Other financial institutions get 24 months to comply as regulator tightens oversight and pushes digital tools to combat financial crime…..
The Central Bank of Nigeria has directed banks and other financial institutions to adopt automated anti-money laundering (AML) systems, giving Deposit Money Banks 18 months and other financial institutions up to 24 months to fully comply with the new regulatory framework.
The timeline begins from March 10, 2026, the date the apex bank formally issued the new baseline standards. The compliance period represents an extension from the earlier 12-month deadline initially proposed when the guidelines were first introduced.
In a circular released on Tuesday, the regulator clarified the timeline for implementation.
“The implementation of these guidelines shall start from the date of issuance, while full compliance shall be 18 months for Deposit Money Banks and 24 months for Other Financial Institutions from the date of issuance,” the CBN stated.
The circular, titled Issuance of Baseline Standards for Automated Anti-Money Laundering Solution for Financial Institutions in Nigeria, was signed by Akinwunmi Olubukola, Director of the Banking Supervision Department, and Olubunmi Ayodele-Oni for the Director of the Compliance Department.
It was addressed to a wide range of financial institutions, including banks, mobile money operators, international money transfer operators, payment service providers, and other regulated entities.
Mandatory implementation plans
Beyond the compliance deadline, the CBN also directed institutions to submit detailed implementation roadmaps within three months of the guideline’s release. These plans are to be forwarded to the bank’s Compliance Department as part of the transition process.
According to the regulator, the new standards are designed to strengthen Nigeria’s financial system by improving the detection and reporting of suspicious financial transactions.
The framework focuses on automated solutions that support efforts to combat money laundering, terrorism financing, and proliferation financing, areas regulators say have become more complex with the rapid digitisation of financial services.
“The Baseline Standards provide a framework for implementing automated solutions that strengthen the detection and reporting of suspicious transactions in real time and enhance compliance with applicable AML, CFT, and CPF laws and regulations,” the apex bank noted.
Shift from manual controls
The CBN emphasised that manual monitoring systems are no longer adequate for modern financial systems where transaction volumes and digital channels continue to grow.
Under the new rules, all institutions regulated by the bank must deploy automated AML systems. However, the sophistication of these systems will depend on factors such as an institution’s size, risk profile, business model, transaction volume, and operational complexity.
The standards are rooted in the CBN Act of 2007 and the Banks and Other Financial Institutions Act of 2020, and are intended to complement existing compliance obligations rather than replace them.
Broad system requirements
The new framework outlines a wide range of system requirements that financial institutions must incorporate into their AML platforms.
These include:
- Transaction monitoring systems
- Customer due diligence processes
- Know-Your-Customer (KYC) and Know-Your-Business (KYB) verification
- Screening for sanctions and politically exposed persons
- Case management and regulatory reporting
- Comprehensive audit trails and data protection measures
- Fraud monitoring and unified customer risk assessment tools
- System integration and scalability
The framework also aligns with international standards set by the Financial Action Task Force, the global body responsible for combating money laundering and terrorist financing.
Technology and AI adoption
To strengthen financial crime detection, the CBN is encouraging institutions to deploy advanced technologies such as artificial intelligence, machine learning, and advanced analytics within their AML systems.
However, these technologies must undergo independent annual validation, including accuracy checks, fairness audits, and bias testing, to ensure they operate effectively and responsibly.
Institutions are also required to maintain tamper-proof audit trails, implement role-based access controls, and ensure secure authentication protocols.
Additionally, all systems must comply with the Nigeria Data Protection Act to safeguard sensitive financial and customer information.
Vendor and third-party oversight
The guidelines also place strong emphasis on vendor and third-party management.
Financial institutions must establish policies covering procurement, system implementation, ongoing support, incident management, and exit strategies for external technology providers involved in AML systems.
For sectors considered high-risk, the CBN said enhanced monitoring capabilities must be deployed, including deeper integration with KYC repositories and customer risk-profiling systems.
Compliance tied to licensing
Institutions applying for fresh authorisation or licences will now be required to demonstrate compliance with the AML standards or present credible implementation plans.
The CBN said it will monitor adherence to the rules through a mix of off-site surveillance, on-site examinations, and thematic supervisory reviews.
Failure to meet the requirements could trigger regulatory action.
According to the bank, institutions and responsible individuals may face remedial directives, administrative sanctions, and financial penalties under existing laws.
“All stakeholders are required to ensure strict compliance with the guidelines and all other regulations,” the apex bank said, adding that it will continue to monitor developments and issue additional guidance where necessary.
The move signals a broader effort by the CBN to modernise Nigeria’s financial crime monitoring systems and strengthen confidence in the country’s banking sector.
