NIGERIA Law and Practice Contributed by: Isa Alade, Seyi Bella, Ayodele Adeyemi-Faboya and Ayomikun Ogunkanmi, Banwo & Ighodalo
2.12 Review of Industry Participants by Parties Other than Regulators The NIBSS, among other things, initiates and develops an integrated nationwide network for electronic or paperless payments, funds transfer, and transaction settlement. To fulfil its mandate, the NIBSS sets verification standards that must be complied with by industry participants who seek to consummate transactions on the NIBSS network. In addition, the Companies and Allied Matters Act 2020 (as amended) (CAMA) stipulates that all companies in Nigeria must prepare audited financial statements comprising an auditor’s report certified by an independent auditor. How - ever, companies that have not carried on busi - ness since incorporation and small companies as defined under Section 394 of the CAMA are exempt from preparing audited financial state - ments. Thus, all fintech companies operating in Nigeria must be audited annually by certified independent audit firms, except those that fall within the exemption bracket. 2.13 Conjunction of Unregulated and Regulated Products and Services Generally, it is not permissible for licensed/regis - tered companies offering regulated products to offer unregulated products and services. Regu - lated entities in the financial services industry submit annual returns for their operations/busi - nesses and undergo an annual examination that will expose unregulated products/services. Nonetheless, certain participants offer regulated and unregulated products and services through the same legal entity. 2.14 Impact of AML and Sanctions Rules The main legislation prohibiting money launder - ing in Nigeria is the Money Laundering (Pre - vention and Prohibition) Act 2022 (MLPA). The
CBN’s AML/CFT Regulations regulate financial institutions under the CBN’s regulatory purview, and the SEC’s AML/CFT Regulations regulate institutions under the SEC’s regulatory purview. The MLPA, which is more general in its scope, imposes the obligation to conduct KYC checks on financial institutions and designated non- financial businesses (DNFBs). To the extent that an unregulated entity does not fall under the def - inition of a financial institution or a DNFB, it is not bound by the requirements of the MLPA – given that it relates to financial institutions and DNFBs, including the fulfilment of the KYC requirements. However, a fintech company that holds a CBN or SEC licence and/or falls under the definition of a financial institution or DNFB under the MPLA is required to comply with the KYC require - ments as stipulated under the relevant laws and regulations and to make the required periodical returns. 2.15 Financial Action Task Force Standards Nigeria’s anti-money laundering (AML) and sanc - tions regulations are largely designed to align with the standards set by the Financial Action Task Force (FATF). Nigeria is a member of the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), a specialised institution of the Economic Community of West African States (ECOWAS), and the FATF Style Regulatory Body (FSRB) in West Africa. GIABA facilitates the adoption and implementation of AML and coun - ter-terrorist financing (CFT) measures in West Africa, ensuring that member states, including Nigeria, comply with international standards. However, In February 2023, the FATF added Nigeria to its “grey list,” citing significant defi -
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