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The Central Bank of Nigeria (CBN) has intensified its supervision of banks and other regulated financial institutions over terrorism financing risks, strengthening regulatory scrutiny aimed at preventing the financial system from being exploited by illicit actors.
The apex bank said terrorism financing supervision has been elevated to a current supervisory priority, with particular attention on transaction monitoring, suspicious transaction reporting and compliance with targeted financial sanctions.
The CBN disclosed this in a statement issued on Tuesday and signed by Hakama Sidi-Ali, Acting Director, Corporate Communications and Investor Relations Department.
“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 move is expected to increase regulatory attention on the systems and controls financial institutions use to identify, assess and manage transactions that could be associated with terrorism financing.
CBN focuses on four key compliance areas
According to the CBN, its enhanced supervisory attention will centre on four areas: terrorism financing risk management, transaction monitoring, implementation of targeted financial sanctions and suspicious transaction reporting linked to terrorism financing.
The focus places greater responsibility on banks and other regulated institutions to maintain effective compliance systems capable of detecting unusual activities and meeting existing anti-money laundering and counter-terrorism financing obligations.
Financial institutions will also be expected to demonstrate that their internal controls can identify and escalate transactions that present heightened financial crime risks.
The CBN said it would continue to apply a risk-based approach to supervision, combining on-site examinations with off-site monitoring to assess the effectiveness of financial institutions’ controls.
“The bank will continue to apply a risk-based supervisory approach, including on-site and off-site engagement, to support effective AML/CFT/CPF controls across the financial sector in line with existing legal and regulatory obligations,” the statement read.
AML/CFT/CPF covers measures against money laundering, terrorism financing and proliferation financing.
Risk-based supervision puts higher-risk activities under greater scrutiny
Under a risk-based supervisory framework, regulators concentrate resources on institutions, customers, transactions and activities that present higher financial crime risks rather than applying identical levels of scrutiny across the entire financial system.
The CBN’s latest focus also highlights targeted financial sanctions, which are intended to prevent designated individuals and entities from accessing or moving funds through the formal financial system.
For banks and other financial institutions, effective sanctions screening and implementation will remain an important component of their broader compliance management systems.
Suspicious transaction reporting is another key area of the regulator’s attention. Financial institutions are required under existing regulatory frameworks to monitor customer activities and report transactions that raise concerns about potential financial crimes.
CBN strengthens Nigeria’s broader financial integrity framework
The apex bank said the enhanced supervisory focus forms part of Nigeria’s wider domestic and international efforts to combat terrorism financing and other threats to financial system integrity.
“This supervisory focus also supports Nigeria’s ongoing domestic and international cooperation on counter-terrorism financing, counter-proliferation financing, financial integrity, and the protection of the financial system,” the bank stated.
The regulator added that additional supervisory engagements would be conducted where necessary, signalling that institutions could face further regulatory scrutiny depending on identified risks and the effectiveness of their controls.
Banks face continued sanctions compliance obligations
The latest supervisory emphasis follows an earlier CBN directive requiring banks and other financial institutions to immediately freeze the accounts and assets of individuals and companies designated for terrorism and terrorism financing.
The directive, contained in a circular dated June 24, 2026, was issued by the CBN’s Compliance Department and addressed to banks, Payment Service Banks and other financial institutions regulated under the Banks and Other Financial Institutions Act 2020.
The action followed sanctions designations by the Nigeria Sanctions Committee and the United States Department of the Treasury’s Office of Foreign Assets Control under Executive Order 13224, as amended, relating to terrorism and terrorism financing.
The developments reinforce the importance of robust AML/CFT compliance frameworks across Nigeria’s financial sector, particularly as regulators increase their focus on transaction monitoring, sanctions screening, suspicious transaction reporting and risk-based compliance management.
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