Nigeria: SEC Urges Stakeholders to Align Regulatory Framework with Evolving FATF Standards

The Director General of the Securities and Exchange Commission (SEC), Dr. Emomotimi Agama, has called on stakeholders in the capital market to adapt regulatory frameworks to meet the evolving standards of the Financial Action Task Force (FATF). He cautioned that failure to do so could undermine the integrity of Nigeria’s capital markets and pose significant risks to both the national and global financial systems.

Dr. Agama delivered this message during the Compliance Summit 2024, organized by the Nigerian Capital Market Institute, a subsidiary of the SEC, in Lagos. The event, themed “Navigating Regulatory Challenges: Aligning with Changes in FATF Standards in the Era of Virtual Asset Service Providers,” highlighted the critical importance of keeping up with global regulatory shifts.

FATF guidance plays a crucial role in helping countries establish effective regulations, especially as virtual assets become increasingly integrated into the global financial system. The evolving standards aim to mitigate the risks associated with virtual assets, including money laundering and terrorist financing.

Dr. Agama emphasized that the rapid growth of virtual assets necessitates proactive engagement with FATF standards. He underscored the need for collaboration between regulators, Virtual Asset Service Providers (VASPs), and other key stakeholders to ensure the successful implementation of these regulations.

“The Summit is a testament to the shared commitment among stakeholders to maintain the Nigerian capital market as a leader in global financial integrity and efficiency, while fostering innovation,” Dr. Agama stated. He further noted that the forum provided an opportunity for regulators, market operators, financial institutions, and technology innovators to exchange insights and collectively navigate the evolving regulatory landscape.

Dr. Agama highlighted several key updates to the FATF standards that significantly impact VASPs, including:

1. Expanded VASP Definition: Custodial wallet providers, exchanges, and peer-to-peer platforms are now formally recognized as VASPs, widening the scope of regulatory oversight.
2. Travel Rule: VASPs are now required to share customer information during transactions, enhancing transparency and accountability in the virtual asset space.
3. Licensing and Registration: All VASPs must register and obtain appropriate licenses to ensure regulatory compliance and accountability.
4. Enhanced AML/CFT Measures: Strengthened regulations have been introduced to combat money laundering and terrorist financing, making compliance with Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) measures more robust.

Dr. Agama stressed that by aligning with these standards, Nigeria’s capital market can remain resilient in the face of global challenges, while continuing to promote progress and innovation. He urged all market participants to leverage their collective expertise to address the regulatory hurdles ahead and ensure a secure and transparent financial ecosystem.

The Compliance Summit 2024 served as a vital platform for fostering dialogue and strategic cooperation, setting the stage for future developments in Nigeria’s capital market and aligning it with international best practices.