The Central Bank of Nigeria (CBN) has consolidated on its plans to battle the money laundering that has been ravaging the country.
The Apex bank in accordance with the move has introduced new rules to prevent money laundering in the country. CBN released its Anti-Money Laundering/ Combating the Financing of Terrorism (AML/CFT) Policy and Procedure Manual.
This is contained in the released AML/CFT Policy and Procedure Manual, which according to the bank will guard against establishing correspondent banking relationships with high-risk foreign banks such as shell banks, as well as correspondent banks that have historically allowed their institutions to be used for Money Laundering / Financing Terrorism (ML/FT).
CBN in the release said all banking products that are used to convert cash to a monetary instrument and electronic products that permit rapid value movement such as electronic transfers, forex transactions followed by payment into an account in another jurisdiction can be abused by criminals.
The CBN said, “For trade transactions, Export Letters of Credit have been ranked as high risk because of the possibility of presentation of false shipping documents when no goods are actually shipped.”
The possibility of over-inflated invoicing for low value or worthless merchandise is another factor in this ranking, adding that other trade products have been risk ranked either medium or low risk.
The regulator said that transactions conducted through correspondent banking relationships shall be managed in accordance with a risk-based approach, and Know Your Correspondent (KYC) procedures shall be established to ascertain whether or not the correspondent bank or the counter-party is itself regulated for money laundering prevention.
Also, where regulated, the correspondent shall verify the identity of its customers in accordance with Financial Action Task Force (FATF) standards, and where this is not the case, additional due diligence shall be required to ascertain and assess the correspondent’s internal policy on money laundering and KYC procedures.
The CBN said that care should be taken when doing business with third parties located in geographic locations with a history of supporting terrorism, bases for drug production/distribution, suffering from civil unrest/war. “These include jurisdictions that have been identified as high-risk countries by standard setting institutions such as FATF; countries on designated sanction lists such as the United Nations Consolidated list and US Office of Foreign Asset Control (OFAC) List,” the bank said.
The CBN said it shall accept customers after due verification of customers’ identities, address and/ or place of business, after ascertaining their source of income/funds and after considering the level of risks they pose to the bank, based on the kind of business under consideration (such as bureau de change operators).