Anti-Money Laundering (AML) in Nigeria: A 2025 Guide

In February 2025, the Financial Action Task Force (FATF) lauded Nigeria for its significant progress in strengthening its Anti-Money Laundering (AML) framework. This recognition marks a pivotal moment in Nigeria’s fight against financial crime, positioning the country as a leader in combating money laundering and terrorist financing in West Africa. For businesses operating within Nigeria or with Nigerian partners, understanding the country’s evolving AML regulations and compliance landscape is crucial.

This guide provides a comprehensive overview of the state of AML in Nigeria as it stands in 2025. It explores the regulatory framework, key developments, the role of technology, and best practices for businesses to ensure compliance with AML laws. With FATF’s endorsement of Nigeria’s AML efforts, now is the time for businesses to align their operations with Nigeria’s robust anti-money laundering policies to mitigate risks and ensure long-term success.

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Nigeria’s AML Progress: A Snapshot of 2025

Nigeria's journey towards a robust AML framework has not been without its challenges. However, significant strides have been made in the last few years. In February 2025, FATF’s recognition of Nigeria’s progress highlighted the nation’s commitment to improving its anti-money laundering and counter-financing of terrorism (CFT) systems. Key improvements include:

• Enhanced legislative reforms: Nigeria has strengthened its legal and regulatory frameworks for tackling financial crimes, updating existing laws to meet international standards.
  
  
• Increased enforcement capabilities: The Nigerian Financial Intelligence Unit (NFIU) has expanded its role and capacity, increasing the frequency and efficiency of investigations.
  
  
• Improved financial sector cooperation: The Central Bank of Nigeria (CBN) and other regulatory bodies have been working more closely with financial institutions to ensure compliance with AML regulations.
  
  

This progress signals Nigeria's determination to curb financial crime and its willingness to align with global best practices. It also creates opportunities for businesses to operate with greater confidence in a more stable and predictable regulatory environment.

The Regulatory Framework: Key Laws and Institutions

Nigeria’s anti-money laundering efforts are underpinned by a solid legal and institutional framework. The country has developed a comprehensive set of regulations that align with international AML standards, particularly those set by the FATF. Key pieces of legislation and regulatory bodies include:

1. The Money Laundering (Prohibition) Act, 2011 (as amended)

This act is the cornerstone of Nigeria’s AML framework. It criminalises money laundering and outlines penalties for individuals or institutions found guilty of facilitating or engaging in money laundering activities. The act also provides detailed guidelines on the duties of financial institutions and other regulated entities to detect and report suspicious transactions.

In its 2025 form, the Money Laundering (Prohibition) Act includes several key provisions:

• Customer due diligence (CDD): Institutions are required to perform CDD procedures, including verifying the identity of customers and monitoring transactions for suspicious activity.
  
  
• Record-keeping: Institutions must maintain records of transactions and customer information for at least five years, facilitating investigations when necessary.
  
  
• Reporting obligations: Financial institutions are required to report suspicious transactions to the Nigerian Financial Intelligence Unit (NFIU).
  
  

2. The Terrorism (Prevention) Act, 2011 (as amended)

This act complements the Money Laundering (Prohibition) Act by specifically addressing the issue of terrorist financing. It criminalises activities related to the financing of terrorism, including the provision of funds to terrorist groups. Financial institutions must take steps to detect and prevent the financing of terrorism, including conducting enhanced due diligence on high-risk customers and monitoring financial transactions that could be linked to terrorism.

3. The Nigerian Financial Intelligence Unit (NFIU)

The NFIU plays a central role in Nigeria’s AML/CFT efforts. It serves as the national center for receiving, analyzing, and disseminating financial intelligence. The NFIU collaborates closely with law enforcement agencies, regulatory bodies, and international counterparts to investigate financial crimes and ensure that suspicious transactions are thoroughly examined.

With its enhanced capabilities, the NFIU has become a critical player in tracking illicit financial flows, investigating money laundering, and supporting global efforts to fight terrorism financing. The unit’s ability to collect and analyze data has been strengthened in recent years, thanks to improved technology and increased cooperation with both national and international financial institutions.

4. The Central Bank of Nigeria (CBN)

The CBN is Nigeria's primary financial regulatory authority, overseeing the operations of banks and other financial institutions in the country. The CBN is responsible for enforcing AML regulations within the financial sector and ensuring that financial institutions adhere to customer due diligence procedures, report suspicious transactions, and implement internal controls to prevent money laundering.

The CBN has also played a key role in aligning Nigeria’s AML policies with international best practices, working closely with the FATF, the International Monetary Fund (IMF), and other global regulators to strengthen the country’s financial crime prevention efforts.

2025: Key AML Developments in Nigeria

1. Strengthened Enforcement and Investigations

In 2025, Nigeria has made notable advancements in its enforcement of AML laws. The Nigerian government has significantly improved its investigation and prosecution mechanisms. The NFIU, in collaboration with law enforcement agencies, has been more effective in tracking illicit financial activities and prosecuting offenders.

These efforts are supported by a more sophisticated intelligence-sharing network, both within Nigeria and internationally. The country’s improved ability to trace illicit flows and coordinate with foreign financial intelligence units has resulted in more robust enforcement actions.

