In the battle against money laundering and financial crime, the focus is often on banks and financial institutions, which play a critical role in monitoring and reporting suspicious transactions. However, in Nigeria, as in other parts of the world, there are other key players that must be integrated into Anti-Money Laundering (AML) frameworks. These are the Designated Non-Financial Businesses and Professions (DNFBPs)—a category of entities that have just as much potential to be used in the laundering of illicit funds.
In this post, we’ll explore what DNFBPs are, why they are important in Nigeria’s Anti-Money Laundering (AML) framework, and how Regfyl can support these businesses in staying compliant and protecting themselves from money laundering risks.
What are DNFBPs?
DNFBPs are a diverse range of businesses and professions that, while not classified as traditional financial institutions, are nevertheless susceptible to money laundering activities. These entities often deal in high-value goods or provide services that involve large sums of money or assets that can be exploited to conceal the origins of illicit funds. In Nigeria, the Money Laundering (Prevention and Prohibition) Act specifically lists the types of businesses and professions that fall under the DNFBP category. They include:
Automotive dealers
Businesses in the hospitality industry
Casinos
Clearing and settlement companies
Consultants and consulting companies
Dealers in jewelry
Dealers in mechanized farming equipment and machinery
Dealers in precious metals and precious stones
Dealers in real estate, estate developers, estate agents, and brokers
High-value dealers
Hotels
Legal practitioners and notaries
Licensed professional accountants
Mortgage brokers
Practitioners of mechanized farming
Supermarkets
Tax consultants
Trust and company service providers
Pools betting companies
Any other businesses or professions as designated by the Minister of Trade and Investment
This broad definition is a testament to how varied the methods of money laundering can be, touching a wide range of sectors that might not immediately appear to be vulnerable to financial crime.
Why DNFBPs Matter in an AML Context
DNFBPs are crucial to the effectiveness of Nigeria's AML framework for several reasons:
High-Risk Sectors
Many of the listed professions involve high-value goods or services, making them attractive channels for laundering illicit funds. For example, real estate agents, jewelers, and car dealerships often handle large, one-off transactions that can provide opportunities for criminals to disguise the origins of illegal money.
Limited Awareness
Unlike banks and other financial institutions, many DNFBPs may not be fully aware of their AML obligations. This lack of awareness makes these sectors more vulnerable to exploitation by criminals. By incorporating DNFBPs into Nigeria's AML framework, regulators ensure these entities are better equipped to detect suspicious activities and report them to the appropriate authorities.
Cash-Based Economies
Nigeria's economy still relies heavily on cash transactions, particularly in the informal sector. DNFBPs such as dealers in farming equipment, supermarkets, and automotive dealers often transact in cash, which makes it easier for illicit funds to enter the system unnoticed. A robust AML approach, therefore, requires attention to these cash-heavy sectors.
Cross-Sector Collaboration
DNFBPs are often involved in transactions that intersect with financial institutions. For example, mortgage brokers and real estate agents work closely with banks when facilitating property purchases. Casinos and hotels also process significant payments from their patrons. Strengthening AML compliance in these businesses helps create a more seamless and comprehensive approach to identifying suspicious financial activity across sectors.
AML Obligations for DNFBPs in Nigeria
The Money Laundering (Prevention and Prohibition) Act of Nigeria mandates that DNFBPs adopt specific AML measures to minimize the risk of being used as vehicles for money laundering. These measures include:
Know Your Customer (KYC) Obligations:
Suspicious Activity Reporting (SAR):
Record Keeping:
How Regfyl Can Help DNFBPs Stay Compliant
As a DNFBP, ensuring that your business complies with AML regulations is critical not only to avoid penalties but also to protect your reputation and stay competitive. T
The Regfyl platform is built to provide DNFBPs with the tools they need to stay compliant with regulations, and avoid being used by criminals for money laundering purposes.
Automated KYC and Customer Due Diligence
DNFBPs must conduct due diligence on their clients, particularly for high-value transactions. This involves verifying the identity of their customers and understanding the nature of the business relationships.
Regfyl offers robust Know Your Customer (KYC) and due diligence solutions, which are critical for DNFBPs dealing with high-value transactions. Whether you’re a real estate agent, a car dealer, or a jeweler, we simplify the process of verifying your customers, ensuring that you're compliant with Nigeria's AML laws.
Suspicious Activity Monitoring
DNFBPs are required to report any transactions or activities that raise suspicions of money laundering to the Nigerian Financial Intelligence Unit (NFIU).
With Regfyl’s platform, DNFBPs can easily monitor transactions for red flags and anomalies that might indicate money laundering. The system is powered by AI, which allows for real-time analysis of transaction data, helping you detect suspicious activities early and report them to the authorities as required.
Record-Keeping and Reporting
Like financial institutions, DNFBPs are also expected to keep records of their transactions and customer information for a specified period. These records should be easily accessible in case they are required for investigations or audits. Regfyl streamlines the record-keeping process, which is a key part of AML compliance. Our platform ensures that you maintain accurate and accessible records of customer information and transactions for the required period, enabling you to respond quickly to any regulatory audits or investigations.
Why You Should Act Now
As regulators increase their focus on DNFBPs, staying compliant is no longer an option but a necessity. Businesses that fail to comply with AML regulations face steep penalties and reputational damage, both of which can be devastating in today’s competitive marketplace.
At Regfyl, we understand the unique challenges that DNFBPs face in Nigeria, especially with the growing complexity of compliance requirements. Our platform is tailored to help you navigate these challenges efficiently and cost-effectively.
If you’re a DNFBP operating in Nigeria now is the time to ensure that your AML compliance is up to par.
Reach out to Regfyl and book a 15 min discovery call today.
Let us help you protect your business from financial crime, enhance your compliance, and safeguard your reputation.
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