Money laundering: CBN warns banks against violating directives

The Central Bank of Nigeria has moved against money laundering and terrorism financing activities believed to be going on at the Deposit Money Banks and discount houses.

As such, the central bank in a circular to banks has directed banks and discount houses violating its anti-money laundering and terrorism financing rules to desist with immediate effect or face severe penalties.

The circular posted on the CBN website on Wednesday and dated May 23 ordered banks and discount houses to comply with its past directives by, among other things, appointing a chief compliance officer who would report directly to the board of directors on issues that bordered on money laundering and terrorism financing.

The circular read, “Information available to the CBN has revealed that chief compliance officers of some banks and discount houses are below the grade of general manager without prior approval of the CBN. Equally worrisome is the fact that most of them do not report directly to the board of directors. This is a flagrant disregard to extant laws and regulations on the subject.

“For the avoidance of doubt, the CBN circular ref BSD/2/2002 dated August 8, 2002 and FPR/DIR/GEN/001/022 dated July 18, 2013 directed that banks and discount houses should designate chief compliance officers, not below the grade of a general manager to, among other things, apply the provisions of the relevant Acts and circulars on money laundering at various levels of their institutions; and Section 9(1) of the Money Laundering (Prohibition) Act, 2011(as amended) also requires them to designate, at management level, chief compliance officers in their head offices and branches, who have the relevant competence, authority and independence to implement their institutions’ anti-money laundering/counter terrorism financing compliance programme.

“Regulations 2013 stipulates that the chief compliance officer shall be appointed at management level and shall report directly to the board on all matters under the regulations.”

According to the central bank, banks must also ensure that the CCOs report to the board of directors with dotted lines to the MD/CEO without interlocking roles.

The circular by the Director of Banking Supervision, CBN, Mr. K Balogun, further stated, “Accordingly, the particulars of all current CCOs with evidence of the CBN approval of same and reporting line should be forwarded to the CBN’s director of banking supervision within one week from the date of this letter.