The Securities and Exchange Commission (SEC) has ordered Nigerian capital market firms to stop conducting business with financial institutions linked to North Korea and Iran, as the regulator steps up efforts to strengthen anti-money laundering and counter-terrorism financing controls in the country. Under the new directive, regulated capital market entities must immediately terminate correspondent banking relationships connected to North Korea and refuse transactions involving Iranian financial institutions.
The SEC said the measures are part of updated guidance from the Financial Action Task Force (FATF) and are being implemented under Nigeria’s Investments and Securities Act, 2025, as well as the commission’s AML/CFT rules. Firms dealing with North Korean interests have been instructed to sever financial relationships, avoid maintaining subsidiaries or representative offices in the country and restrict transactions involving North Korean nationals, entities and government bodies. For Iran, capital market operators are required to reject dealings with Iranian financial institutions where the associated risks cannot be adequately managed.
The regulator, however, adopted a different approach toward Myanmar, requiring firms to apply enhanced due diligence rather than imposing an outright ban. Capital market operators must also conduct additional checks on transactions connected to 20 jurisdictions currently under increased FATF monitoring. The SEC warned that suspicious transactions must be reported to the Nigerian Financial Intelligence Unit (NFIU), while firms that fail to comply could face fines, suspension or even revocation of their registration.
The crackdown comes as Nigeria intensifies its fight against illicit financial flows and terrorism financing. The SEC has also directed regulated firms to subscribe to the Nigeria Sanctions (NigSac) Alerts system and freeze assets linked to designated individuals. For brokers, fund managers and other market operators, the new restrictions mean a rapid review of customer-screening systems, know-your-customer procedures, correspondent banking relationships and transaction-monitoring processes will be necessary to avoid potentially serious regulatory consequences.
At the same time, the SEC is widening the door for regulated digital-asset innovation. The commission admitted three additional virtual asset service providers—Pisi Payments Solution Limited, BC Access Nigeria Limited (Blockchain.com) and Yellow Card Financial Limited—into its Accelerated Regulatory Incubation Programme, bringing the number of crypto firms in the sandbox to 14. The SEC stressed that the approvals are only Approval-in-Principle and do not amount to full operating licences. The move highlights the regulator’s two-track strategy: closing loopholes that could expose Nigeria’s financial system to illicit funds while creating a supervised environment where legitimate fintech and digital-asset businesses can develop.
source: Leadership
