On 20 May 2025, the Central Bank of Nigeria (CBN) released the Exposure Draft on Baseline Standards for Automated Anti-Money Laundering, Combating the Financing of Terrorism, and Countering the Proliferation Financing (AML/CFT/CPF) Solutions (Exposure Draft).
The Exposure Draft aims at further closing the gap in ensuring that AML/CFT/CPF compliance standards by banks and other financial institutions in Nigeria are in tandem with global best practices and international regulatory frameworks, including the Recommendations of the Financial Action Task Force (FATF).
While it is arguable that there is in place a robust AML/CFT/CPF guidelines and regulations, the compliance level by financial institutions has been fraught with manual implementation which in the CBN’s opinion practically undermines operational efficiency in combating money laundering and terrorist financing effectively.
On this note, the Exposure Draft principally strengthens the AML/CFT/CPF capabilities of financial institutions through technology-driven approaches; encouraging the adoption of emerging technologies to enhance the detection; reporting of suspicious transactions in real time; reducing operational inefficiencies associated with manual AML processes; and supporting compliance with evolving domestic and international regulatory expectations. (i)
Similarly, in the event that the Exposure Draft is eventually issued by the CBN as a substantive regulation, it will encourage uniform and efficient compliance in AML solutions across financial institutions in Nigeria.
We have now set forth below notable highlights of the Exposure Draft under specific compliance categories that stakeholders may look forward to as the industry anticipates the final version of the guideline from the CBN:
1. User Interface & Customisation (ii)
The Exposure Draft mandates financial institutions to deploy intuitive, user-friendly AML solutions with capabilities for real-time reporting, trend analysis, and case management. The solutions are required to support rule customisation with minimal vendor reliance and include multi-language and multi-currency features to enhance usability across jurisdictions.
2. System Integration & Scalability (iii)
The Exposure Draft emphasizes that AML solutions deployed by financial institutions should be capable of seamless, real-time data exchange and processing across systems involved in the AML/CFT/CPF lifecycle.
These solutions are expected to support both real-time and batch processing, enable integration through standardized Application Programming Interfaces (such as RESTful APIs), and offer compatibility with legacy systems and third-party services via configurable connectors.
Institutions are expected to ensure that the solutions are scalable to handle growing transaction volumes, facilitate secure data transmission, and support integration with core banking and regulatory systems.
Additionally, with the CBN’s approval, AML solutions may be operated under a shared services arrangement, and where integration is not feasible, user-friendly interfaces and automated import/export features should be provided to ease data entry and validation.
3. Sanction list & PEP Screening (iv)
To enhance the effectiveness of sanctions and Politically Exposed Persons (PEP) screening, the Exposure Draft provides that AML solutions are to integrate with both domestic and global sanctions and watchlists. These systems are required to employ AI-driven fuzzy matching for name variations, allow real-time updates of sanction lists, support the addition of internal watchlists, and integrate PEP databases to automatically flag high-risk individuals, including capabilities for adverse media monitoring.
4. Transaction Monitoring & Risk-Based Analysis (v)
On the monitoring obligation, the Exposure Draft emphasizes that transaction monitoring systems are to be robust, incorporating Artificial Intelligence/Machine Learning capabilities for anomaly detection, behavioural analysis, and adaptive learning to reduce false positives and enhance detection accuracy. Financial institutions are required to conduct periodic stress testing, implement configurable risk-based rules, and ensure real-time alerting for high-risk activities including crypto-related and cross-border transactions while adhering to predefined decision timelines to strengthen AML/CFT/CPF compliance.
5. Customer Due Diligence (CDD), Know Your Customer (KYC) & Know Your Customer’s Business (KYB) (vi)
Financial institutions are required to deploy automated AML solutions with real-time access to CDD/KYC/KYB information to ensure dynamic risk profiling, seamless onboarding, and ongoing monitoring. The systems are required to integrate with national identity databases (e.g., BVN/NIN) and support continuous customer classification, data synchronisation, and both standard and enhanced due diligence based on risk categorisation. These capabilities aim to strengthen compliance with AML/CFT/CPF obligations using intelligent, technology-driven processes.
6. Regulatory Reporting (vii)
The Exposure Draft provides further that financial institutions are required to implement AML solutions capable of automatically detecting and escalating suspicious transactions and electronically filing reports (e.g., Suspicious Transaction Report, Currency Transaction Reports, Foreign Currency Transaction Report) to the Nigeria Financial Intelligence Unit within regulatory timeframes.
These solutions should feature comprehensive compliance reporting tools that provide real-time insights, ensure accuracy, and support both internal monitoring and external regulatory obligations. The goal is to enhance timely, efficient, and technology-driven compliance across the reporting value chain.
Conclusively, the Exposure Draft underscores the CBN’s commitment to strengthening the AML/CFT/CPF regime through the adoption of robust, technology-driven solutions that align with international best practice, for a safer financial ecosystem in Nigeria.
By mandating standardized baseline capabilities for AML systems across financial institutions, the draft sets a clear direction for innovation, operational efficiency, and regulatory compliance in combating financial crimes.
ENDNOTE
- Exposure Of Draft Baseline Standards for Automated Anti-Money Laundering (Aml) Solutions, BSD/DIR/CON/AML/018/033 May 20, 2025
- Article 4 (4.2) of the Exposure Draft
- Article 4 (4.3) of the Exposure Draft
- Article 4 (4.4) of the Exposure Draft
- Article 4 (4.5) of the Exposure Draft
- Article 4 (4.6) of the Exposure Draft
- Article 4 (4.8) of the Exposure Draft