The first part is here.
In this article instalment, the focus will be on additional measures on some specific customers and businesses including Non-Governmental Organizations (NGOs) & Domiciliary account Operations. These provisions are as follows :-
– In line with Memorandum 17 of the CBN Foreign Exchange Manual, an FI shall satisfy itself that a customer is permanently resident outs-ide Nigeria when establishing a banking relationship for external and non-resident non-Nigerian customers.
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The following are eligible to open external accounts —
(a) Embassies ;
(b) High Commissions ;
(c) Legations or consulates ;
(d) Career and established members of Embassies, High Commissions, and Legation or Consulates ;
(e) other international organisations recognized and accorded
diplomatic status and their expatriate officials, such as African Union, United Nations or Commonwealth of Nations.
– FIs shall obtain the following documentation for external accounts —
(a) applicant’s letter of request, showing official position or status and the probable duration of stay in Nigeria ;
(b) letter of introduction from the relevant Diplomatic Mission or International Organisation certifying the accredited status of the applicant ;
(c) relevant pages of the applicant’s international passport.
The following are eligible to open non-resident accounts —
(a) overseas correspondence and examination bodies;
(b) foreign companies executing approved contracts in Nigeria;
(c) foreign professional bodies.
– FIs shall obtain the following documentation for non-resident accounts —
(a) for overseas correspondence and examination bodies, letters of request from applicant, memorandum and articles of the overseas company, letter of accreditation from the Federal Ministry of Education, and Power of Attorney to the Agent in Nigeria ;
(b) for foreign companies executing approved contracts in Nigeria, contract document, letter of request from applicant, and Memorandum and Articles of Association of the company ;
(c) for foreign professional bodies, letters of request from applicant, memorandum and articles of the overseas company, letter of accreditation from the Federal Ministry of Education, Power of Attorney to the Agent in Nigeria and letter of certification from a relevant body in Nigeria.
– FIs shall —
(a) obtain and verify identification directly from the customer’s embassy or through a reputable FI in the applicant’s home country or country of residence, provided that particular care shall be taken when relying on identification evidence obtained from other countries ;
(b) obtain and verify separate evidence of an applicant’s permanent residential address which shall be notarized ;
(c) obtain additional comfort by confirming the customer’s identity and address from a reputable credit institution in the customer’s home country, where necessary.
All accounts of Non-resident stipulated in subregulations (2) and (4) of this regulation, shall, on completion of the contract or the applicant’s business in Nigeria, be closed and the balance on the account, if any, transferred to the customer’s account in country of residence, after proper docu-mentation.
-In cases that are not classified under subregulations (2) and (4) of this regulation, FIs shall refer to the CBN for clarification
Non-Nigerian & Non-resident Customers
– Where approvals are granted for individuals (including directors of legal persons) that are non-Nigerian and non-resident, the requirements of regulations 6 and 7 of these Regulations shall apply and the appropriate category of BVN as relates to non-resident individuals shall apply.
– FIs shall obtain and verify applicant’s name, date of birth and permanent residential address (in host country) directly through a reputable Credit Institution or FI in the applicant’s country of residence or a correspondent bank, provided that particular care shall be taken when relying on identification evidence obtained from other countries.
FIs shall validate the source of funds by obtaining identification issued by employer, payslips or statements of accounts from a bank in the country of residence.
Resident Non-Nigerian Customers
-FIs shall, as part of CDD measures, obtain and verify the valid Resident Permit of resident non-Nigerians.
Where a foreign national has recently arrived in Nigeria, the residential address in the applicant’s home country shall be notarized.
Correspondent Financial Transactions
– Transactions conducted through correspondent relationships shall be managed in accordance with a risk-based approach.
Due diligence procedures shall be established to ascertain whether or not the correspondent bank or the counter-party is itself regulated for prevention of ML, TF or PF, and where regulated, the correspondent respondent shall verify the identity of its customers in accordance with FATF standards.
