Banks required to deploy automated anti-money laundering systems in 18 months - CBN

Thursday, March, 12 2026 - The Central Bank of Nigeria has introduced new baseline standards requiring financial institutions to adopt automated anti-money laundering systems capable of detecting suspicious transactions and strengthening compliance with financial crime regulations.

The directive was issued through a circular dated March 10, 2026, titled “Issuance of Baseline Standards for Automated Anti-Money Laundering (AML) Solution for Financial Institutions in Nigeria.” The document was signed by Akinwunmi Olubukola and Olubunmi Ayodele-Oni.

The new standards apply to deposit money banks, mobile money operators, international money transfer operators, payment service providers and other regulated financial institutions. According to the central bank, the policy aims to strengthen Nigeria’s financial crime detection framework as financial services become increasingly digitised.

“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,” the circular stated. The regulator explained that automated systems will help institutions better manage financial crime risks and improve their ability to monitor suspicious activity.

Under the directive, deposit money banks have been given 18 months to fully comply with the standards, while other financial institutions are expected to meet the requirements within 24 months. Institutions must also submit implementation roadmaps to the regulator within three months of the issuance of the guidelines.

The central bank said the shift reflects the growing complexity of financial transactions and the limitations of traditional manual compliance systems.

“As financial services become increasingly digitised and complex, manual AML/CFT/CPF controls are no longer sufficient to manage evolving risks,” the regulator said. Financial institutions are therefore expected to deploy automated AML platforms capable of supporting customer identification and verification, risk assessment, sanctions screening, transaction monitoring, case management, investigation processes and regulatory reporting.

The systems must also integrate with core banking platforms and operational systems to ensure comprehensive monitoring across different products, channels and customers.

According to the central bank, AML monitoring systems must analyse transactions within the full context of a customer’s profile rather than relying solely on raw transaction data. The framework also permits the use of advanced technologies such as artificial intelligence, machine learning and predictive analytics to improve the detection of suspicious financial patterns.

However, the regulator emphasised that these technologies must be subject to proper governance and independent validation. Institutions are required to conduct annual independent validation of AI and machine learning models to assess accuracy, performance drift, fairness and potential bias.

The guidelines also require stronger know-your-customer processes, with financial institutions encouraged to integrate identity verification with national databases such as the Bank Verification Number and the National Identification Number.

Under the standards, AML platforms must screen customers and transactions against domestic and international sanctions lists, politically exposed persons registers, internal watchlists and adverse media sources. The systems must also be capable of blocking account openings or transactions where confirmed sanctions matches occur.

In addition to anti-money laundering controls, the framework encourages institutions to deploy automated fraud monitoring systems across electronic channels, card payments, deposits and lending platforms.

The central bank said compliance will be monitored through off-site surveillance, on-site examinations and thematic regulatory reviews. Financial institutions that fail to comply with the standards may face regulatory actions, including remedial directives, administrative sanctions and financial penalties.

The regulator added that the baseline standards represent the minimum compliance threshold and institutions may be required to implement stronger controls depending on their operational complexity and risk profile.

According to the central bank, the new framework is expected to strengthen Nigeria’s ability to prevent, detect and report money laundering, terrorism financing and proliferation financing while reinforcing the integrity and stability of the country’s financial system.