The Central Bank of Nigeria (CBN) has introduced new regulations requiring banks and other financial institutions to deploy automated systems to detect suspicious financial transactions, a move aimed at strengthening oversight in Nigeria’s rapidly expanding digital economy.
The directive, issued on 10 March 2026, applies to deposit money banks, mobile money operators, international money transfer operators, payment service providers and other financial institutions supervised by the CBN. The policy represents one of the most significant updates to Nigeria’s financial crime compliance framework in recent years, addressing concerns about digital fraud, cross-border money laundering and the increasing complexity of financial transactions.
New compliance requirements for financial institutions
Under the new rules, financial institutions must install automated anti-money laundering (AML) systems capable of monitoring and analysing large volumes of transactions in real time.
These systems are expected to include several key functions, including customer identification and verification processes, commonly referred to as Know Your Customer (KYC), monitoring of transactions across multiple payment channels, screening for sanctions and politically exposed persons (PEP), risk-based customer due diligence and automated reporting of suspicious transactions.
The systems must also be integrated with banks’ core banking platforms and customer databases to enable continuous transaction monitoring and faster detection of unusual activity.
The CBN has given deposit money banks 18 months to fully comply with the directive, while other financial institutions have up to 24 months. Banks are also required to submit detailed implementation plans within three months of the circular’s release.
Shift towards technology-driven financial monitoring
Nigeria’s move towards automated anti-money laundering technology reflects a broader global shift in financial regulation. Traditional AML processes relied heavily on manual reviews and rule-based monitoring, methods that regulators now consider insufficient in the face of growing digital payment volumes.
Over the past decade, Nigeria’s financial sector has expanded significantly, with the country emerging as one of Africa’s largest fintech hubs. The number of licensed payment and financial technology companies has grown rapidly, while cross-border financial transactions reached 20.93 billion dollars in 2024.
Regulators have expressed concerns that criminals could exploit weaknesses in monitoring systems to move illicit funds through banks, fintech platforms and mobile wallets.
Automated AML systems use advanced technology, including machine learning and behavioural analysis, to identify unusual transaction patterns that traditional monitoring tools may fail to detect.
Part of wider regulatory reforms
The March 2026 directive forms part of a broader effort by the Central Bank of Nigeria to strengthen financial supervision.
In May 2025, the regulator introduced preliminary standards for automated AML systems and sought feedback from financial institutions. The earlier guidelines required banks and other financial service providers to adopt technology capable of generating real-time alerts for high-risk transactions, such as unusually large cash deposits and cross-border transfers.
The updated directive now formally enforces those proposals across the sector, signalling the regulator’s intention to implement technology-driven compliance measures nationwide.
Aligning with global AML standards
Nigeria’s anti-money laundering regulations are designed to align with international standards set by the Financial Action Task Force, the global body responsible for developing policies to combat money laundering and terrorist financing.
Under the Money Laundering (Prevention and Prohibition) Act 2022, financial institutions are required to monitor transactions, maintain detailed records and submit Suspicious Transaction Reports to the Nigerian Financial Intelligence Unit whenever irregular activity is detected.
Automated monitoring systems are expected to help institutions meet these obligations more effectively by analysing large transaction volumes and identifying potential risks automatically.
Implications for banks and fintech firms
The directive is likely to require significant investment in compliance technology, data infrastructure and staff training across the financial sector.
Industry experts note that implementing advanced AML software can be costly, particularly for smaller financial institutions. However, regulators and analysts say such upgrades are increasingly necessary as financial crime becomes more sophisticated and digitally driven.
The CBN believes that the adoption of automated monitoring tools will improve transparency, strengthen the integrity of Nigeria’s financial system and enhance the country’s ability to combat illicit financial flows.
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