By Chika Okeke
The Central Bank of Nigeria (CBN) has intensified its supervision of banks and other financial institutions to prevent the country’s financial system from being exploited to finance terrorism and other illicit activities.
The apex bank said terrorism financing supervision had become a key regulatory priority, with increased focus on transaction monitoring, suspicious transaction reporting and compliance with targeted financial sanctions.
The CBN disclosed this in a statement issued on Tuesday by the Acting Director, Corporate Communications and Investor Relations Department, Hakama Sidi-Ali.
“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.
Under the new focus, financial institutions will face closer scrutiny of their systems for identifying, assessing and managing transactions that could be linked to terrorism financing.
The regulator identified four major areas of concern: terrorism financing risk management, transaction monitoring, and implementation of targeted financial sanctions and reporting of suspicious transactions associated with terrorism financing.
Banks and other regulated institutions are therefore expected to strengthen their monitoring systems to detect unusual transactions and ensure compliance with anti-money laundering and counter-terrorism financing regulations.
The CBN said it would continue to apply a risk-based approach, using both on-site examinations and 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,” it stated.
The risk-based framework allows regulators to direct greater attention to institutions, customers, transactions and activities considered to present higher financial crime risks.
The CBN also highlighted the importance of targeted financial sanctions, which are intended to prevent designated individuals and organisations from accessing or transferring funds through the formal financial system.
Financial institutions are similarly required to monitor customer activities and report suspicious transactions that may indicate terrorism financing or other financial crimes.
The apex bank said the enhanced supervision formed part of Nigeria’s wider domestic and international efforts to combat terrorism financing, counter proliferation financing and other threats to financial 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 CBN said.
The regulator added that further supervisory engagements would be conducted with financial institutions where necessary.
