The Central Bank of Nigeria (CBN) has implemented a new set of rules to tackle the age-long economic menace which is Money Laundering. The principal bank of Nigeria announced its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Policy & Procedure Manual.
The newly released AML/CFT sees CBN move to shield against establishing correspondent banking relationships with high-risk foreign Banks like Shell Bank with correspondent banks notorious for giving up their prestige for Money Laundering/Financing Terrorism (ML/FT).
According to CBN, criminals are capable of abusing all banking product used to covert cash to monetary investment and also electronic products that permit rapid value movement such as electronic transfers, FOREX transactions followed by payment into an account in another jurisdiction.
Ways CBN Intend to Curb Money Laundering
The regulator states that transactions through Correspondent banking relationship shall be handled in tune with a risk-based approach, and Know Your Correspondence (KYC) procedures shall be introduced to determine whether or not the correspondent bank or the counter-party is itself checked for money laundering deterrence.
In cases where they are regulated, the correspondent shall verify the identity of it’s customers in accordance with Financial Action Task Force (FATF) standards.
Where reverse is the case pertaining regulation, extra due diligence is employed to determine the Correspondent’s internal policy on money laundering & KYC procedures. The CBN advises precautionary measures when dealing with third parities, located in geographical locations, with notoriety of supporting Terrorism, base for drug production/Distribution,
“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.
“Another factor in this ranking is the possibility of over-inflated invoicing for low value or worthless merchandise. All other trade products have been risk ranked either medium or low risk.” CBN posited.
CBN further instructed that it shall only accept customers after due verification of customers’ identities, address and/or place of business. After this ascertainment, their source(s) of income following consideration on the level of risk they pose to the bank, based on the kind of business under consideration (such as bureau de change operators).
CBN also called against opening account for anonymous or fictitious customers. Customer acceptance process also include ensuring that the prospective customer is not on the society’s watchlist which may include names of sanctioned persons or well known fraudsters.