Nigeria: SEC Tightens Controls to Prevent Illicit Funds in Banking Recapitalization

The Securities and Exchange Commission (SEC) is taking significant steps to prevent the infusion of illicit funds into the capital market amid the ongoing banking recapitalization, as revealed by Dayo Obisan, the Executive Director (Operations) of the commission. He spoke during a symposium organized by the Association of Capital Market Academics of Nigeria on the topic of ‘Banking Sector Recapitalization Implications for the Nigerian Capital Market’.

Obisan expressed a positive stance on the recapitalization initiative, highlighting the SEC’s commitment to collaborating with stakeholders to ensure a smooth and successful process. He emphasized the importance of ensuring that the capital inflow during this period is legitimate and transparent.

“We are keen to avoid the pitfalls of the past by learning from previous experiences and ensuring that only clean, verifiable money enters our financial system,” Obisan noted. This focus on financial integrity is a response to concerns about potential money laundering activities that could undermine the financial system’s stability.

To this end, the SEC is prepared to work closely with other regulatory bodies, including the Central Bank of Nigeria (CBN) and the Nigeria Financial Intelligence Unit (NFIU), to rigorously verify the sources of funds used in the recapitalization process. This collaborative approach is intended to strengthen the verification processes and ensure compliance with anti-money laundering standards.

“We are already taking proactive steps by engaging with regulatory partners to refine the application and approval processes, making them more stringent to prevent illicit funds from entering the market,” Obisan added.

During his opening remarks, Osita Izunaso, the Chairman of the Senate Committee on Capital Market, also addressed the issue of illicit funds and reassured that the Senate is committed to supporting regulatory efforts to enhance market integrity.

Moreover, Oluwole Adeosun, President of the Chartered Institute of Stockbrokers, affirmed that the capital market is well-equipped to support the recapitalization exercise. He suggested that banks explore various capital-raising options, such as private and public offers, to attract a broader investor base, including younger generations.

“The market’s capacity has grown significantly over the last decade, enabling it to handle the demands of this recapitalization exercise efficiently,” said Adeosun.

In addition, Mrs. Toyin Sanni, CEO of EmergingAfrica Group, endorsed the recapitalization drive, noting its potential to attract foreign capital and boost economic growth.

This initiative follows the CBN’s recent adjustment of minimum capital requirements for banks, setting new thresholds to strengthen the banking sector’s foundation and enhance its global competitiveness.