CBN Unveils Draft Standards for Automated AML/CFT Systems to Strengthen Financial Oversight
In a major step toward enhancing Nigeria’s financial security, the Central Bank of Nigeria (CBN) has released a draft document outlining Baseline Standards for Automated Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Solutions. The initiative aims to leverage technology for improved real-time surveillance and compliance in financial institutions. Stakeholders have been invited to provide feedback on the draft, which aligns with global standards and the recommendations of the Financial Action Task Force (FATF).
Explaining the rationale behind the move, Dr. Olubukola Akinwunmi, Director of Banking Supervision at the CBN, emphasized that the increasing digitalisation of Nigeria’s financial landscape necessitates robust and automated systems to counter illicit financial activities. The draft standard is designed to strengthen regulatory compliance, enhance operational efficiency, and modernize the country’s AML/CFT framework.
The draft stipulates that AML systems must include features such as real-time monitoring, sanction screening, politically exposed persons (PEP) identification, transaction analysis, and compliance reporting. It also highlights the need for centralized dashboards to aid case management and trend analysis. One of the most notable innovations is the incorporation of AI-powered fuzzy matching algorithms to detect potential matches on domestic and global watchlists.
To boost system accuracy and reduce compliance burdens, institutions are expected to periodically stress-test their systems and calibrate thresholds for false positives. The document further outlines the integration of advanced AI and machine learning capabilities for anomaly detection, behavioral analysis, and adaptive learning—allowing systems to refine their responses based on historical alert outcomes.
The CBN also mandates integration of AML systems with national databases like the Bank Verification Number (BVN) and National Identity Number (NIN) for seamless onboarding and verification. These systems must also support Know Your Customer (KYC) and Know Your Business (KYB) functions. As global regulators adopt similar digital surveillance strategies, Nigeria’s draft standard marks a significant move toward safeguarding the financial system from evolving threats, particularly those involving virtual assets and cross-border transactions.
Source: Arise