Banks get 18 months to launch anti-money laundering systems

The Central Bank of Nigeria (CBN) has directed banks and other financial institutions to implement automated anti-money laundering (AML) systems capable of detecting suspicious financial transactions and strengthening compliance with financial crime regulations.

The directive was issued in a circular dated March 10, 2026, titled “Issuance of Baseline Standards for Automated Anti-Money Laundering (AML) Solution for Financial Institutions in Nigeria.”

Signed by Akinwunmi Olubukola, director of the banking supervision department, and Olubunmi Ayodele-Oni on behalf of the compliance department director, the circular applies to banks, mobile money operators, international money transfer operators, payment service providers, and other regulated financial institutions.

18–24 month compliance timeline

According to the regulator, implementation of the guidelines takes effect immediately.

Deposit money banks have been given 18 months to achieve full compliance, while other financial institutions have 24 months to implement the new standards.

The CBN also instructed affected institutions to submit detailed implementation roadmaps to the regulator within three months of the circular’s issuance.

The apex bank said the new framework aims to strengthen Nigeria’s financial crime detection capabilities as digital financial services continue to expand.

Shift from manual monitoring to automated systems

The CBN noted that traditional manual compliance processes are no longer sufficient to address evolving financial crime risks in an increasingly digital financial system.

Under the new standards, financial institutions are required to deploy automated AML solutions capable of detecting suspicious transactions in real time and improving reporting accuracy to regulators and relevant authorities.

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The systems are expected to support customer identification and verification, risk assessment, transaction monitoring, investigation case management, regulatory reporting, and governance functions.

Financial institutions are also required to integrate these systems with their core banking infrastructure to enable more effective monitoring across products, customers, and transaction channels.

AI and machine learning are allowed under strict oversight

The regulator said institutions may adopt advanced technologies such as artificial intelligence, machine learning, and predictive analytics to strengthen the detection of suspicious patterns.

However, the CBN stressed that such technologies must be subject to strict governance and independent validation.

According to the guidelines, institutions must carry out annual independent validation of artificial intelligence and machine-learning models to assess accuracy, performance drift, bias risks, and overall fairness.

The regulator said this process should also include human oversight, where necessary, depending on the institution’s risk profile.

Stronger identity verification and sanctions screening

The standards also require financial institutions to strengthen know-your-customer (KYC) and due diligence processes through automated systems.

The CBN encouraged banks to integrate identity verification checks with national databases such as the Bank Verification Number and the National Identification Number to support real-time identity verification.

AML systems must also screen customers and transactions against sanctions lists, politically exposed persons registers, internal watchlists, and adverse media sources.

The CBN warned that institutions that fail to comply with the standards could face regulatory sanctions, adding that the guidelines represent the minimum compliance threshold required to strengthen Nigeria’s ability to detect and prevent money laundering, terrorism financing, and other financial crimes.