The Nigerian Securities and Exchange Commission (SEC) has moved toward strengthening the fight against financial crime in the digital asset market.

The commission has developed a new AML/CFT/CPF onboarding manual specifically designed to license and register Digital Asset Service Providers (VASPs) and ensure ongoing screening of their beneficial owners.

AML/CFT/CPF stands for Anti-Money Laundering/Combating the Financing of Terrorism/Counter-Financing of Proliferation. An onboarding manual in this context is a guidebook specifically designed for Digital Asset Service Providers (VASPs) to follow when registering and licensing with the Securities and Exchange Commission (SEC).

This initiative aims to prevent criminals from infiltrating the capital market by establishing clear and transparent regulations for VASPs. The SEC emphasized its commitment to work with legitimate VASPs under these new guidelines.

The regulations are currently undergoing a final review process, incorporating additional feedback received from the Central Bank of Nigeria (CBN). They will be publicly available for comment before being finalized.

For the convenience of potential VASP applicants and the general public, the SEC has compiled a comprehensive guide outlining all relevant regulations regarding digital assets and VASPs. This resource provides a clear understanding of the commission’s regulatory framework in this rapidly evolving space.

A brief timeline of the SEC’s regulatory efforts in the digital asset space:

In September 2020, the SEC clarified its position on the classification of digital assets, outlining its regulatory authority over various types of crypto tokens and derivative instruments.

In May 2022, it released a comprehensive set of regulations governing different aspects of the digital asset market, including General requirements for VASPs; Issuance of digital assets as securities; Digital Assets Offering Platforms (DAOPs); Digital Assets Exchanges (DAXs); Digital Asset Custodians (DACs).

In May 2022 and April 2023, the SEC amended and issued its AML/CFT/CPF regulations, introducing specific requirements for VASPs, including Customer Due Diligence (CDD) and Know Your Customer (KYC) procedures; Compliance with the Travel Rule; Submission of Suspicious Transaction Reports (STRs); Maintaining comprehensive records.

In April 2023, the SEC established procedures for implementing targeted financial sanctions against individuals and entities linked to terrorism.

The SEC’s ongoing efforts demonstrate its commitment to fostering a safe and transparent environment for the development of the digital asset industry in Nigeria.

These regulations aim to protect investors, combat money laundering and terrorist financing, and ensure the sustainable growth of this innovative sector. (The Nation)

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