML systems capable of real-time transaction monitoring and anomaly detection. Institutions are expected to adopt systems that integrate AI and ML for behavioural pattern recognition, risk scoring, and adaptive learning. These tools will help banks detect illicit activity such as large-volume cash transactions, cryptocurrency dealings, and cross-border transfers that may point to money laundering or terrorist financing.
- Equally important is the ability of AML systems to connect seamlessly with internal platforms such as core banking software, customer onboarding systems, and transaction processors. The draft document specifies that platforms must feature real-time dashboards for reporting, trend analysis, case management, and risk alerts. In addition, systems must be scalable to handle increasing transaction volumes and flexible enough to allow customisation based on specific institutional needs.
- The framework places heavy emphasis on customer due diligence (CDD), know-your-customer (KYC) processes, and the newer know-your-customer-business (KYB) approach. AML solutions must offer real-time access to customer identification data and support integration with national identity systems like BVN and NIN to enhance verification.
- Advanced systems should also be capable of supporting enhanced due diligence procedures and the reclassification of customers based on updated risk assessments. Institutions are expected to maintain synchronised data to ensure that KYC records accurately reflect customer profiles and transactional activity at all times.
Enhanced screening and watchlist integration
- As part of the new compliance mandate, institutions must integrate their systems with both domestic and global watchlists, including those used for sanctions screening and identifying politically exposed persons (PEPs). The solutions must support real-time updates of these lists and deploy fuzzy-matching algorithms to catch name variations or spelling differences that could otherwise lead to missed detections.
- The CBN also expects AML platforms to offer functionality for adverse media screening and allow institutions to maintain internal watchlists. These screening tools must be comprehensive, accurate, and capable of generating real-time alerts that trigger immediate case review or escalation.
- To address the gap between detection and resolution, the draft mandates the inclusion of enterprise case management (ECM) systems. These ECMs will automate the creation, assignment, and resolution of cases related to flagged transactions. Institutions must implement role-based workflows to ensure oversight and accountability, and all systems must maintain audit trails of actions taken.
- For regulatory reporting, the new standards require AML platforms to support the automatic generation and submission of reports such as Suspicious Transaction Reports (STRs), Currency Transaction Reports (CTRs), and Foreign Currency Transaction Reports (FTRs) to the Nigerian Financial Intelligence Unit (NFIU). These reporting features must be backed by data visualisation tools and compliance dashboards that offer real-time insights for both internal and external stakeholders.
- Also, institutions must implement data protection protocols such as encryption in transit and at rest, multi-factor authentication, and user-access controls based on roles and responsibilities. The CBN also emphasises that AML systems must include comprehensive audit logging to monitor system changes and user activity.
- In terms of vendor management, financial institutions are required to document vendor relationships, support agreements, and third-party compliance obligations. Where third-party service providers are used, they must adhere to all applicable provisions in the CBN’s standards.
What you should know
The CBN said it will monitor adherence through regular inspections and validation exercises. Institutions found to be non-compliant after the 12-month implementation window risk facing regulatory sanctions and penalties.
- Although the draft is not yet final, the CBN has set a clear expectation for institutions to begin aligning their AML infrastructure with the new requirements. Once finalised, institutions will have exactly 12 months to achieve full compliance.
- The CBN has stated it will conduct follow-up reviews and industry-wide assessments to measure the level of implementation.
