Nigeria Remains on FATF Gray List Due to Compliance Failures

Richard M. November 6, 2023 4 minute read

Nigeria failed to pass a full-scale AML system review conducted by the global regulatory authority Financial Action Task Force (FATF).

Global watchdog, the Financial Action Task Force, examined Nigeria’s AML compliance system and observed loopholes in their Money Laundering and Terrorism Financing controls. The FATF claimed that the Nigerian government is not implementing rigid regulations on financial institutions. Nigeria was among the 21 countries on the grey list whose AML system was reviewed in the FATF annual plenary meeting in the previous week. However, the Nigerian Financial Intelligence Unit (NFIU) claimed in the meeting that are enhancing their approach to combat money laundering and terrorist financing. NFIU stated they are scaling up the country’s AML derivatives to comply with all FATF recommendations. Nigeria only has to meet 15 latest obligations, and after that, they will exit from the increased monitoring regime.

To combat money laundering, and funding of terrorism whilst the spread of weapons of mass destruction, governments need to implement a comprehensive and consistent framework of actions outlined in the FATF guidelines. The regulatory authority placed Nigeria, alongside 23 other countries, on the grey list due to deficiencies in their money laundering prevention system. The FATF issues a list of countries three times a year that are under increased monitoring because of noncompliance with more than three significant recommendations. FATF explained, “when the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolving the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring. This list is often externally referred to as the grey list.”

FATF issued a statement on the outcomes of its annual plenary meeting. The group added that countries under greater surveillance were actively collaborating with the FATF to resolve key shortcomings in their regimes to combat money laundering, terrorist funding, and proliferation finance. The delegation said in the plenary meeting, “ FATF identifies additional jurisdictions, on an ongoing basis, that have strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. A number of jurisdictions have not yet been reviewed by the FATF or their FSRBs, but will be in due course. The FATF provides some flexibility to jurisdictions not facing immediate deadlines to report progress on a voluntary basis.”