On the 13th of December 2024, the Nigeria Financial Intelligence Unit (“NFIU”) issued Guidelines for the Identification, Verification and Reporting of Suspicious Transactions Related to Money Laundering, Financing of Terrorism and Proliferation of Weapons of Mass Destruction (ML/FT/PF) for Financial Institutions (the “Guidelines”).
The purpose of the Guidelines is to assist financial institutions in the generation and filing of quality Suspicious Transaction Reports (STRs) to enhance the control measures within these institutions. The Guidelines are to be read in conjunction with the NFIU Guidance on Preparing a Complete Suspicious Transaction/Activity Report and other related guidelines.
In this newsletter we share highlights from the Guidelines.
Highlight of the Guidelines
1. Who does the Guidelines affect? All financial institutions including Banks, Fintechs, Bureau De Change, Virtual Asset Service Providers, Discount Houses, Insurance Institutions, Debt Factorisation and Conversion Firms.
2. How is a Suspicious Transaction to be identified? To determine if a transaction is suspicious, a Reporting Entity must screen transaction alert; and assess the facts and context of the transaction against the initial indicators that raised suspicion.
Additional Information to consider in determining a suspicious transaction includes whether the transaction can be connected to a usually high-risk jurisdiction.
3. What reports are to be filed? A Suspicious Transaction Report is to be filed within 24 hours from when a transaction is termed suspicious after a thorough review has been conducted by the Reporting Entity. The period of conducting the thorough review should not exceed 72 hours from the time of the transaction.
4. What documents are to accompany an STR filing: The following documents and details should accompany an STR filing:
- Customer identification documents: e.g a copy of a valid identity document; proof of address; copy of the beneficial owner’s identity document (if applicable); copy of the legal representative’s identity document (if applicable).
- Transaction records; and
- A documentation that states the kind of offence the suspicious transaction relates.
5. What further information should be provided? The Guidelines prescribe certain information to be contained in the narration of an STR. Some of these include details of the alert(s) that triggered the investigation, along with all previous alerts or STR filing history on the subject (if any); detailed account of remedial actions taken by the Reporting Entity to address the risk identified around the transaction.
The Guidelines are not exhaustive and are to be read alongside other related guidelines such as the NFIU Guidance on Preparing a Complete Suspicious Transaction/Activity Report.
6. Will Financial Institutions be penalised for non-compliance? Yes, financial Institutions that fail to comply with the reporting requirements will be penalised in accordance with the provisions of existing Anti-Money Laundering laws. The penalties range from fines to revocation of licence and/or imprisonment.
Conclusion
The Guidelines aim to improve the quality of STRs filed by Reporting Entities in Nigeria. Adherence to these Guidelines is expected to reduce the volume of STR filings and minimize alleged customer harassment over transactions flagged by monitoring systems. Over time, it is expected to result in more efficient use of resources in battling money laundering and generally improve the anti-money laundering system in Nigeria.
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