NFIU to collaborate with SEC to enhance anti-money laundering system

Hafsat Bakari, the chief executive director (CEO) of the Nigerian Financial Intelligence Unit (NFIU), says the agency is committed to collaborating with the Securities and Exchange Commission (SEC) to enhance the effectiveness of its anti-money laundering (AML) and combating the financing of terrorism (CFT) systems.

Bakari spoke during the 2024 Compliance Summit organised by the Nigerian Capital Market Institute (NCMI), a subsidiary of SEC, on Monday in Lagos.

The summit was themed ‘Navigating Regulatory Challenges: Aligning with Changes in FATF Standards in the Era of Virtual Asset Service Providers’.

Bakari, represented by Mohammad Jiya, chief operating officer (COO), emerging technologies and innovations, NFIU, said the Financial Action Task Force (FATF) recently updated its standards to include virtual assets and virtual asset service providers (VASPs) within the AML/CFT and combating proliferation financing (CPF) compliance framework.

She said in Nigeria, the update requires continuous efforts to strengthen the regulatory environment to ensure that the challenges posed by the emerging financial products and services are effectively tackled.

“It is important to put necessary measures in place for the next mutual evaluation of the country’s AML/CFT/CPE Regime by FATF which is scheduled to take place in 2027. Virtual assets, cryptocurrency related activities and VASPs will take the centre stage of the mutual evaluation because of the country’s position in the global cryptocurrency adoption index,” Bakari said.

“NFIU remains fully committed to collaborating with all stakeholders l, including the SEC, financial institutions, and law enforcement agencies, to enhance the effectiveness of our AML/CFT systems.”

Bakari said the rise of VASPs has necessitated not only a rethinking of its regulatory strategies but also the adoption of more dynamic technology-driven approaches in the fight against financial crimes.

“As regulators, law enforcement agencies, financial institutions and stakeholders in the fight against financial crime, we must ensure our regulatory frameworks remain robust and effective,” she said.

SEC URGES STAKEHOLDERS TO ALIGN WITH FATF STANDARDS

Emomotimi Agama, SEC’s director-general (DG), called on stakeholders in the capital market to adapt regulatory frameworks to align with the evolving FATF standards.

Speaking at the summit, Agama said failure to do so would jeopardise the capital markets’ integrity and pose a risk to Nigeria and the global financial system.

He said the FATF guidance helps countries implement effective regulations and address risks associated with virtual assets.

According to Agama, as virtual assets continue to gain prominence, there is a need for proactive engagement with FATF standards to navigate regulatory challenges.

The SEC DG said collaboration between regulators, VASPs and stakeholders ensures effective implementation.

‘EVOLUTION OF VIRTUAL ASSETS HAVE IMPACTED FINANCIAL LANDSCAPE’

Agama said considerable changes have been brought to the financial landscape due to the rapid evolution of virtual assets and the emergence of related service providers.

Furthermore, Agama said the evolution of virtual assets has created opportunities and, invariably, carries with it, untold regulatory challenges that necessitate the SEC’s immediate and appropriate attention.

“The summit will explore critical topics such as the unique regulatory implications posed by virtual assets service providers, importance of compliance in safeguarding our markets,” he said.

“It will also strategies for implementing effective risk management protocols.”

The SEC DG said the summit shows stakeholders are committed to ensuring the Nigerian capital market remains at the vanguard of global financial integrity and efficiency while fostering an environment conducive to progress and innovation.

He further outlined key updates in FATF standards, including the expanded definition of VASPs, the inclusion of custodial wallet providers, exchanges, and peer-to-peer platforms as VASPs, and the travel rule.

Agama added that it was important to collaborate among regulators, virtual asset service providers, and stakeholders to ensure effective implementation.