2. Enhanced Technology Use in Compliance

One of the most significant developments in Nigeria’s AML landscape is the increased use of technology to fight financial crime. Financial institutions in Nigeria are now implementing more advanced transaction monitoring systems and artificial intelligence to detect suspicious activities in real time. These technologies allow institutions to identify patterns and trends that may indicate money laundering or terrorist financing, helping to reduce human error and increase the efficiency of investigations.

Nigeria is seeing an increase in the use of blockchain and digital ledgers to track the movement of funds, improving transparency and accountability in financial transactions. These technologies are helping Nigerian financial institutions and regulatory bodies stay one step ahead of criminal networks.

3. Expanding Scope of Customer Due Diligence (CDD)

The Nigerian AML framework continues to place strong emphasis on customer due diligence (CDD), and in 2025, the scope of these obligations has expanded. Financial institutions are required to conduct ongoing monitoring of customer transactions to detect suspicious activity throughout the business relationship, not just during onboarding.

As a result, businesses must enhance their CDD processes by gathering detailed information about their clients’ source of wealth and nature of business. They must also ensure that they have procedures in place to update customer profiles when changes in customer behaviour or risk factors are detected. This shift towards dynamic CDD reflects a more proactive approach to AML compliance.

Best Practices for AML Compliance in Nigeria in 2025

With Nigeria’s evolving regulatory landscape and FATF’s endorsement, businesses must adopt best practices to ensure they remain compliant with AML regulations. These best practices should be integrated into your operations, from onboarding customers to daily transaction monitoring.

1. Adopt a Risk-Based Approach to AML

A risk-based approach to AML means focusing your efforts on high-risk customers and transactions. Financial institutions in Nigeria should assess the risks associated with each customer or business relationship, considering factors such as:

• Geographical location: High-risk countries or regions should trigger enhanced due diligence measures.
  
  
• Customer type: Politically exposed persons (PEPs), corporate clients with complex ownership structures, and high-net-worth individuals (HNWIs) may require more thorough scrutiny.
  
  
• Transaction patterns: Unusual or large transactions should be flagged for further investigation.
  
  

By prioritising resources on higher-risk areas, financial institutions can optimise their compliance efforts and reduce the likelihood of money laundering or terrorism financing.

2. Leverage Advanced Technology and AI Tools

As technology continues to evolve, so should your AML compliance tools. In 2025, Nigerian financial institutions are increasingly adopting artificial intelligence (AI), machine learning (ML), and blockchain technologies to improve their transaction monitoring and detection systems. These tools help identify suspicious patterns and outliers, reducing false positives and improving the accuracy of investigations.

Investing in advanced technology not only helps streamline your AML compliance efforts but also positions your organisation to stay ahead of regulatory changes and global financial crime trends.

3. Ensure Robust Reporting and Record-Keeping

In line with the Money Laundering (Prohibition) Act, financial institutions in Nigeria are required to maintain comprehensive records of customer transactions and due diligence efforts. These records must be stored securely and accessible for inspection by regulatory authorities when required. Regular audits of these records help ensure that your AML compliance practices are effective and meet the necessary standards.

Timely and accurate reporting of suspicious activities to the Nigerian Financial Intelligence Unit (NFIU) is critical to staying compliant. It is important that your organisation has established internal processes to detect and report suspicious transactions promptly.

4. Provide Ongoing Staff Training and Awareness

AML compliance is a company-wide responsibility, and regular staff training is key to maintaining a robust compliance programme. In 2025, Nigerian financial institutions must ensure that their staff are well-versed in the latest AML regulations, money laundering schemes, and how to spot suspicious activity.

Training should cover topics such as:

• Customer due diligence and enhanced due diligence procedures
  
  
• The process for reporting suspicious transactions
  
  
• Recognising red flags for money laundering and terrorist financing
  
  
• The legal consequences of non-compliance
  
  

Empowering employees with the knowledge to detect and respond to financial crime will help create a culture of compliance and reduce the risk of breaches.

5. Collaborate with Global Regulatory Bodies

Finally, Nigeria’s position as an active member of the FATF means that financial institutions should engage with global AML regulators and share information and intelligence where possible. Regular participation in international forums, data-sharing initiatives, and cross-border investigations strengthens Nigeria’s AML framework and enhances global efforts to fight financial crime.

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Conclusion: AML in Nigeria

Nigeria’s AML journey has reached a significant milestone in 2025, with the country receiving FATF’s praise for its progress. With stronger regulatory frameworks, advanced technology, and more efficient enforcement mechanisms, Nigeria has positioned itself as a key player in the global fight against money laundering and terrorism financing. For businesses operating in or with Nigeria, staying compliant with the country’s evolving AML regulations is critical to mitigating financial crime risks and maintaining a strong reputation.

By adopting best practices such as risk-based approaches, leveraging AI and blockchain, ensuring proper reporting, and maintaining robust training programmes, businesses can navigate Nigeria’s AML landscape successfully. With continued international cooperation and regulatory improvements, Nigeria is well on its way to becoming a global leader in anti-money laundering efforts, and businesses have the opportunity to lead the charge in ensuring that they remain compliant in this dynamic environment.

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