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The Central Bank of Nigeria (CBN) has emphasized the urgent need for financial institutions to strengthen their compliance frameworks and align with global regulatory standards to curb illicit financial flows and protect the integrity of the financial system.
This directive was issued during the Mandatory Compliance and Anti-Money Laundering (AML) Training Workshop, held in Lagos on February 28, 2025, in collaboration with Citi. The workshop brought together compliance officers, trade operations specialists, and correspondent banking teams to discuss regulatory trends, financial risks, and best practices in compliance management.
CBN Urges Banks to Strengthen Risk-Based Compliance
Speaking at the event, Shola Phillips, Special Adviser to the CBN Governor on Compliance, stressed the importance of adopting risk-based AML and Counter-Financing of Terrorism (CFT) programs that align with international best practices.
She noted that the evolution of correspondent banking relationships has increased the need for stringent compliance measures, urging Nigerian banks to enhance their risk management strategies to remain competitive in the global financial system.
“Regulators expect financial institutions to maintain dynamic, risk-based AML/CFT frameworks that respond to evolving financial environments. Proactive engagement with regulatory changes and the integration of innovative compliance solutions are key to meeting these expectations,” she stated.
Phillips also warned that non-compliance with global regulatory standards could subject Nigerian banks to increased scrutiny from international financial institutions, potentially affecting their access to global banking networks.
Global Banking Executives Highlight Compliance Risks
During the workshop, Siobhan Ni Ealaithe, Managing Director of Citi’s Correspondent Banking Group, reinforced the importance of robust governance frameworks in mitigating financial risks.
She emphasized the critical role of Know Your Customer (KYC), Know Your Business (KYB), and Know Your Transaction (KYT) in preventing illicit financial flows and ensuring transparency in transactions.
Similarly, Stephanie Bailey, Head of EMEA AML Risk Management for Foreign Correspondent Banking, highlighted the growing risks of financial crime, revealing that an estimated $3 trillion in illicit funds circulates through the global financial system annually.
Bailey urged Nigerian banks to:
- Strengthen due diligence processes
- Leverage technology-driven compliance solutions
- Enhance transparency in financial dealings
By reinforcing compliance automation, regulatory intelligence, and AML technology, Nigerian banks can mitigate risks while ensuring alignment with global financial regulations.
As the CBN intensifies its regulatory oversight, the adoption of advanced compliance technologies and risk-based regulatory frameworks will be essential in safeguarding Nigeria’s financial ecosystem from illicit financial flows.
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