The Central Bank of Nigeria (CBN) has issued new baseline standards requiring banks and other financial institutions to deploy automated anti-money laundering systems capable of detecting suspicious transactions and financial fraud risks in real time.

The directive, contained in a circular released yesterday, mandates banks, mobile money operators, international money transfer operators and other regulated institutions to implement automated solutions that strengthen monitoring, detection and reporting of suspicious financial activities.

According to the apex bank, the framework establishes minimum technical, governance and operational standards for automated systems used to combat money laundering, terrorism financing and proliferation financing within Nigeria’s financial system.

The bank said the move was necessary as the financial services sector becomes increasingly digital and complex, making manual monitoring methods inadequate for managing evolving financial crime risks.

Under the new framework, deposit money banks (DMBs) are expected to achieve full compliance within 18 months from the date of issuance, while other financial institutions will have 24 months to comply.

Institutions are also required to submit detailed implementation roadmaps to the CBN’s compliance department within three months.

The standards apply to all institutions operating under the CBN’s regulatory purview, although the depth and sophistication of implementation will depend on each institution’s size, transaction volumes, operational complexity and risk exposure.

The framework outlines several minimum capabilities that automated anti-money laundering (AML) systems must possess, including customer identification and verification, sanctions screening, transaction monitoring and case management for suspicious activities.

Financial institutions are also expected to ensure their systems integrate customer data with transaction patterns so that suspicious behaviour can be assessed in the context of a customer’s risk profile.

The CBN said institutions should strengthen identity verification processes by integrating onboarding systems with national databases such as the Bank Verification Number (BVN) and National Identification Number (NIN) platforms to support real-time identity checks.

The framework permits the use of emerging technologies such as artificial intelligence and machine learning to improve the detection of unusual financial patterns.

However, the regulator said such technologies must operate under strict governance frameworks, including independent validation and human oversight.

Institutions deploying AI-based monitoring models will be required to conduct periodic validation to ensure accuracy, reliability and fairness in the detection of suspicious transactions.

The standards also require financial institutions to maintain secure data protection controls, including encryption, role-based access and multi-factor authentication, in compliance with Nigeria’s data protection regulations.

In addition, the systems are to maintain comprehensive audit trails of transactions, alerts, investigations and system activities to support regulatory supervision and forensic investigations.

The CBN said compliance with the framework will be monitored through off-site surveillance, on-site examinations and thematic reviews, warning that institutions that fail to implement the standards may face regulatory sanctions under existing banking and financial crime laws. (The Guardian)

Update news