Where the correspondent bank or the counter-party is itself unregulated, additional due diligence shall be required to ascertain and assess the correspondent or respondent’s internal policy for prevention of ML, TF or PF and KYC procedures.
Transactions with FIs in high-risk jurisdictions
The volume and nature of transactions flowing through correspondent accounts with FIs, from high risk jurisdictions or those with inadequacies or material deficiencies shall be monitored against expected levels and destinations and any material variances shall be reported as STR to the NFIU.
Maintenance of records
-FIs shall maintain records and ensure that sufficient due diligence has been undertaken by the remitting bank on the underlying client and the origin of the funds in respect of the funds passed through their accounts.
Correspondent Relationships with High Risk Foreign Banks
– FIs shall guard against establishing correspondent relationships with high risk foreign banks such as shell banks or with correspondent banks that permit their accounts to be used by such banks.
Staff dealing with correspondent banking accounts shall be trained to recognize higher risk circum-stances and be prepared to challenge the correspondents over irregular activity whether isolated transactions or trend and to submit a suspicious transaction report to the NFIU.
FIs shall terminate an account with a correspondent bank that fails to provide satisfactory answers to questions including confirming the identity of customers involved in unusual or suspicious circumstances.
Foreign Trusts
Where the arrangement for a Foreign Trust or Foundation is opaque or information on the parties to the legal arrangements cannot be provided because it is incorporated in a jurisdiction (such as tax havens and off-shore financial centres) that makes it impractical to do so, the FI shall decline to open an account for the legal arrangement
Blind Trusts
-FIs shall obtain and understand the Trust Agreement in a Blind Trust such that the grantor, settlor or trustor and beneficiary are identified.
Where the grantor or beneficiary is a PEP, the FI shall apply measures.
FIs shall understand the structure of a Blind Trust and determine whether it is revocable or irrevocable. Where the customer is a Revocable Blind Trust, the FI shall apply EDD measures to the customer.
-FIs shall apply EDD where the BOs of a customer is a Blind Trust and identify the ultimate BO.
Nominee Disclosures
-FIs shall require customers that are legal persons to disclose nominee shareholders and nominee directors, if any.
FIs shall obtain and verify the identification of nominee directors and shareholders in a legal person or legal arrangement.
FIs shall obtain information on the status of nominees and their nominator to company.
Acceptable Means of Identification
FIs shall use identification issued by the Nigerian Immigration Services or other recognizable government agency to render banking service to refugees or asylum seekers.
FIs shall undertake additional monitoring procedures in respect of sub-regulation (1) of this regulation to ensure that the use of the account is consistent with the customer’s circumstances.
Foreign Students
– FIs shall, as part of CDD measures:
(a) obtain and verify the valid Study Permit of prospective customers that are non-Nigerian students ;
(b) obtain and verify identification directly from the customer’s embassy or through a reputable FI in the applicant’s home country or country of residence, provided that particular care shall be taken when relying on identification evidence obtained from other countries ;
(c) obtain and verify separate evidence of an applicant’s permanent residential address in home country, which shall be notarized.
All accounts of foreign students shall, on completion of the applicant’s studies in Nigeria, be closed.
Minors
– For banking relationships for a minor, FIs shall obtain the birth certificate and passport photo of the minor.
FIs shall obtain and verify the identification and home address of the parent or guardian of a minor.
For accounts opened through a school-related scheme, the school shall provide the date of birth and permanent address of the minor and complete the standard account opening documentation on behalf of the minor.
FIs shall continuously monitor account of a minor to ensure that —
(a) it is not used for the purposes of ML or TF ;
(b) the transactions on the account are in line with the purpose for which the account was opened ;
(c) transactions on the account does not exceed a limit pre-determined by the FI in line with its established risk assessment criteria.
