HIGHLIGHTS OF THE NIGERIAN FINANCIAL INTELLIGENCE UNIT SUSPICIOUS TRANSACTIONS REPORTING GUIDELINES

On December 13, 2024, the Nigerian Financial Intelligence Unit (the “NFIU”) in line with Section 28 of the Nigerian Financial Intelligence Unit Act 2018, issued the Guidelines for the Identification, Verification and Reporting of Suspicious Transactions related to Money Laundering, Financing of Terrorism, and Proliferation of Weapons of Mass Destruction (“ML/FT/PF”) for Financial Institutions.

The guidelines aim to improve the identification, verification, and reporting of suspicious transactions by financial institutions. This is referred to as the “Suspicious Transaction Reporting (STR) Guidelines”, the framework aims to assist financial institutions in generating and submitting high-quality reports, thereby enhancing internal control measures and contributing to the broader fight against terrorism.  Below are key provisions of the STR Guidelines and its impact on the operations of financial institutions:

What constitutes a suspicious transaction capable of being filed at the NFIU?

Before filing an STR at the NFIU, the Reporting Entity must take appropriate measures to ensure that it:

1. Screens and reviews all transaction alerts;
2. Assess the facts and contexts surrounding the suspicious transactions. Examples of such facts are the transaction date, time, location, amount, etc;
3. Links the ML/FT/PF indicators to the assessment of facts and not just mere opinions;
4. Explain the ground for suspicion;
5. Identify high-risk predicate offences as contained in the National Risk Assessment, the findings of any relevant sectoral risk assessments, as well as the entities’ Anti-Money-Laundering, Counter Financing of Terrorism and Counter-Proliferation Financing risk assessment policies;
6. Identify higher-risk jurisdictions as outlined in the relevant regulations issued by the regulatory bodies.

What is the period for forming a suspicion and filing the transaction as an STR to the NFIU?

Pursuant to Section 7(2)(1)(a) Money Laundering (Prevention &Prohibition) Act, 2022, and Section 84(1) Terrorism (Prevention & Prohibition) Act, 2022, reporting entities are mandated to render STRs to NFIU within 24 hours of the transaction. Hence, once a transaction is termed suspicious in line with Section 7(1) (a-e) of the MLPPA and Section 84(1) (a-c) TPPA, the 24-hour period for the report to NFIU is activated.

Further to the above, the transaction is subjected to a thorough examination and screening process by the Reporting Entity for a period of time not exceeding 72 hours.

Additionally, Reporting Entities are to file internally all alerts generated and investigated but failed to qualify as suspicious, with clear written reasons as to why they are deemed not suspicious for examiners to review during AML/CFT/PF examinations. This will also serve as a reservoir for future investigations by the institution’s TMS team.

What are the accompanying documents and required details to be filed with the NFIU?

To support the Suspicious Transaction Report, the following categories must be satisfied:

a. Customer Identification Documents, which include:

• A copy of a valid identity document (e.g. international passport, National Identification Number document, driver’s license, etc)
• Proof of address (e.g., utility bill, visitation report, lease agreement, etc)
• Business registration documents (for corporate accounts)
• Copy of the beneficial owner’s identity document (if applicable)
• Copy of the legal representative’s identity document (if applicable)

b. Transaction Records: To support the STR, the following transaction records should be included:

• Transaction slips or receipts: copies of the actual transaction records, including deposit slips, withdrawal slips, transfer receipts, or other instructions.
• Bank statements or account activity logs: comprehensive records of the customer’s account activity, including transactions, balances, and relevant notes.
• Electronic payment records: records of electronic transactions, such as SWIFT messages, wire transfer records, or online payment confirmations.
• Account opening or closing records: documents related to the opening or closing of the account.
• Fixed Deposit account records/call Deposits, Treasury bills, Bonds etc (if any)
• Customer loan account records, including duly executed loan agreements and offer letters (if any)
• Evidence of remittances by IMTOs (Money Gram, Western Union, etc.)

c. Predicate Offence Documentation:Indicate (in the reporting entity’s best estimate) the specific predicate offence (e.g., Corruption, Kidnapping, Fraud, Terrorist/Proliferation Financing, etc.)

The contents and nature of the narration of the STR prepared for filing  should include:

1. A detailed and well-organised account of the suspicious activity
2. Details of the alert that triggered the investigation and all previous alerts and/or STR filing history on the subject.
3. Details of internally triggered investigations or law enforcement agency quest on the subject
4. A detailed account of remedial actions taken by the reporting entity to address the identified risks rounding the transaction.

Sanctions and Penalties

The sanctions for failure to adhere with the guidelines will result in penalties stipulated under existing laws like the Money Laundering (Prevention & Prohibition) Act, 2022, Terrorism (Prevention & Prohibition) Act, 2022, and Nigerian Financial Intelligence Unit (NFIU) Act, 2018.[1] They are not limited to fines, revocation of licences, and possible imprisonment.

In conclusion, this guideline is a significant development in Nigeria’s effort to combat financial crimes in Nigeria. It now behoves financial institutions to focus on full compliance to not only avoid penalties but also contribute to the growth of the financial eco-system.