E-Financial
Nigerian Banks Spend Billions Annually on KYCs – KPMG
A KPMG report has revealed that Nigerian banks spend billions of naira annually to implement the Know Your Customer (KYC), which is a compulsory regulatory tool used to reduce the menace of money laundering, terrorist financing and corruption, especially in managing public finance.
The report stated that its survey showed that individual banks could spend between N50 million and N400 million per annum on KYC requirement depending on the customer base of the bank.
The report also stated that on average, between 15 to 30 per cent of customers who start the KYC process do not complete it, because the process is too manual, information required would be difficult to obtain and time consuming and could last for more than four weeks in some cases.
It also noted that the KYC requirement could also be an inhibitor to the attainment of financial inclusion policy in Nigeria that did not have centralised identity management systems.
The report, which is titled “KPMG 2021 Know Your Customer (KYC) Survey: KYC Challenges and Opportunities in Nigeria,” revealed that 85 per cent of the banks that responded to its survey stated that KYC process constituted a significant cost to their operations, with 71 per cent anticipating that the cost of KYC would continue to increase.
In addition, more than 70 per cent of the responding banks, according to the KPMG, spend about N10,000 as direct cost for identity and address verification of a customer while others spend as much as N40,000 on the KYC of a customer.
The key drivers of the continual increase in the cost, according to the report, included frequent changes in regulatory requirements, financial inclusion programs, increase in customer base, initial cost of acquiring technology needed to implement KYC, more complex ownership structures of some businesses operating bank accounts and increase in the number of employees required to administer the KYC unit in a bank.
The survey findings added: “Our analysis of the data reveals that for many banks, the direct cost of KYC is below N50 million per annum, but depending on the size of the bank it can rise to as much as N400 million per annum, which do not include the indirect cost of KYC.
“Banks also incur significant indirect cost in performing KYC that include cost incurred in staffing the compliance office/sanctions screening desk, purchasing, installing and implementing technology, storing and managing customer KYC data, cost incurred due to regulatory reporting, fines incurred as a result of failure to report, opportunity cost incurred as a result of customers who are discouraged from opening accounts due to inefficient or cumbersome KYC systems.”
KPMG also highlighted that some of the topmost challenges banks encountered while implementing KYC in Nigeria include identifying complex legal structures, verifying addresses and identities, identifying and verifying politically exposed persons (PEPs), as well as remediating rather high-volume of legacy accounts.
It added: “Due to the current manual nature of searches at the Corporate Affairs Commission (CAC) as well as continued existence of jurisdictions designated as tax/secret havens – it is difficult for banks to unravel complex legal structures, especially where these complex legal structures are employed to mask true or ultimate beneficial owners.”
The report also noted that address verification is expensive and cumbersome in Nigeria and might not be effective in ascertaining the true location of potential money launderers or terrorist financiers during investigations.
It acknowledged that the deployment of Biometric Verification Number (BVN) and the ongoing National Identification Number (NIN) registration would continue to contribute to addressing this challenge of disparate identity systems in Nigeria that made it difficult for banks to effectively and efficiently identify individuals.
Mr. Saheed Olawuyi, Partner and Head of Forensic Services, KPMG in Nigeria, explained: “It is important for regulators and banks to continuously develop ways to address the KYC challenges, while not compromising the integrity of the financial systems.”
The report recommended that banks should continue to explore technology as a way of tackling the challenges of KYC in Nigeria and create opportunities to share the cost of KYC among them by maintaining common KYC utility facilities.
The KPMG report said: “We would like to encourage more investment in the deployment and adoption of artificial intelligence, machine learning and robotics to automate certain segments of the KYC process, so as to build more efficiency, accuracy and predictive capabilities in the KYC process.”
The report also urged the CAC to further enhance its recently launched digital platform to seamlessly enable users to carry out search on the directors and shareholders of companies, in order to drive efficiency of corporate onboarding and identification of complex ownership structures.
