REGULATORY UPDATE: THE CENTRAL BANK OF NIGERIA ISSUES
GUIDELINES FOR LICENSING OF BANKS AND OTHER FINANCIAL
INSTITUTIONS IN NIGERIA
Introduction
On November 23, 2022, the Central Bank of Nigeria (“CBN”) issued the Anti-
Money Laundering, Combating the Financing of Terrorism, and Countering
Proliferation Financing (AML/CFT/CPF) Guidelines for Licensing of Banks and
Other Financial Institutions. (the “Guidelines”).
The Guidelines were issued by the CBN in furtherance of its efforts towards
promoting compliance with AML/CFT/CPF laws and regulations in Nigeria.
In this newsletter, we summarise the additional compliance requirements
applicable to potential banks and OFIs1 in Nigeria.
What is the Scope/Applicability of the Guidelines?
The Guidelines highlight the minimum AML/CFT/CPF requirements in respect of
license applications for banks and other financial institutions which are applicable
in conjunction with other pre-existing AML/CFT/CPF regulations. The Guidelines
became effective on 23rd November 2022 and are applicable to both pending and
new applications, including those awaiting the CBN’s final approval.
What are the objectives of the Guidelines?
The Guidelines seek to;
i) guide promoters in complying with AML/CFT/CPF requirements in
license applications for banks and other financial institutions;
ii) ensure that proceeds of crimes are not used to establish financial
institutions;
iii) ensure that criminals do not own or control financial institutions in
Nigeria;
iv) identify and verify the Beneficial Owners2 of financial institutions; and
v) ensure that promoters of financial institutions put in place appropriate
and effective measures to mitigate risks of money laundering, terrorism
financing, and proliferation of weapons of mass destruction (ML/TF/PF).
What are the requirements for the application of a CBN-issued license?
The promoters of financial institutions and OFIs are required to provide the
following when making an application for a license:
i) a completed and personally signed Beneficial Owners Declaration Form,
which requires the inclusion of details and information concerning the
Beneficial Owner;
1
OFI’s include Deposit money banks, discount houses, primary mortgage institutions, finance companies, bureau-
de-change, development finance institutions, micro finance banks, payment service providers, e.t.c
2
A beneficial owner includes the natural person(s) who ultimately owns or controls the customers/
corporate entity.
ii) a notarised statement of net worth for all Beneficial Owners;
iii) a completed and personally signed Politically Exposed Persons (PEP)
Declaration Form;
iv) an AML/CFT/CPF compliance policy;
v) the shareholding structure of the institution for which licence is sought,
and all relevant incorporation documents;
vi) where a shareholder or prospective shareholder is a legal person or legal
arrangement, all relevant incorporation documents, detailing the current
shareholding structure and directorship/trustee/fiduciary information; and
vii) the curriculum vitae of the Beneficial Owners.
The requirements above are not exhaustive, as the promoters are also expected to
comply with licensing requirements specified in guidelines relevant to the
institution to be set up.
What are the instances where the CBN may reject an application?
The CBN may reject an application for a license, in an instance where the
promoters;
i) fail to demonstrate understanding of the ML/TF/PF risks inherent in the
business;
ii) are unable to address the AML/CFT/CPF licensing requirements
satisfactorily;
iii) misrepresent facts and make false declarations; and
iv) application indicates a criminal record of conviction of any offence that
constitutes a financial crime.
Conclusion
It appears the CBN has issued the Guidelines to prevent the ownership of financial
institutions by financial criminals or potential launderers and therefore seeks to
ensure that promoters of entities under its regulatory purview, i.e banks, and other
financial institutions put in place measures to mitigate AML/CFT risks in such
institutions before they are formed and issued a license to operate. Whilst it is
uncertain to what extent the information contained in applications would be
verified, this compliance requirement as a condition precedent to being issued a
license may alleviate the risks of money laundering and terrorism financing within
the financial services sector.
