Last week, President Buhari released transmitted two bills that could largely impact business transactions in Nigeria. These are the Money Laundering and Terrorism Prevention bills that he passed to the National Assembly for consideration and passage to meet global standards and avoid the blacklisting of Nigeria by the Financial Action Task Force (FAFT).
We covered everything you need to know about the bill and how it affects businesses in this article – Looming: Failure to Pass Pending Anti-Money Laundering (AML) & Terrorism Prevention Bills Could See Nigeria Globally Blacklisted.
How does this bill impact businesses in Nigeria?
This bill was designed to address the deficiencies in Nigeria’s Anti-Money Laundering/Combating the Financing of Terrorism regime (AML/CFT). Because the Financial Action Task Force (FAFT) sets the global standards, the requirements of the bills and how it affects businesses are according to their regulations.
According to an official press release, here are the latest FATF recommendations that directly concern businesses:
Customer due diligence
Financial institutions should be prohibited from keeping anonymous accounts or accounts in obviously fictitious names.
Financial institutions should be required to undertake customer due diligence (CDD) measures when:
(i) Establishing business relations;
(ii) Carrying out occasional transactions: (a) above the applicable designated threshold (USD/EUR 15,000); or (b) that are wire transfers in the circumstances covered by the Interpretive Note to Recommendation 16;
(iii) There is a suspicion of money laundering or terrorist financing; or
(iv) The financial institution has doubts about the veracity or adequacy of previously obtained customer identification data
Politically exposed persons (PEP)
Financial institutions should be required, in relation to foreign politically exposed persons (PEPs) (whether as a customer or beneficial owner), in addition to performing normal customer due diligence measures, to:
(a) have appropriate risk-management systems to determine whether the customer or the beneficial owner is a politically exposed person;
(b) obtain senior management approval for establishing (or continuing, for existing customers) such business relationships;
(c) take reasonable measures to establish the source of wealth and source of funds; and
(d) conduct enhanced ongoing monitoring of the business relationship.
Financial institutions should be required to take reasonable measures to determine whether a customer or beneficial owner is a domestic PEP or a person who is or has been entrusted with a prominent function by an international organisation.
In cases of a higher-risk business relationship with such persons, financial institutions should be required to apply the measures referred to in paragraphs (b), (c), and (d). The requirements for all types of PEP should also apply to family members or close associates of such PEPs
You can check out the full FATF recommendations here.
What steps should I take to protect my business?
Firstly, major concerns for businesses pertain to explicit customer due diligence to adequately identify the individual you are transacting with. This covers basic KYC, PEP, and background checks on customers and people affiliated with such individuals as the case may be. Failure to do this could attract a penalty from the Nigerian government.
To protect your business, you need to make use of a reliable identity verifications service with access to AML and CFT watch lists. This would ensure you don’t conduct any form of business with such individuals that facilitate fraud.
With Youverify’s YV OS, you can conduct customer due diligence in seconds. Our product allows you to conduct identity verification on customers to meet the most recent compliance and regulations. This helps protect your business as well as satisfy regulations set by the FATF and Nigeria’s Anti-Money Laundering/Combating the Financing of Terrorism regime (AML/CFT).
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How to achieve KYC and PEP requirements
Achieving KYC onboarding is easy when using Youverify’s operating system or YV OS. This innovative software is Youverify’s flagship product that simplifies the whole Know Your Customer process for you. You can create automated forms that perform a preset action based on the KYC needs of your business after verifying the identity and credentials of potential customers.
If you would like a demo of how YV OS can complete your company's KYC due diligence in seconds, you can contact us here.
Fostering New Technology
The FAFT recommendations encourage countries and financial institutions to efficiently identify and assess risks around money laundering or terrorist financing related to:
- Developing new products and business practices including new delivery mechanisms
- The use of emerging technologies for both existing and new products.
Basically, this urges financial institutions to take appropriate steps to identify and mitigate risks around new products and developing technologies.
In addition, this should be accomplished by regulating virtual asset service providers for AML and CFT purposes. They should also be registered or licensed accordingly to ensure effective monitoring and ensuring compliance with the set FATF recommendations.
This welcomed development would foster the adoption of emerging products and technologies by countries and businesses. More importantly, it would create an environment with minimal risk regarding money laundering and terrorist financing for financial institutions and the country at large.
If you would like a demo of how YV OS can complete your company's KYC due diligence in seconds, you can contact us here.
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