It also called on the CBN and other relevant regulators and stakeholders to streamline the definition of PEPs and “create a collaborative environment where all parties come together and proffer solutions to common KYC issues.”
In continuation of its mission to make financial services simpler, faster, and more accessible, SmartCash Payment Service Bank, a subsidiary of Airtel Nigeria, has announced a strategic partnership with Leadway Assurance to offer Smartcash users an effortless access to Leadway’s mobile-friendly motor insurance service.
Starting from ₦15,000, this new offering provides a convenient and affordable way for motorists to stay protected and compliant with national insurance requirements. With this collaboration, new and existing Smartcash customers can now acquire or renew two types of Leadway Assurance motor insurance: the Third-Party Insurance and AutoBase Comprehensive Insurance, directly on the Smartcash app or by dialling *939#.
While the third-party motor insurance plan offers the legally required minimum cover, protecting motorists from liability for damages or injuries caused to others, the AutoBase Comprehensive Insurance plan extends that protection to cover the user’s own vehicle in the event of accidents.
Commenting on this partnership, Chief Executive Officer, Smartcash PSB, Tunde Kuponiyi highlighted the importance of the collaboration in driving convenient and inclusive insurance access for Nigerians.
“At Smartcash, our goal has always been to bring inclusive financial solutions closer to everyday Nigerians. By partnering with Leadway Assurance, we’re making it easier for motorists to insure their vehicles without stress or delays. It’s insurance that moves at your speed,” he said.
He also noted that Smartcash users can complete the entire purchase process in under three minutes, from plan selection to payment with no physical paperwork or documentation required. Customers receive instant confirmation and their digital policy documents via email, making insurance more accessible than ever.
Also speaking on the partnership, Kike Fischer, Director, Sales, Retail and Partnership, Leadway Assurance, added: “At Leadway, innovation and exceptional service are at the core of our mission to deepen insurance penetration and inclusion.
“This collaboration with SmartCash enables us to deliver real-time protection to more Nigerians via a trusted, everyday platform. It marks a bold step in transforming how insurance is accessed and experienced across the country.”
The insurance integrated service is also fully inclusive, as it works across all types of mobile phones. Users without smartphones or internet access can access the same features via USSD, ensuring nationwide reach, especially in rural and underserved areas.
This partnership reinforces Smartcash’s commitment to delivering digital-first financial services that meet the real-world needs of Nigerians. By simplifying access to essential products like motor insurance, Smartcash continues to empower users with tools that protect, support, and uplift their daily lives.
Central Bank of Nigeria (CBN) has suspended dividend payments to shareholders and bonuses to directors and senior management staff of banks currently benefiting from regulatory forbearance.
Forbearance refers to the temporary reduction or postponement of payments, such as for loans or mortgages, usually introduced to give temporary relief to individuals, and corporations, including financial institutions encumbered by financial straits.
The directive was contained in a circular dated June 13, signed by Olubukola Akinwunmi, director of Banking Supervision, CBN.
According to the CBN, the move is part of efforts to strengthen capital buffers, enhance balance sheet resilience and promote prudent internal capital retention within the banking sector during what it described as a transitional period.
The regulatory forbearance arrangement, which allows banks some relief in meeting credit exposure and Single Obligor Limit (SOL) requirements, is currently being reviewed by the central bank in terms of capital positions and provisioning adequacy.
As part of this review, the CBN directed affected banks to suspend dividend payments, defer bonuses, and refrain from making investments in foreign subsidiaries or launching new offshore ventures.
“This temporary suspension is until such a time as the regulatory forbearance is fully exited and the banks’ capital adequacy and provisioning levels are independently verified to be fully compliant with prevailing standards,” the CBN said.
The bank added that the measure is to ensure that internal resources are retained to meet existing and future obligations and support “the orderly restoration of sound prudential positions.”
The CBN also said it will continue to monitor developments and engage with institutions as necessary.
