CBN Orders Banks to Freeze Terrorism Financing Accounts

By Samuel Akpan

The Central Bank of Nigeria (CBN) has ordered all banks and financial institutions to immediately freeze accounts linked to terrorism financing, acting on fresh sanctions designations by Nigerian authorities and the United States Treasury Department over alleged Islamic State (ISIS) connections.

In a circular issued on Thursday and signed by Olubunmi Ayodele-Oni, the apex bank directed financial institutions to act without delay on the updated sanctions list.

The move followed designations by the Nigeria Sanctions Committee and the US Treasury’s Office of Foreign Assets Control targeting three individuals and six entities accused of facilitating Islamic State financing.

Among those listed are three Nigerian bureau de change operators based in Lagos and Kano, whose activities are said to be connected to the terror financing network.

The CBN instructed banks to “immediately freeze, without prior notice, all funds, assets, and other economic resources belonging to, owned, held, or controlled (directly or indirectly) by the designated persons and entities”.

Financial institutions must also screen all existing customers, beneficial owners and ongoing transactions against the sanctions list.

Banks were further directed to ensure that no funds, financial services or economic resources are provided, directly or indirectly, to any of the blacklisted individuals or entities.

The regulator ordered financial institutions to file suspicious transaction reports with the Nigerian Financial Intelligence Unit for any confirmed or suspected matches.

They must also “submit reports to the CBN within 48 hours, detailing the status of any matches, affected accounts, amounts frozen and actions taken”.

“Nil returns are mandatory where no matches are identified,” the circular stated.

Financial institutions have been told to heighten scrutiny of transactions showing classic terrorism financing red flags, including rapid movement of funds, heavy use of money service businesses and dealings involving high-risk jurisdictions.

Non-compliance carries serious consequences, it said, warning that institutions that fail to implement the directive risk regulatory sanctions under the Banks and Other Financial Institutions Act 2020 and other relevant laws.

The apex bank stated that it will carry out off-site reviews, on-site examinations and other supervisory checks to confirm full adherence.