CBN rolls out new anti money laundering sanction regime

The Central Bank of Nigeria (CBN) has rolled out a
tougher sanctions regime for Anti-Money Laundering and Combating
the Financing of Terrorism (AML/CFT) which stipulates fines on
banks, their directors and other key officials for 48 money
laundering infractions.

The new regime is an imporovement on existing regime, which only
stipulates fines against financial institutions for money
laundering infractions.

The new regime was also developed to ensure that Nigeria’s
compliance with Financial Action Task Force (FATF) recomendation 35
which states: “Countries should ensure that there is a range of
effective, proportionate and dissuasive sanctions, whether
criminal, civil or administrative, available to deal with natural
or legal persons covered by Recommendations 6, and 8 to 23, that
fail to comply with AML/CFT requirements. Sanctions should be
applicable not only to financial institutions and DNFBPs, but also
to their directors and senior management.”

According to the CBN, banks and board members or chief
compliance officers will all be sanctioned for 31 out of the 48
money laundering infractions listed in the new regime.

For each of the 31 infractions, the new regime stipulates
minimum fines ranging from N500,000 to N1.2 million on board
members or chief compliance officers or the internal auditor, and
fines ranging from N1 million to N20 million on the offending
bank.

The new sanction regime was communicated to banks and other
financial institutions by the Director Financial Policy and
Regulations Department of the apex bank, Kevin N. Amugo, through a
circular titled: “CBN Anti-Money Laundering and Combating the
Financing of Terrorism (administrative sanctions) regulations,
2018.”

The circular stated: “Banks and other financial institutions are
by this circular, informed of the attached ‘CBN AML/CFT
Administrative Sanctions Regime’ the application of which comes
into effect as at the date of the Gazette. Kindly ensure
compliance.”

The infractions and penalties stipulated under the new regime
include: failure to approve the AML/CFT policies and procedures -a
minimum penalty as follows: N1 million on each member of the board
and N20 million on the Deposit Money Banks (DMB);

Failure to review/ update the AML/CFT policies and procedures at
least every three (3) years, a minimum penalty as follows: N750,000
on the Executive compliance officer in the for instance and
N750,000 for each year that the contravention continues.

N500,000 on the Chief compliance officer in the first instance
and N500,000 for each year that the contravention continues. N5
million on the bank in the first instance and N1 million for each
year that the contravention continues;

“Failure to communicate the AML/CFT program of the organization
to the employees. A minimum penalty as follows: N750,000 on the
Executive compliance officer, N500,000 on the Chief compliance
officer and N10 million on the DMB.

‘Failure of the board or its committee to supervise and ensure
the effective implementation of the AML/CFT programme, A minimum
penalty as follows: N500,000 on each member of the board and N10
million on the DMB.”

“Failure of the officer to generate periodic reports on AML/CFT
issues to the board or its relevant committee, a minimum penalty as
follows: N750,000 on the Executive compliance officer, N500,000 on
the Chief compliance officer and N5 million on the DMB;

“Failure to classify ML/TF risks in the bank, failure to put in
place guidelines for risk assessment and profiling of customers in
institutions’ AML/CFT board approved program and failure to
carryout risk assessment and profiling of each account, a minimum
of N1 million on the Chief compliance officer of the DMB, a minimum
penalty of N3 million on the DMB for failure to put in place
guidelines for risk assessment and profiling of customers in
AML/CFT program. A minimum of N100,000 per account for failure to
carryout risk assessment and profiling of account.

The Central Bank of Nigeria (CBN) has rolled out a
tougher sanctions regime for Anti-Money Laundering and Combating
the Financing of Terrorism (AML/CFT) which stipulates fines on
banks, their directors and other key officials for 48 money
laundering infractions.

The new regime is an imporovement on existing regime, which only
stipulates fines against financial institutions for money
laundering infractions.

The new regime was also developed to ensure that Nigeria’s
compliance with Financial Action Task Force (FATF) recomendation 35
which states: “Countries should ensure that there is a range of
effective, proportionate and dissuasive sanctions, whether
criminal, civil or administrative, available to deal with natural
or legal persons covered by Recommendations 6, and 8 to 23, that
fail to comply with AML/CFT requirements. Sanctions should be
applicable not only to financial institutions and DNFBPs, but also
to their directors and senior management.”

According to the CBN, banks and board members or chief
compliance officers will all be sanctioned for 31 out of the 48
money laundering infractions listed in the new regime.

For each of the 31 infractions, the new regime stipulates
minimum fines ranging from N500,000 to N1.2 million on board
members or chief compliance officers or the internal auditor, and
fines ranging from N1 million to N20 million on the offending
bank.

The new sanction regime was communicated to banks and other
financial institutions by the Director Financial Policy and
Regulations Department of the apex bank, Kevin N. Amugo, through a
circular titled: “CBN Anti-Money Laundering and Combating the
Financing of Terrorism (administrative sanctions) regulations,
2018.”

The circular stated: “Banks and other financial institutions are
by this circular, informed of the attached ‘CBN AML/CFT
Administrative Sanctions Regime’ the application of which comes
into effect as at the date of the Gazette. Kindly ensure
compliance.”

The infractions and penalties stipulated under the new regime
include: failure to approve the AML/CFT policies and procedures -a
minimum penalty as follows: N1 million on each member of the board
and N20 million on the Deposit Money Banks (DMB);

Failure to review/ update the AML/CFT policies and procedures at
least every three (3) years, a minimum penalty as follows: N750,000
on the Executive compliance officer in the for instance and
N750,000 for each year that the contravention continues.

N500,000 on the Chief compliance officer in the first instance
and N500,000 for each year that the contravention continues. N5
million on the bank in the first instance and N1 million for each
year that the contravention continues;

“Failure to communicate the AML/CFT program of the organization
to the employees. A minimum penalty as follows: N750,000 on the
Executive compliance officer, N500,000 on the Chief compliance
officer and N10 million on the DMB.

‘Failure of the board or its committee to supervise and ensure
the effective implementation of the AML/CFT programme, A minimum
penalty as follows: N500,000 on each member of the board and N10
million on the DMB.”

“Failure of the officer to generate periodic reports on AML/CFT
issues to the board or its relevant committee, a minimum penalty as
follows: N750,000 on the Executive compliance officer, N500,000 on
the Chief compliance officer and N5 million on the DMB;

“Failure to classify ML/TF risks in the bank, failure to put in
place guidelines for risk assessment and profiling of customers in
institutions’ AML/CFT board approved program and failure to
carryout risk assessment and profiling of each account, a minimum
of N1 million on the Chief compliance officer of the DMB, a minimum
penalty of N3 million on the DMB for failure to put in place
guidelines for risk assessment and profiling of customers in
AML/CFT program. A minimum of N100,000 per account for failure to
carryout risk assessment and profiling of account.