The Central Bank of Nigeria (CBN) has given Deposit Money Banks 18 months to fully comply with its newly issued baseline standards for automated anti-money laundering solutions, while other financial institutions have been granted a 24-month compliance window beginning from March 10, 2026.
The directive, contained in a circular dated March 10, 2026, establishes a timeline for institutions under the regulator’s supervision to deploy automated systems capable of strengthening the detection, monitoring, and reporting of suspicious financial transactions as Nigeria seeks to reinforce the integrity and stability of its financial system amid increasing digitalisation of financial services.
In the circular, the apex bank stated that implementation of the new framework would begin immediately from the date of issuance, but institutions would have a defined period to achieve full compliance depending on their classification within the financial system.
According to the regulator, “The implementation of these guidelines shall start from the date of issuance, while full compliance shall be 18 months (for Deposit Money Banks) and 24 months (for Other Financial Institutions) from the date of issuance.”
The directive effectively means that banks will have a year and a half to meet the requirements, while other regulated entities will have two years to deploy the systems and processes required under the new compliance regime.
The circular, titled Issuance of Baseline Standards for Automated Anti-Money Laundering Solution for Financial Institutions in Nigeria, was signed by the Director of the Banking Supervision Department at the CBN, Akinwunmi Olubukola, and Olubunmi Ayodele-Oni for the Director of the Compliance Department.
It was addressed broadly to banks, mobile money operators, international money transfer operators, other financial institutions, and payment service providers operating within Nigeria’s financial system. By directing the circular to such a wide range of entities, the regulator signaled that the compliance standards are expected to apply across the financial ecosystem, covering institutions that process payments, facilitate remittances, or provide other financial services.
Beyond setting a compliance deadline, the apex bank also instructed affected institutions to prepare and submit detailed implementation roadmaps to its Compliance Department within three months of the circular’s issuance, effectively tightening the transition timetable for the adoption of the automated anti-money laundering solutions.
The regulator explained that the standards were introduced as part of broader efforts to promote financial system stability and integrity while strengthening the country’s capacity to combat financial crimes. It noted that the framework specifically addresses automated solutions for anti-money laundering, combating the financing of terrorism, and countering proliferation financing activities across Nigeria’s financial sector.
Explaining the objective of the standards, the CBN stated that the framework is designed to improve the capacity of financial institutions to identify suspicious financial behaviour and ensure prompt regulatory reporting.
“The Baseline Standards provide a framework for implementing automated solutions that strengthen the detection and reporting of suspicious transactions in real time and enhance compliance with applicable AML/CFT/CPF laws and regulations, while also supporting the use of emerging technologies to improve overall financial crime risk management,” the bank said.
According to the regulator, the adoption of automated systems will allow institutions to detect irregular financial patterns faster, reduce manual oversight limitations, and align compliance processes with global financial crime monitoring practices.
Under the new directive, all financial institutions supervised by the CBN must operate automated anti-money laundering solutions, although the level of sophistication required for each system will depend on factors such as the institution’s size, risk exposure, business model, transaction volumes, and operational complexity.
The CBN clarified that the new baseline standards are anchored on the provisions of the Central Bank of Nigeria Act and the Banks and Other Financial Institutions Act, and are intended to complement, rather than replace, existing legal and regulatory obligations already binding on financial institutions in the country.
The central bank further stressed that manual compliance systems are increasingly inadequate in the face of rapidly evolving financial services and digital transaction channels.
According to the regulator, institutions must now deploy technology-driven compliance systems capable of supporting risk-based customer due diligence, enabling timely identification of suspicious activities, and facilitating accurate and prompt reporting to regulatory authorities including the Nigerian Financial Intelligence Unit and the central bank itself.
These systems are expected to strengthen monitoring capabilities across the financial sector and reduce vulnerabilities that may allow illicit financial flows to pass through regulated institutions.
The baseline standards also align with the recommendations of the Financial Action Task Force (FATF), the global body responsible for setting international standards for combating money laundering and terrorism financing.
As part of the requirements, financial institutions must deploy systems capable of carrying out comprehensive transaction monitoring, customer due diligence processes, know-your-customer (KYC) and know-your-business (KYB) verification procedures, sanctions and politically exposed persons screening, regulatory reporting, case management processes, audit trail maintenance, data security protections, vendor oversight, fraud monitoring, unified customer risk assessments, and system integration with scalable operational capabilities.
The regulator further noted that institutions operating in high-risk sectors or subsectors will be required to apply enhanced monitoring mechanisms within their anti-money laundering systems. This includes ensuring that AML solutions are integrated with KYC and KYB databases as well as customer risk profiling frameworks.
According to the circular, financial institutions must also support comprehensive customer identification processes, risk evaluation mechanisms, sanctions screening procedures, transaction monitoring systems, case investigation tools, reporting functions, governance structures, auditing mechanisms, and data protection safeguards.
In addition to the operational standards, the CBN encouraged the use of advanced technologies such as artificial intelligence, machine learning, and advanced analytics to strengthen financial crime detection capabilities. However, the regulator emphasized that the deployment of such technologies must be subject to rigorous oversight and independent verification processes.
These include annual validation procedures, accuracy checks, fairness assessments, and bias testing to ensure that automated decision-making tools remain reliable and do not introduce discriminatory or flawed outcomes within financial crime monitoring systems.
The central bank also mandated that all AML solutions deployed by financial institutions must include tamper-proof audit trails, role-based workflow management systems, secure authentication protocols, and compliance with the provisions of the Nigeria Data Protection Act.
Furthermore, institutions must establish clear third-party and vendor management policies covering procurement procedures, system implementation processes, ongoing support arrangements, incident management protocols, and exit strategies for vendors providing compliance technology solutions.
According to the CBN, financial institutions seeking fresh regulatory authorisation will also be required to demonstrate compliance with the baseline standards or present credible implementation plans outlining how they intend to meet the requirements within the stipulated timeframe.
The apex bank said compliance with the new rules will be monitored through a combination of supervisory mechanisms, including off-site surveillance, on-site examinations, thematic regulatory reviews, and other monitoring tools used in its oversight of the financial sector.
The regulator warned that institutions that fail to comply with the baseline standards risk facing regulatory actions under existing laws governing Nigeria’s financial sector. Such measures may include remedial directives requiring immediate corrective action, administrative sanctions, and financial penalties that could apply to both institutions and responsible individuals within those organisations.
The CBN concluded the circular by emphasising that all regulated entities must adhere strictly to the new guidelines as the central bank continues to strengthen its oversight framework for financial crime prevention.
“All stakeholders are required to ensure strict compliance with the guidelines and all other regulations, as the CBN continues to monitor developments and issue further guidance as may be appropriate,” the apex bank added.