The Central Bank of Nigeria (CBN) has unveiled a draft framework aimed at revolutionizing the nation’s approach to anti-money laundering (AML) by mandating the use of automated, AI-driven systems across the financial sector.
Outlined in a circular dated May 20, 2025, and addressed to all regulated financial institutions, the CBN emphasized the need to modernize AML practices in response to the rapid digital transformation of Nigeria’s financial landscape. The document, referenced BSD/DIR/CON/AML/018/033, lays out baseline standards for implementing intelligent AML tools powered by artificial intelligence (AI) and machine learning (ML).
12-Month Compliance Timeline
Following a stakeholder review period ending June 13, 2025, the final framework will be published. From the date of issuance, financial institutions will have 12 months to comply with the new requirements.
“All institutions must align their AML solutions with the new baseline standards within a year,” the draft circular stated.
Broad Institutional Scope
The framework applies to a wide array of financial entities under the CBN’s regulatory purview, including:
- Commercial banks
- Microfinance institutions
- Mortgage banks
- Digital payment providers
- Other regulated financial services companies
Intelligent AML Systems Mandated
Key provisions in the draft require institutions to deploy smart AML systems with real-time monitoring and risk detection capabilities. These systems must utilize AI/ML to:
- Detect unusual or high-risk transactions
- Recognize behavioral patterns
- Perform adaptive risk scoring
- Monitor large cash movements, cross-border transfers, and crypto-related activities
Systems must also integrate seamlessly with existing banking platforms and customer onboarding tools. Real-time dashboards, case management tools, and scalable configurations are mandated to help institutions respond to specific operational needs and risk levels.
Enhanced Customer Due Diligence
A core focus of the framework is on strengthening Know Your Customer (KYC) and Know Your Customer’s Business (KYCB) processes. Institutions must have real-time access to verified customer identity data and integrate their AML systems with Nigeria’s Bank Verification Number (BVN) and National Identification Number (NIN) databases.
Ongoing risk profiling and periodic reclassification of customers based on behavioral data are also required, especially for high-risk individuals or accounts.
Advanced Screening Capabilities
The draft framework calls for integration with domestic and global watchlists to screen for sanctioned individuals and politically exposed persons (PEPs). Systems must use fuzzy matching technology to identify name discrepancies that may escape conventional checks.
Additional features must include:
- Adverse media screening
- Internal watchlist maintenance
- Automated updates of third-party risk databases
Industry-Wide Overhaul
The CBN’s proposal is the product of a detailed review of existing AML tools and best practices from other jurisdictions where AI-driven compliance models are already in use.
Once adopted, this framework is expected to significantly enhance the Nigerian financial system’s ability to combat money laundering, bolster transparency, and align with international AML standards set by organizations such as the Financial Action Task Force (FATF).
Stakeholders are encouraged to provide feedback before the framework is finalized in June. The move marks a critical step in Nigeria’s efforts to modernize its regulatory infrastructure and safeguard the integrity of its financial institutions.
