To initiate a new client or business partner relationship the following steps must be followed:
- the financial institution shall identify its customers and verify the customers’ identities using reliable, independently sourced documents or information;
- where the client is a legal person or a legal arrangement, the financial institution shall identify any person purporting to have been authorised to act on behalf of that customer by obtaining evidence of the customer’s identity and verifying the identity of the authorised person;
- identifying and verifying the legal status of the legal person or legal arrangement by obtaining proof of incorporation from the Companies Registry or similar evidence of establishment or existence;
- identifying and taking reasonable steps to verify the identity of a beneficial owner; and
- taking reasonable measures to understand the ownership and control structure of a legal person or legal arrangement and determining the natural persons that ultimately own or control the customer.
Covered institutions are mandated to obtain senior management approval before they establish or continue business relationships with politically exposed persons (PEPs) and they are required to render monthly returns on all transactions to the relevant regulatory authorities.
Covered institutions are also required to take reasonable measures to establish the source of wealth and funds of customers and beneficial owners identified as PEPs.
Covered institutions in business relationships with PEPs shall conduct enhanced and ongoing monitoring of the relationships and report any abnormal transactions as suspicious transactions.
For cross-border and correspondent banking relationships, covered institutions are required to obtain approval from senior management before establishing correspondent relationships, gathering sufficient information about a respondent institution to understand fully the nature of its business and determine from publicly available information the reputation of the institution and the quality of the supervision, document and assess the respondent institution’s AML and combating the financing of terrorism controls and ascertain that they are in compliance with FATF standards.
For wire transfers of US$1,000 or more, the ordering financial institution must obtain, identify and maintain records of the name, account number (or unique reference code) and address of the originator.
Enhanced due diligence is required for higher-risk customers, including non-resident customers, private banking customers, PEPs and legal persons that serve as personal asset-holding vehicles (see question 18).
In relation to existing client and business partner relationships:
- a party must ensure that such client’s records are up to date and that in the event of a transfer of ownership of a corporate client it is aware of the identity of the natural persons who truly own or control the client; and
- furthermore, the client could be asked to provide references and discreet investigations could be conducted with law enforcement agencies.
Yes, the AML regulations stipulate that covered institutions and persons conduct risk-based analysis, document their risk assessment profile and keep the assessments up to date. The Money Laundering Act states that where the customer is a PEP, the financial or non-financial institution shall:
- establish the individual’s identity by means of any identification document as prescribed in any relevant regulation;
- verify the individual’s identity by means of reliable, independent source documents, data or information; and
- put in place appropriate risk-management systems and obtain senior management approval during, and before establishing, any business relationship with the PEP.
A financial institution shall perform enhanced due diligence for higher-risk customers, which include:
- non-resident customers;
- private banking customers;
- legal persons or arrangements that are personal asset-holding vehicles;
- cross-border banking relationships; and
Under the Money Laundering Act and other relevant legislation, covered institutions are required to maintain records including identification data, business correspondence and account files of all transactions both domestic and international for at least five years after completion of the transaction or such longer period as may be required by the regulatory authorities.
The components of the records of transactions to be maintained would include names and addresses or other identifying information, nature and date of the transaction, type and amount of currency involved and the type and identifying number of any account involved in the transaction.
Under the Money Laundering Act and other relevant legislation, where a transaction’s frequency is unjustifiable or unreasonable, appears to have no economic justification or lawful objective or is simply inconsistent with the known transaction relationship, the covered institutions or persons are required within 24 hours of the transaction to:
- draw up a written report containing the identity of the principal and the beneficiary or beneficiaries;
- take appropriate action to prevent the laundering of the proceeds of criminal conduct;
- send a copy of the report and action taken to the Nigerian Financial Intelligence Unit (NFIU);
- keep the record of a customer’s identification for a period of at least five years after the closure of the account or the severance of relations with the customer; and
- keep the record and other related information of a transaction carried out by a customer for a period of five years after carrying out the transaction.
There is a law that governs banker-customer confidentiality. However, the Money Laundering Act makes it mandatory for the covered institutions and persons to send their records to domestic law enforcement agencies and the NFIU. A lawyer’s obligation not to disclose privileged communications with clients is also the subject of an express provision in the Evidence Act. In any event, and as noted in question 14, the present law in Nigeria is that lawyers are not included in the list of designated NFIs subject to the AML regime imposed by the Money Laundering Act and other relevant legislation. The Constitution contains a broadly stated guarantee of privacy, and its extent, with regard to AML and other laws has yet to receive judicial consideration.
The Inter-governmental Action Group Against Money Laundering in West Africa published its last mutual evaluation report on Nigeria in May 2015. There has been no report published for 2017.