Non Face-to-face Customer CDD
FIs shall —
(a) in respect of a non-face-to-face customer, undertake additional measures or checks to supplement the documentary or electronic evidence to ensure that an applicant is who he/she claims to be ;
(b) apply the additional measures in paragraph (a) of this regulation, whether the applicant is resident in Nigeria or elsewhere, where the applicant is requesting a bank account or other product or service that offers money transmission or third party payments ;
(c) ensure that there is sufficient evidence either documentary or electronic in its procedures for identification and authentication of its customers, to confirm their address and personal identity and to undertake at least one additional check to guard against impersonation or fraud ;
(d) ensure that the extent of the identification evidence required in this regulation shall depend on the nature and characteristics of the product or service and the assessed risk, provided that care shall be taken to ensure that the same level of information is obtained for internet, postal or telephone customers ;
(e) undertake checks to ensure that, where reliance is placed on intermediaries to undertake the processing of applications on the customer’s behalf, the interediaries are regulated for the prevention of ML, TF or PF and that the relevant identification procedures are applied ;
(f ) conduct regular monitoring of internet-based business or customers and where a significant proportion of the business is operated electronically, computerized monitoring systems or solutions that are designed to recognize unusual transactions and related patterns of transactions shall be put in place to recognize suspicious transactions ;
(g) ensure that in all cases, evidence as to how identity has been verified shall be obtained and retained with the account opening records.
Introductory Letters by Financial Intermediaries
– An introductory letter shall be issued by the introducing financial intermediary or person in respect of each applicant for business.
Where an intermediary introduces a customer and then withdraws from the ensuing relationship, the underlying customer shall become the applicant for the business and shall be identified in line with the requirements for personal, corporate or business customers as appropriate.
To ensure that product-providers meet their obligations, satisfactory identification evidence shall be obtained and retained for the necessary statutory period.
Each introductory letter shall either be accompanied by certified copies of the identification evidence obta-ined in line with the usual practice of certification of identification documents or by sufficient details and reference numbers that permits the actual evidence obtained to be reobtained at a later stage.
Reliance on Foreign Financial Intermediaries
-Where business is introduced or received from a financial intermediary regulated for AML and CFT, who is outside Nigeria, the reliance that shall be placed on that intermediary to undertake the verification of identity check shall be assessed by the Compliance Officer or some other competent persons within the FI, on a case-by-case basis based on the knowledge of the intermediary.
Introduction of customers by Financial Sector Group
– Where a customer is introduced by one part of a financial sector group to another, the customer’s identity shall be re-verified, and the records shall not be duplicated except—
(a) the identity of the customer has not been verified by the introducing parent company, branch, subsidiary or associate in line with the money laundering requirements of equivalent standards and taking account of any specific requ-irements such as separate address verification ;
(b) no exemptions or concessions have been applied in the original verification procedures that may not be available to the new relationship ;
(c) a group introduction letter is obtained and placed with the customer’s account opening records ;
(d) in respect of group introducers from outside Nigeria, in which case arrangements shall be put in place to ensure that identity is verified in accordance with requirements and that the underlying records of identity in respect of the introduced customers are retained for the required period.
Where an FI has day-to-day access to all the group’s KYC information and records, there is no need to identify an introduced customer or obtain a group introduction letter where the identity of that customer has been previously verified.
Where the identity of a customer has not been previously verified, then any missing identification evidence shall be obtained and a risk-based approach taken on the extent of KYC information that is available on whether or not additional information shall be obtained.
Before relying on group intro-duction, FIs shall ensure that there are no secrecy or data protection legislation in host or home countries of any of the financial groups that will restrict free access to the records.
Where the restrictions referred to in the preceding sub-regulation of this regulation applies, copies of the underlying records of identity shall, wherever possible, be sought and retained.
Where identification records are held outside Nigeria, it shall be the responsibility of the FI to ensure that the records available meet the requirements of these Regulations and the CBN AML, CFT and CPF
Regulations.
Acquisition of an FI by another FI
– Where a FI acquires a business and accounts of another FI, it may not be necessary for the identity of the existing customers to be reidentified, provided that all the underlying customers’ records are acquired with the business, but it shall carry out due diligence enquiries to confirm that the acquired institution had conformed with the requirements of the provisions of these Regulations and CBN AML, CFT and CPF Regulations.
