The Central Bank of Nigeria (CBN) has cautioned Deposit Money Banks (DMBs) and Other Financial Institutions (OFIs) in the country against engaging in any kind of financial transaction with the Russian Federation, the Democratic People’s Republic of Korea, Iran, Cameroun, or any of the other countries included in the memo.
The caution was sent in a circular that was distributed on Thursday by the Director of Financial Policy and Regulation, Mr. Chibuzo Efobi. The circular included the reference number: FPR/AML/PUB/BOF/001/029.
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What’s in the circular?
According to the circular, Nigerian banks and other financial institutions, along with those in other countries like Croatia and Vietnam, should exercise caution while conducting business with the countries that were specified. It was reaffirmed that limitations had been imposed on the aforementioned nations because the Financial Action Task Force (FATF) has placed them on its list of jurisdictions that pose a high risk to international financial transactions.
“Democratic People’s Republic of Korea, Iran and Myanmar remain on the list of high-risk jurisdictions, subject to Call for Action”, the circular says.
Remark from CBN
“The attention of banks and other Financial Institutions is drawn to the outcomes of Financial Action Task Force Plenary conducted from June 21-23, 2023 and subsequent addition of Cameroon, Croatia and Vietnam to the list of jurisdictions under ‘Increased Monitoring.”
In the circular, it was indicated that more due diligence should be employed and that countermeasures would be made in extreme instances. This was done with the intention of protecting the global financial system. The FATF would also suspend the Russian Federation and the other countries listed with immediate effect, according to the circular.
The Central Bank of Nigeria (CBN) issued a warning notice to the country’s deposit money banks (DMBs) and other financial institutions (OFIs) last month as a direct result of a decision made by the members of the FATF at a plenary session the previous month. The note instructed them to cease engaging in any business or individual-to-individual transactions in any of the nations that were placed on the blacklist.
About Financial Action Task Force
Intergovernmental organization known as the Financial Action Task Force (FATF) was established in 1989 in response to an initiative from the Group of Seven (G7) countries. The purpose of the Task Force is to formulate policies to combat money laundering and to uphold specific interests as a global watchdog for money laundering and the financing of terrorist organizations. This includes the funding of terrorist organizations.
In addition to this, the Task Force establishes international norms with the purpose of preventing illegal actions and the potential harm they could cause to society.
Since the year 2000, the Financial Action Task Force (FATF) has been responsible for maintaining two lists: the FATF blacklist (formerly known as the “Call for action”) and the FATF greylist (formerly known as the “Other monitored jurisdictions”). Because of the blacklist, financial institutions have begun to redirect resources and services away from the countries that are listed.
This, in turn, has encouraged domestic economic and political actors in the countries that are listed to exert pressure on their governments to establish policies that are compliant with the FATF.
