Tighten your sanctions compliance framework, CBN orders banks

The Central Bank of Nigeria has issued a fresh regulatory directive to banks, payment service banks, and fintech companies, warning them to tighten their sanctions compliance frameworks or face enforcement actions.

In a circular dated April 17, 2025, signed by Amonia Opusunju for the Director, Compliance Department, the apex bank reminded all financial institutions of their obligation to comply with both domestic and international sanctions lists.

These include the United Nations Consolidated Sanctions List, the Nigerian Sanctions List in line with the Terrorism (Prevention and Prohibition) Act 2022, and the CBN’s own guidelines on targeted financial sanctions related to terrorism and terrorism financing.

The CBN noted that financial institutions are required to maintain a robust and responsive sanctions compliance structure.

This includes the prompt identification and reaction to updates on sanctions lists, ensuring their systems are not used for transactions involving designated individuals or entities, and conducting real-time screening of customers, transactions, and beneficial owners.

“Financial Institutions are required to maintain a robust and dynamic sanctions compliance framework that enables them to Identify and respond promptly to updates or changes across all applicable sanctions lists; Prevent the use of their systems and platforms for transactions involving designated individuals or entities; Conduct real-time screening of customers, transactions, and beneficial owners; and File appropriate reports with the Nigerian Financial Intelligence Unit and notify the CBN, where necessary,” the circular read.

The apex bank also directed institutions to file reports with the Nigerian Financial Intelligence Unit and notify the CBN when necessary.

It warned that failure to comply may result in enforcement action or regulatory sanctions.

“The effectiveness of sanctions compliance programmes must be regularly reviewed and aligned with legal and regulatory requirements and expectations,” the circular stated.

The directive comes at a time when global scrutiny over financial crimes is intensifying, particularly around anti-money laundering and counter-terrorism financing regulations. Nigeria, which is working to improve its standing with global watchdogs like the Financial Action Task Force, has been ramping up oversight across the financial sector.

The CBN’s reminder also highlights the need for fintechs and other non-traditional financial players to embed compliance mechanisms into their platforms, particularly as innovation in the sector continues to grow.

The regulator stressed that the reminder should be taken seriously by all institutions under its purview, noting that compliance is not optional.

It urged financial operators to align with applicable laws and CBN directives to avoid penalties.

This move signals an impending wave of regulatory enforcement, with banks and fintechs now expected to step up investments in compliance tools, including sanctions screening, transaction monitoring, and reporting systems.