Verification of identity shall be undertaken for all the transferred customers who were not verified by the transferor in line with the requirements for existing customers that open new accounts, where the –
(a) money laundering procedures previously undertaken have not been in accordance with the requirements of these Regulations and CBN AML,CFT and CPF Regulations
Domiciliary Accounts
– Where a customer wishes to open a Domiciliary Account or make a wholesale deposit by cash or inter-bank transfer, a FI shall obtain identification evidence in accordance with the requirements for individuals, companies or professional intermediaries operating on behalf of third parties as appropriate.
Where the funds to a domiciliary account are by inter-bank transfer, FI shall satisfy itself that the transferring institution is regulated for ML, TF or PF prevention in its country of origin.
Parcels, Envelopes & Safety Deposit Boxes
– FIs shall take precautions in relation to requests to hold boxes, parcels and envelopes in a safe custody.
Where such facilities are made available, the identification procedures set out in these Regulations shall be followed, depending on the type of individual involved or risks associated with the business relationship.
FIs shall not allow items with unidentified contents to be deposited in safe deposit box and the contents shall be declared and documented at the point of entering the contract.
FIs shall maintain registers for on-going monitoring of the activities of persons who use safe custody or safe deposit box services.
FIs shall also conduct due diligence on owners of safe deposit boxes.
Occupational Pension/Employee Benefit Trust Accounts
-Where an occupational pension programme, employee benefit trust or share option plan is an applicant for an account, the trustee and any other person who has control over the relationship such as the administrator, programme manager, and account signatories shall be considered as principals and the financial institution shall take steps to verify their identities.
Non-Profit/Governmental Organization (NGO) Accounts
– In case of account to be opened for NPOs such as charities, clubs and societies, FIs shall take reasonable steps to identify and verify the identity of the institution, members of the governing body or committee, president, board members, treasurer, and all signatories.
In all cases, independent verification shall be obtained that the persons involved are true representatives of the institution and independent confirmation shall also be obtained of the purpose of the institution.
Professional Intermediaries
– Where a professional intermediary opens a client account on behalf of a single client, that client shall be identified.
Where professional intermediaries open “pooled” accounts on behalf of a number of entities, BOs of the account held by the intermediary shall be identified.
Where funds held by the intermediary are not co-mingled but there are “sub-accounts” which shall be attributable to each BO, all BOs of the account held by the intermediary shall be identified.
– Where the funds are co-mingled, the Fl shall look through to the beneficial owners and take steps to identify —
(a) the fund itself ;
(b) its directors or any controlling board, where it is a company ;
(c) its trustee, where it is a unit trust ;
(d) its managing (general) partner, where it is a limited partnership ;
(e) account signatories ;
(f ) any other person who has control over the relationship such as fund administrator or manager.
Where other investment vehicles are involved —
(a) the same steps specified in regulation 28 of these Regulations shall be taken, where it is appropriate to do so ;
(b) all reasonable steps shall be taken to verify the identity of the BOs of the funds and of those who have control over the funds.
Intermediaries shall be treated as individual customers of the FI and the standing of the intermediary shall be separately verified by obtaining the appropriate information itemized in regulation 28 of these Regulations.
In addition to requirements stipulated in respective guidelines for different FIs’ operation in respect to agency relationships and CDD measures in these Regulations, FIs shall —
(a) establish efficient and thorough Agent Due Diligence procedures to mitigate risks ;
(b) define initial agent engagement, conduct regular monitoring and supervisory checks, trigger points and corrective measures ;
(c) publish an updated list of all their agents on their websites and annual reports.
Non-Compliance
– The administrative sanctions and penalties for non-compliance with these Regulations shall be as specified in the Banks and Other Financial Institutions Act (BOFIA), 2020 and Schedule to these Regulations.
– The Governor of the Central Bank of Nigeria may, as considered appropriate, amend or revoke the provisions of these Regulations which amendment or revocation shall be published in the Gazette.