LAGOS — The Central Bank of Nigeria (CBN) has elevated terrorism-financing risk to a current supervisory priority, signalling tighter scrutiny of how banks and other regulated financial institutions identify, monitor and report transactions that could support terrorism-related activities.
The move forms part of the apex bank’s broader efforts to strengthen the resilience of Nigeria’s financial system against abuse by illicit actors and reinforce the country’s anti-money laundering and counter-terrorism financing framework.
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Under the new supervisory focus, the CBN will place particular emphasis on terrorism-financing risk management, transaction monitoring, targeted financial sanctions and suspicious transaction reporting linked to terrorism financing.
The regulator said its oversight would continue to be risk-based and would involve both on-site examinations and off-site supervisory engagement with financial institutions.
The development is expected to increase compliance expectations for regulated institutions, particularly in the areas of customer and transaction monitoring, sanctions screening, escalation of suspicious activity and the timely reporting of transactions that may present terrorism-financing risks.
CBN targets weaknesses in terrorism-financing controls
The CBN said the supervisory priority is designed to support effective anti-money laundering, countering the financing of terrorism and counter-proliferation financing controls across Nigeria’s financial sector.
The framework covers AML/CFT/CPF controls, reflecting the growing international focus on preventing financial institutions from being exploited to move funds linked to terrorism, proliferation activities and other illicit networks.
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Under the risk-based approach, institutions are expected to maintain controls that are proportionate to the risks associated with their customers, products, services, delivery channels and geographic exposure.
The CBN’s increased supervisory attention means institutions could face closer examination of whether those controls are operating effectively rather than merely existing as documented compliance policies.
Stronger focus on transaction monitoring
A central element of the supervisory programme will be terrorism-financing transaction monitoring.
Financial institutions are expected to have systems capable of identifying unusual or suspicious transactions and escalating potentially terrorism-related activity for further investigation and reporting.
The CBN is also focusing on the implementation of targeted financial sanctions, an important component of the global framework for disrupting access to financial resources by designated individuals and organisations.
Effective sanctions controls require financial institutions to screen relevant customers and transactions, identify potential matches and take appropriate action in accordance with applicable legal and regulatory requirements.
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The enhanced supervisory focus therefore places greater responsibility on financial institutions to ensure that their compliance systems are functioning effectively and that potential risks are identified early.
Suspicious transaction reporting under scrutiny
The CBN has also identified terrorism-financing-related suspicious transaction reporting as an area of supervisory attention.
This could translate into closer scrutiny of how institutions detect potentially suspicious activities, document their assessments, escalate cases internally and make appropriate reports to the relevant authorities.
For financial institutions, the emphasis reinforces the need for strong governance, effective compliance teams, reliable monitoring systems and clear escalation procedures.
It also underscores the importance of maintaining accurate customer and transaction information, particularly where complex or unusual transactions require additional scrutiny.
Risk-based supervision to continue
The CBN said it would continue to apply a risk-based supervisory approach, using both on-site and off-site engagements to assess the effectiveness of AML/CFT/CPF controls.
On-site examinations allow regulators to assess an institution’s systems and controls directly, while off-site supervision enables the regulator to analyse information and compliance indicators submitted by regulated entities.
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The approach allows supervisory resources to be concentrated on areas presenting higher risks rather than applying identical levels of scrutiny across all institutions.
The CBN said further supervisory engagement would be undertaken where appropriate.
Nigeria strengthens global financial-integrity efforts
The latest initiative also forms part of Nigeria’s broader domestic and international cooperation on counter-terrorism financing, counter-proliferation financing and financial integrity.
Strengthening controls against illicit finance has become increasingly important as regulators and governments seek to prevent criminal and terrorist networks from exploiting formal financial channels, digital payment systems and other financial infrastructure.
For Nigeria’s financial sector, the CBN’s latest position reinforces the expectation that financial institutions must treat terrorism-financing risk as an active and evolving compliance issue rather than a purely procedural requirement.
The move also sends a signal to international investors, correspondent banks and financial institutions that Nigeria remains focused on strengthening the integrity and resilience of its financial system.
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For banks and other regulated entities, the immediate priority will be to ensure that their risk-assessment frameworks, transaction-monitoring systems, sanctions-screening processes and suspicious-transaction reporting mechanisms are sufficiently robust to withstand increased regulatory scrutiny.
The CBN’s enhanced supervisory focus does not represent a new standalone regulatory regime but signals heightened supervisory attention to existing terrorism-financing obligations and the effectiveness of institutions’ controls.
