CBN Orders Banks to Stem COVID-19 Financial Crimes

Central Bank of Nigeria (CBN) has advised all banks to update alert protocols in their Anti-Money Laundering/Combating the Financing of Terrorism monitoring tools, in line with the red flags and emerging trends arising from the COVID-19 related financial crimes.

It said this in a circular titled ‘Administrative letters to all banks and other financial institutions’  signed by  J. M. Gana, director, Financial Policy and Regulation Department.

The regulator said changes in the trends of business activities and financial transactions precipitated by COVID-19 pandemic inadvertently led to increase in financial crimes globally.

This therefore required financial institutions to adapt rapidly and keep abreast with emerging risks and other developments while taking proactive steps to address the new and emerging ML/TF, it stated.

The circular said this included investing in robust data mining and artificial intelligence software to monitor transactions and also report suspicious transactions.

The CBN said the Nigerian Financial Intelligence Unit, as the central repository of suspicious transactions and other financial information, had issued an advisory based on comprehensive analysis of STRs and other information available to it.

It said the advisory identified increased financial crimes such as cybercrimes, frauds, counterfeiting and substandard goods, diversion of public funds and misuse of non-governmental organisations funds.

Some vulnerabilities and red flags highlighted in the advisory were e-commerce merchants with little or no history or Internet presence suddenly receiving multiple payments from unrelated third parties.

Others are individuals suddenly receiving multiple payments from unrelated third parties, and customers suddenly engaging in the supply or purchases of medical supplies and payment for goods and services associated with known brands, yet, the beneficiary is an individual not a corporate body.

The CBN mentioned that there were unusual transaction dynamics from customers.

It said the occurrence of diversion of public funds which involved unusual volumes of transactions, large and frequent cash withdrawals and deposits.

Also identified were immediate disbursement of deposited funds to multiple accounts, account signatory which was also a public or civil servant, and funds transferred from government accounts to personal accounts.

The CBN said some non-profit organisations were suddenly receiving donations in favour of COVID-19 patients or victims.

It also flagged down some customer accounts with little or no activity that suddenly receive funds from one or more unrelated third parties only for the funds to be transferred to one or more unrelated third parties.