The Central Bank of Nigeria (CBN) has issued an order to banks and other financial institutions in Nigeria instructing them to reveal the beneficial owners of accounts belonging to their customers.
The most recent order, outlined in a guideline signed by CBN Director, Financial Policy and Regulation Department, Chibuzor Efobi, would require financial institutions to disclose the identities of the ultimate beneficial owners of any legal arrangements per the requirements of existing anti-money laundering and counter-terrorist financing laws and guidelines.
The document, titled Ultimate Beneficial Ownership of Legal Persons and Legal Arrangements, pointed out that criminals are increasingly using corporate vehicles like companies, trusts, foundations, and other types of legal persons and legal arrangements to hide and convert the proceeds of crime, so it is imperative that countries “ensure that adequate, accurate, and timely information on” beneficial ownership is available to authorities.
To comply with the central bank’s anti-money laundering and countering the financing of terrorism and proliferation of weapons of mass destruction regulations, financial institutions must learn about the organisational structure of legal persons and legal arrangements and conduct customer due diligence to reduce the associated risks.
The central bank called the move an innovative approach to preventing money laundering, terrorism financing, and the financing of nuclear, chemical, or biological weapons proliferation.
The CBN issued the order in a document titled “Guidance on Ultimate Beneficial Owners of Legal Persons and Legal Arrangements” on Friday.
The central bank has said that the order will take effect immediately.
The central bank has issued a statement stating, “Financial institutions are required to unveil the beneficial owners of legal persons and legal arrangements in line with provisions of extant AML/CFT laws and regulations.”
According to the Central Bank of Nigeria (Anti-Money Laundering, Combating the Financing of Terrorism, and Countering the Proliferation Financing of Weapons of Mass Destruction in Financial Institutions) Regulations, 2022 (CBN AML/CFT/CPF Regulations), the CBN issued the guideline to FIs within its regulatory purview.
According to the central bank, the directives help banks comply with existing AML/CFT/CPF laws and regulations by identifying and verifying the beneficial owners of legal persons and legal arrangements.
According to the regulations, “Beneficial owner (BO) refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or legal arrangement.”
In addition, the beneficial owner must meet the following requirements: i. hold, directly or indirectly, at least 5% of the issued shares in the legal person; ii. control a customer and/or the natural person (but not limited to) who: a. exercises at least 5% of the voting rights in the legal person; b. holds the right, directly or indirectly, to appoint or remove a majority of the directors or similar positions of the legal person.”
According to the CBN’s guidelines, financial institutions must gather Beneficial Owner’s information from a public registry such as Corporate Affairs Commission (CAC) and publicly available sources in addition to client details.
According to the new rule, account files, business correspondence, and analytical results must be kept for at least five years after the end of the commercial relationship in electronic or paper form.