The Central Bank of Nigeria (CBN) has issued new regulations for customer due diligence for financial institutions under its supervision. The regulations are aimed at enhancing the prevention and detection of money laundering, terrorism financing, and proliferation financing of weapons of mass destruction.
According to the CBN, the new regulations require financial institutions to obtain and verify various information from their customers, including their social media handle, e-mail address, telephone number, residential address, and more.
The Customer Due Diligence Regulations 2023
The CBN released the Customer Due Diligence Regulations 2023 on May 31, 2023, as a supplement to the existing Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction in Financial Institutions Regulations 2022.
The regulations apply to all financial institutions under the CBN’s purview, such as banks, microfinance banks, primary mortgage institutions, finance companies, development finance institutions, bureau de change operators, mobile money operators, payment service providers, and payment solution service providers.
The regulations provide additional measures for customer identification, verification, and ongoing due diligence based on a risk-based approach. They also specify the minimum cut-off marks for different categories of customers and businesses.
The Implications for Customers and Financial Institutions
The new regulations imply that customers who want to open or maintain accounts with financial institutions must provide their social media handle and other personal details as part of the Know Your Customer (KYC) process. Customers must also update their information regularly or whenever there is a change in their circumstances.
Financial institutions must establish internal policies and procedures for conducting customer due diligence measures for both existing and potential customers. They must also keep records of customer information and transactions for at least five years after the end of a business relationship or an occasional transaction.
Financial institutions that fail to comply with the new regulations may face sanctions from the CBN, such as fines, suspension, revocation of license, or prosecution.
The CBN may also impose additional measures on financial institutions that pose higher risks of money laundering or terrorism financing.
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