FATF status

Nigeria is on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement  -  23 February 2024

Since February 2023, when Nigeria made a high-level political commitment to work with the FATF and GIABA to strengthen the effectiveness of its AML/CFT regime, Nigeria has taken steps towards improving its AML/CFT regime, including by updating its national AML/CFT strategy and other relevant national strategies, establishing a mechanism to maintain comprehensive data on asset confiscation and conducting risk-based and targeted outreach to NPOs at risk of TF abuse. Nigeria should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) disseminating its residual ML/TF risk assessment; (2) enhancing formal and informal international cooperation in line with ML/TF risks; (3) improving AML/CFT risk-based supervision of FIs and DNFBPs and enhancing implementation of preventive measures for high-risk sectors; (4) ensuring that competent authorities have timely access to accurate and up-to-date beneficial ownership (BO) information on legal persons and applying sanctions for breaches of BO obligations; (5) demonstrating an increase in the dissemination of financial intelligence by the FIU and its use by LEAs; (6) demonstrating a sustained increase in ML investigations and prosecutions in line with ML risks; (7) proactively detecting violations of currency declaration obligations and apply appropriate sanctions; (8) demonstrating sustained increase in investigations and prosecutions of different types of TF activities in line with risk and enhancing interagency cooperation on TF investigations; and (9) implementing risk-based monitoring for the subset of NPOs at risk of TF abuse without disrupting or discouraging legitimate NPO activities.

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Nigeria was undertaken in 2023. According to that Evaluation, Nigeria was deemed Compliant for 13 and Largely Compliant for 19 of the FATF 40 Recommendations. It was assessed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness ratings.

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US Department of State Money Laundering assessment (INCSR) 

Nigeria is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes

Overview

Nigeria is a major drug transshipment point and a significant center for financial crime and cyber-crimes.  

The Central Bank of Nigeria (CBN) oversees policies to mitigate money laundering/terrorist financing (ML/TF) in the banking industry.  The integrity of Nigeria’s financial systems is a major problem; the economy has a significant share of informal, cash-based transactions that are difficult to oversee.  The Anti-Money Laundering/Countering Finance of Terrorism (AML/CFT) Act requires tracing of transactions and identifying sources of cash.  There is low compliance by financial institutions.  Many contributors to the financial sector operate outside the banking sector, and government regulators have limited ability to trace transactions.    

Egmont Group

The Heads of FIU concluded that legislative changes in Nigeria addressed the issues that led to its suspension in 2017. Consequently, the suspension on Nigeria was lifted. The NFIU can now participate in all Egmont events and activities with the full rights of a member.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           25

World Governance Indicator – Control of Corruption             15

Corruption is a significant obstacle to business in Nigeria: companies are very likely to encounter bribery and other corrupt practices. Corruption risks are pervasive throughout all institutions but the oil sector is particularly corrupt. Corruption is criminalised primarily by the Criminal Code and the Corrupt Practices and Other Related Offences Act. Accepting or giving gifts as well as facilitation payments are illegal, and individuals can be penalised with up to 7 years' imprisonment. Despite a strong legal framework, enforcement of anti-corruption legislation in Nigeria remains weak: in practice, gifts, bribery and facilitation payments are the norm. For further information - GAN Integrity Business Anti-Corruption Portal

Nigeria’s economy – Africa’s largest – experienced real GDP growth of 3.3% (according to the IMF) in 2022 following a GDP real growth rate of 3.6% the previous year. Sustained higher interest rates and inflation continued, at least partly attributable to Russia’s war on Ukraine. The IMF forecasts a growth rate of about 3% in 2023 while the Nigerian government predicts a more robust 3.8% growth rate in 2023. President Muhammadu Buhari’s administration has prioritized diversification of Nigeria’s economy beyond oil and gas, with the stated goals of building a competitive manufacturing sector, expanding agricultural output, and capitalizing on Nigeria’s technological and innovative advantages. With the largest population in Africa, Nigeria is a potentially attractive consumer market for investors and traders which offers abundant natural resources and a low-cost labor pool.

The government has undertaken reforms to help improve the business environment, including facilitating faster business start-up by allowing electronic stamping of registration documents, and making it easier to obtain construction permits, register property, obtain credit, and pay taxes. Foreign direct investment (FDI) inflows nevertheless declined to $422 million in the first eleven months of 2022 (the latest data available) from $581 million during the same period in 2021 as persistent economic challenges remain.

Corruption is a serious obstacle to Nigeria’s economic growth and is often cited by domestic and foreign investors as a significant barrier to doing business. Nigeria ranked 150 out of 175 countries in Transparency International’s 2022 Corruption Perception Index, compared to its 2021 rank of 154. Among other complaints, businesses report that corruption by customs and port officials often leads to extended delays in port clearance processes and to other issues importing goods.

Nigeria’s trade regime is protectionist in key areas. High tariffs, restricted foreign exchange availability for 44 categories of imports, and prohibitions on many other import items have the aim (if not the effect) of spurring domestic agricultural and manufacturing sector growth. The government provides tax incentives and customs duty exemptions for pioneer industries including renewable energy. A decline in oil exports, rising prices for imported goods, an overvalued currency, and Nigeria’s expensive gasoline subsidy regime continued to exert pressure on the country’s foreign exchange reserves in 2022. Domestic and foreign businesses frequently cite lack of access to foreign currency as a significant, if not the most significant, impediment to doing business.

Nigeria’s underdeveloped power sector is a bottleneck to broad-based economic development and forces most businesses to generate a significant portion of their own electricity. Reform of Nigeria’s power sector is ongoing, but investor confidence continues to be weakened by regulatory uncertainty and limited domestic natural gas supply.

Security remains a concern to investors in Nigeria due to violent crime, kidnappings for ransom, and terrorism in certain parts of the country. The ongoing Boko Haram and Islamic State in West Africa (ISIS-WA) insurgencies have included attacks against civilian and military targets in the northeast of the country. Nigeria has experienced a rise in kidnappings for ransom and attacks on villages by armed gangs in the North West and North Central regions. Criminal attacks on oil and gas infrastructure in the Niger Delta region that restricted oil production in 2016 have eased, but high levels of illegal bunkering and oil theft has left the sector in a similar state of decreased output.

Russia’s war in Ukraine worsened Nigeria’s fiscal strain and exacerbated the country’s double-digit inflation. Inflation, which had declined to 15.6% in January 2022, began to rise in February and ended the year at 21.3%. The cost of importing food and agricultural inputs was disproportionately affected by the war, causing food inflation to increase from 17% to 24% during the same period. The conflict contributed to upward price pressures on staple food items and exacerbated concerns about Nigerian households’ shrinking access to essential food items. The sharp increase in the costs of wheat and other cereals that constitute the essence of Nigerian staple foods, as well as the increased cost of fertilizer, exacerbated food security concerns.

Despite being an oil producer, Nigeria suffered from the increase in global oil prices occasioned by Russia’s war of aggression in Ukraine; the cost of the government’s gasoline subsidy increased by about 17% in 2022, while local diesel prices saw a nearly fourfold increase. Diesel is the primary fuel for transporting agricultural produce and manufactured products throughout the country, and is not subsidized. In addition, most businesses rely on diesel generators to power their operations, further contributing to rising prices.

Country Links

Nigerian Financial Intelligence Unit (NFIU)​

Central Bank of Nigeria

Securities and Exchange Commission (Nigeria)