The move comes amid efforts to tighten supervision across the financial system following recent banking sector reforms and recapitalisation directives.
Kevin Ugwuoke, Executive Director and Chief Risk Officer of Fidelity Bank Plc, has formally assumed office as President of the Chartered Risk Management Institute of Nigeria (CRMI).
L-R: Registrar/Chief Executive, Chartered Risk Management Institute of Nigeria (CRMI), Victor Olannye; Divisional Head, Risk Management Securities and Exchange Commission (SEC), Grace Abioye; Immediate Past President, CRMI, Ezekiel Oseni; President, CRMI and Executive Director/Chief Risk Officer, Fidelity Bank Plc, Kevin Ugwuoke; Director, Enterprise Risk Management, Nigeria Deposit Insurance Corporation (NDIC), Amal Haruna; and Rep. Keynote speaker, Deputy Group Management Director, United Bank of Africa (UBA), Chukwuma Nweke; at the CRMI Conferment Handover/Sent-Forth ceremony, held in Lagos recently.
His leadership promises a reform-focused era anchored on policy advocacy, ethical standards, and digital innovation to deepen risk governance across sectors in the country.
Speaking during the presidential handover ceremony in Lagos over the weekend, Ugwuoke — who also doubles as acting President of the Federation of African Risk Management Associations (FARMA) — described his election as “a call to action.”
He pledged to reposition CRMI as a thought leader and institutional partner in shaping the future of risk management in Nigeria’s national development.
“Our mission is more than just certification; it’s about strengthening the culture of risk governance across sectors. We will collaborate with regulators, raise awareness, and provide practical tools to help organizations embed risk discipline at all levels.”
Ugwuoke outlined a five-pronged strategy to guide his administration: strengthening professional education and certification; deepening policy and regulatory engagement; accelerating digital transformation; integrating ESG and climate risk into corporate strategies; and mentoring the next generation of risk practitioners.
He explained that CRMI will align its initiatives with key policy institutions — including the Nigerian Economic Summit Group, the National Assembly, and sub-national governments — to help embed robust risk frameworks into economic development plans.
“We must integrate risk thinking into how we plan, govern, and invest. We will advocate for more inclusive regulations to empower small and medium enterprises, improve macroeconomic stability, and foster institutional resilience.”
Ugwuoke also announced plans to revise the Institute’s curriculum, introduce specialized certifications to reflect emerging risks, and implement a new National Risk Observatory to provide real-time risk data to both the public and private sectors.
“Digital innovation will be central to how CRMI operates going forward. We are automating our backend, delivering more virtual training, and employing technology to scale our impact across the country and beyond.”
In his remarks, the outgoing President of CRMI, Ezekiel Oseni, challenged the new leadership to consolidate on the achievements made under his tenure — from securing chartered status and strengthening partnerships to gaining greater international recognition — and take the Institute to the next level.
Also speaking on the occasion, Chukwuma Nweke, deputy managing director of United Bank for Africa (UBA), delivering a goodwill message on behalf of Group Managing Director, Oliver Alawuba, described Ugwuoke as a worthy successor.
“As Professor Oseni hands over the baton to Kevin Ugwuoke — a well-respected leader in the risk management ecosystem — we are assured CRMI is poised for greater achievements under his watch.”
Nweke stressed that growing economic uncertainties — from inflation and exchange rate volatility to growing debt — underscore the need for a more strategic view of risk. “Risk must be recognized not as a compliance obligation or a cost center but as a key enabler of resiliency and growth. Institutions that embed risk into their strategies will absorb shocks more effectively, unlock value, and inspire investor confidence.”
As part of the day’s ceremonies, 11 distinguished practitioners were conferred with the Fellow of Chartered Risk Manager (FCRMI) award, while 21 new members were formally inducted as Chartered Risk Managers (CRM). Furthermore, a new Governing Council was inaugurated to oversee the affairs of the Institute for the 2025–2027 term, marking a decisive step forward in institutional renewal and policy direction.
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