The latest and most comprehensive regulation concerning anti-money laundering in Nigeria is the Money Laundering (Prevention and Prohibition) Act, 2022. This legislation, which repeals and replaces the Money Laundering (Prohibition) Act of 2011 was introduced as a part of the increased efforts to embrace and put into practice the Financial Action Task Force's (FATF) guidelines on preventing anti-money laundering and combating the financing of terrorism.
The recent Money Laundering Act attempts to stop money laundering and related activities by enforcing stricter regulations against it. It introduced some new regulations while improving the old ones. This article discusses the key provisions of the Money Laundering Act, 2022.
The Special Control Unit Against Money Laundering (SCUML)
The Federal Government established SCUML in September 2005 following the provisions of the Money Laundering (Prohibition) Act, 2004 which was later repealed and amended to become the Money Laundering (Prohibition) Act 2011 (as amended). This latest MLA sets the SCUML as the body responsible for the management of designated non-financial businesses and professions (DNBPs) and their compliance with MLA 2022 provisions and relevant compliance laws.
The SCUML was originally a unit under the Federal Ministry of Industry, Trade and Investment but operationally domiciled within the Economic and Financial Crimes Commission (EFCC). The MLA 2022 now provides statutory support for the independent existence and function of SCUML as a department under the EFCC.
Expansion of Designated Non-Financial Business and Professions (DNBPs)
Businesses were classified into Financial Institutions (FIs) and Designated Non-Financial Institutions (DNFIs) in the amended act. The MLA 2022 changed the name and description of DNFIs to Designated Non-Financial Business and Professions (DNBPs) and extended the category to include; trust and public service providers, dealers in mechanized farming equipment, farming equipment, and machinery, businesses involved in the hospitality industry, real estate agents, developers, brokers, mortgage brokers, dealers in precious metals and precious stones, notaries, pools betting, high-value dealers, and even legal practitioners.
Stricter KYC Requirements for Politically Exposed Persons (PEPs) and Beneficiaries
The new MLA makes more detailed and specific provisions for politically exposed persons than the annulled act. It also differentiates between a domestically politically exposed person and a foreign politically exposed person.
It is required of businesses to take reasonable steps to confirm and determine the source of wealth and money of clients and beneficial owners who have been designated as Politically Exposed Persons (PEPs). They must also keep a closer eye on these kinds of connections.
These are Key Provisions of Nigeria’s AML Act 2022, there are more important additions and changes to take note of like:
The Act extends the definition of Financial Institution to include Virtual Asset Service Providers (“VASP”).
The Act defines funds to include virtual assets, which are digital representations of value that can be digitally traded or transferred and can be used for payment or investment purposes but do not include digital representations of fiat currencies, securities, and other financial assets.
The Act provides that casinos including internet and ship-based casinos, must conduct KYC due diligence on the financial transactions of their customers.
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