Hafsat Bakari, the Chief Executive Director (CEO) of the Nigerian Financial Intelligence Unit (NFIU), has reaffirmed the agency’s dedication to enhance anti-money laundering (AML) and counter-financing of terrorism (CFT) systems through collaboration with the Securities and Exchange Commission (SEC). Speaking at the 2024 Compliance Summit organized by the Nigerian Capital Market Institute (NCMI) in Lagos, Bakari emphasized the importance of joint efforts in navigating the complex landscape of financial regulations.

The summit, themed “Navigating Regulatory Challenges: Aligning with Changes in FATF Standards in the Era of Virtual Asset Service Providers,” served as a platform for discussing the evolving regulatory environment. Bakari, represented by Mohammad Jiya, COO of Emerging Technologies and Innovations at NFIU, highlighted recent updates from the Financial Action Task Force (FATF). These updates now include virtual assets and virtual asset service providers (VASPs) within the AML/CFT and combating proliferation financing (CPF) compliance framework.

A Need to Enhance Anti-Money Laundering to Adapt to Regulatory Changes

In her address, Bakari pointed out that the updates necessitate ongoing efforts to strengthen Nigeria’s regulatory environment. She stated, “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 for 2027.” This evaluation will focus on virtual assets, cryptocurrency-related activities, and VASPs, given Nigeria’s significant position in the global cryptocurrency adoption index.

Bakari reiterated the NFIU’s commitment to working closely with all stakeholders, including the SEC, financial institutions, and law enforcement agencies, to more effectively enhance anti-money-laundering (AML) and counter-financing of terrorism (CFT) systems. The rise of VASPs has prompted a rethinking of regulatory strategies and the adoption of technology-driven approaches to combat financial crimes effectively. “As regulators, law enforcement agencies, and financial institutions, we must ensure our regulatory frameworks remain robust and effective,” she stated.

SEC’s Call for Stakeholder Engagement

Emomotimi Agama, the Director-General (DG) of the SEC, echoed Bakari’s sentiments during the summit. He urged stakeholders in the capital market to adapt their regulatory frameworks in alignment with the evolving FATF standards. Agama warned that failure to do so could jeopardize the integrity of Nigeria’s capital markets and pose risks to both national and global financial systems.

He explained that the FATF guidance is essential for countries to implement effective regulations that address risks associated with virtual assets. As these assets gain prominence, proactive engagement with FATF standards is crucial for navigating regulatory challenges. Agama emphasized that collaboration among regulators, VASPs, and stakeholders is vital for effective implementation of these frameworks.

The SEC DG also pointed out that the rapid evolution of virtual assets has significantly impacted the financial landscape. While these developments present opportunities, they also introduce regulatory challenges that require immediate attention from the SEC. “The summit will explore critical topics such as the unique regulatory implications posed by virtual asset service providers and the importance of compliance in safeguarding our markets,” he noted.

Future Directions and Conclusion

The discussions at the summit underscored the commitment of stakeholders to ensure that the Nigerian capital market remains at the forefront of global financial integrity and efficiency. Agama outlined key updates in FATF standards, including an expanded definition of VASPs, which now encompasses custodial wallet providers, exchanges, and peer-to-peer platforms. He highlighted the importance of the travel rule and the need for effective collaboration among regulators, VASPs, and stakeholders.

In conclusion, the commitment to enhance anti-money laundering efforts in Nigeria’s financial sector is more critical than ever. As the landscape of virtual assets continues to evolve, the need for robust regulatory frameworks and collaborative approaches becomes increasingly apparent. Both the NFIU and SEC are poised to lead these efforts, ensuring that Nigeria not only meets international standards but also fosters an environment conducive to innovation and progress in the financial sector. The upcoming mutual evaluation by FATF will be a crucial test of Nigeria’s readiness to tackle the challenges posed by emerging financial products and services, and stakeholders must work together to rise to this challenge.

Source: The Cable –> Full article and more