The Central Bank of Nigeria (CBN) has introduced a sweeping new directive requiring all financial institutions to adopt real-time alert systems for high-risk transactions, marking a decisive push toward stronger anti-money laundering (AML) compliance. This move aims to fortify the country’s financial system against criminal misuse amid rapid digital innovation in the sector.

Outlined in a letter dated May 20, 2025, and referenced BSD/DIR/CON/AML/018/033, the CBN’s directive comes alongside a request for industry feedback on a draft regulatory framework titled “Baseline Standards for Automated Anti-Money Laundering (AML) Solutions.” The document was signed by Olubukola Akinwunmi, Director of Banking Supervision, and distributed to all licensed financial institutions.

Strengthening AML Through Technology

The draft regulations underscore the apex bank’s intent to modernize Nigeria’s AML compliance landscape. Specifically, they call for the deployment of automated systems that can detect, assess, and report suspicious transactions in real time. According to the CBN, the standards are grounded in global best practices and reflect guidelines from international watchdogs such as the Financial Action Task Force (FATF).

CBN explained that these new requirements stem from a comprehensive review of existing technologies in the financial industry. The goal is to eliminate inefficiencies in manual monitoring processes, boost real-time surveillance capabilities, and ensure Nigeria’s banking system remains globally compliant.

Real-Time Transaction Alerts Now Mandatory

At the heart of the new guidelines is the requirement for real-time alerts for potentially illicit transactions. Financial institutions must be equipped to instantly flag and respond to high-risk activities, including:

• Cross-border fund transfers

• Unusually large cash deposits

• Transactions linked to cryptocurrencies

• Any behavior flagged under existing AML/CFT/CPF protocols

Importantly, the draft mandates that once a high-risk alert is triggered, financial institutions must assess and act within a strict timeframe—yet to be finalized—underscoring the importance of agility in compliance systems.

Mandatory AI and Machine Learning Integration

To meet these goals, the CBN requires that institutions integrate artificial intelligence (AI) and machine learning (ML) into their AML systems. These advanced technologies should facilitate:

• Anomaly detection

• Automated behavioral analysis

• Continuous learning from historical cases

• Dynamic risk scoring based on evolving patterns

Such tools are expected to increase detection accuracy while minimizing false positives, a common problem in legacy AML software. Each institution must define a false positive threshold and ensure its system remains within that limit, balancing responsiveness with precision.

Automated KYC, KYB, and CDD Compliance

The draft further outlines that real-time access to Customer Due Diligence (CDD), Know Your Customer (KYC), and Know Your Customer’s Business (KYB) data is mandatory. Financial institutions must implement seamless onboarding processes that verify identities instantly using biometric and national databases such as:

• Bank Verification Number (BVN)

• National Identification Number (NIN)

Additionally, AML systems must include automated profiling that continuously categorizes customers into risk tiers based on behavior, history, and typologies related to money laundering or terrorism financing. This risk-based approach is intended to allow more targeted oversight of high-risk individuals or entities.

Stress Testing, Custom Risk Scenarios Required

To further boost system integrity, institutions must regularly conduct stress tests and validation exercises on their AML software. The systems should be capable of running configurable risk scenarios that detect suspicious activities using parameters like transaction size, geographic region, customer type, and frequency patterns.

The CBN emphasized that institutions should adopt customer segmentation techniques to enhance behavioral modeling and anomaly detection, thereby increasing operational efficiency.

Collaborative Industry Input Encouraged

The apex bank is currently soliciting feedback from all financial stakeholders to refine the draft standards. Institutions can download the full draft from the official CBN website and are encouraged to contribute comments and suggestions. “We look forward to receiving your valuable feedback,” the letter noted, reflecting a collaborative approach to shaping the future of financial compliance in Nigeria.

This step signals the CBN’s long-term vision to foster a technologically advanced, transparent, and globally compliant financial environment.

A Move Toward Global Best Practice

The push to implement automated AML solutions comes as Nigeria continues to align itself with international financial standards and regulatory norms. By adopting real-time monitoring, artificial intelligence, and standardized compliance thresholds, Nigerian banks will not only boost transparency but also enhance their credibility on the global stage.

Financial institutions now face a critical transformation period. They must quickly adapt their systems to meet the rigorous requirements or risk regulatory penalties and reputational damage. As the CBN finalizes its standards following stakeholder input, this marks a turning point in the country’s fight against illicit financial flows.