THE Central Bank of Nigeria (CBN), has warned Nigerian commercial banks to be alert on related transactions with Benin Republic, citing intelligence that suggests that country is becoming a drug trafficking route and consumption hub in West Africa.
The directive of the Central Bank, sent to the banks, was disclosed in a circular signed by Evelyn E. Asuquo for the Director of Banking Supervision, which was sent to Nigerian banks.
The circular is titled, ‘NEED TO IMPLEMENT ENHANCED MEASURES FOR CUSTOMER ON-BOARDING AND DUE DILIGENCE ON EXISTING ACCOUNTS AND TRANSACTIONS RELATED TO BENIN REPUBLIC.’
The CBN directed Nigerian banks to strengthen their Know Your Customer (KYC) and Customer Due Diligence (CDD) policies, as mandated by regulation, and to ensure they were not used as conduit for laundering such illicit funds.
“Consequently, you are required to implement additional measures on customers and business relationships linked to Benin Republic. You are also required to re-classify related customers and transactions as high risk and conduct Enhanced Due Diligence (ED) procedures accordingly,” it said.
The apex bank directed commercial banks to apply the measures it has laid out during account opening involving Beninese nationals and on fund transfers to and from the Benin Republic.
The CBN stated, “Enhanced Due Diligence would be applied to account opening for Beninese prospects and business ties with Beninese signatories, directors, and shareholders.
“Enhanced Due Diligence would also be applied to funds transfers to and from the jurisdiction, and the purpose of the transfer must be determined.”
Nigeria banks, the directive, noted, would take proactive steps to determine the account’s purpose and the customer’s source of income.
All defaulting customers, it said, must be classified as “High Risk” for money laundering and marked accordingly in the system.
The apex bank told the commercial banks that to authenticate the transaction in invoices, other contractual agreements mustbe gathered and provided to the Compliance Department for evaluation and approval before processing.
This is not the first time the apex bank, as a financial regulator, has issued directives and regulatory alert on illicit financial flows
Last year, the CBN stopped forex sales to Bureau De Change (BDC) operators, accusing them of being involved in illegal financial flows and money laundering in Nigeria.