Nigeria

Nigeria was rated Largely Compliant with FATF Recommendation 16 in its 2021 Mutual Evaluation Report. Recommendation 16 focuses on the transparency of wire transfers, requiring that accurate originator and beneficiary information accompanies all such transactions. This standard ensures that wire transfers are not misused for money laundering or terrorist financing and that competent authorities can trace financial flows as necessary.

The evaluation noted that while Nigeria had put in place a legal framework that generally satisfied the core requirements of Recommendation 16, several deficiencies still limited its full alignment with FATF expectations.

Regulatory & Supervisory Framework

Nigeria’s framework is principally governed by the Money Laundering (Prevention and Prohibition) Act (MLPPA), supported by regulations issued to financial institutions and other reporting entities. The existing regime requires that financial institutions ensure that originator and beneficiary details accompany wire transfers, and that such information is retained and made available to competent authorities on request.

However, the FATF found that Nigeria’s system did not mandate financial institutions to adopt risk-based policies and procedures to determine when to execute, reject, or suspend a wire transfer that lacks the necessary information. Similarly, intermediary financial institutions were not clearly required to identify cross-border wire transfers that are missing originator data, and there was insufficient emphasis on follow-up actions when such deficiencies are discovered.

The FATF also noted that money value transfer services (MVTS) were not explicitly obligated to file suspicious transaction reports in jurisdictions impacted by a suspicious transfer, nor were they required to make detailed transaction data accessible to the Financial Intelligence Unit. In addition, beneficiary financial institutions lacked a clear obligation to verify beneficiary identity for cross-border transfers when this information had not already been confirmed. These issues were compounded by the exclusion of insurance companies and capital market operators from the scope of wire transfer obligations, creating further regulatory gaps.

Conclusion

Nigeria has made measurable progress toward implementing FATF Recommendation 16, with a generally sound legal framework and operational practices among formal financial institutions.

However, the absence of risk-based controls for handling incomplete transfers, limited requirements for intermediaries, and insufficient obligations for non-bank financial institutions and MVTS providers mean that gaps remain. The current rating of Largely Compliant reflects a moderate level of technical alignment with FATF standards, with further refinements needed to achieve full compliance and bolster the integrity of Nigeria’s wire transfer system.