The Central Bank of Nigeria (CBN) yesterday issued an advisory to banks and other financial institutions in the country, asking them to rapidly adapt to and keep abreast of emerging risks and other developments occasioned by the COVID-19 scourge, which, according to the apex bank, has “inadvertently led to increase in financial crimes globally.”
The regulator advised financial institutions to take proactive steps to tackle the new and emerging money laundering and terror financing risks by investing in “robust data mining and artificial intelligence software to monitor transactions and also report suspicious transactions.” Citing an advisory issued by the Nigerian Financial Intelligence Unit (NFIU), which identified increased financial crimes such as cybercrimes, frauds, counterfeiting, diversion of public funds and misuse of NGOs, CBN identified some “vulnerabilities” and “red flags” highlighted in the NFIU advisory, which it said, financial institutions should take steps to address. For instance, the apex bank said financial institutions should be cautious about e-commerce merchant, “with little or no history or internet presence, suddenly receiving multiple payments from unrelated third parties.” It also advised financial institutions to be wary of individual(s) suddenly receiving multiple payments from unrelated third parties.
Similarly, CBN warned about: “Customer(s) suddenly engaging in the supply or purchase of medical supplies and payment for goods and services associated with known brands, yet the beneficiary is an individual, not a corporate body.” Equally, the regulator said financial institutions should be cautious about non-profit organisations suddenly receiving donations in favour of COVID-19 patients or victims. Also, financial institutions should be alert when a customer’s account with little or no activity, suddenly begins to receive funds from one or more unrelated third parties, “only for the funds to be transferred to one or more unrelated third parties.”
CBN further warned that “NGOs under the guise of paying COVID-19 victims could actually be paying members of a criminal gang or facilitating terrorist financing.” In addition, CBN said financial institutions should be paying attention to activities, such as when funds are transferred from government account to personal accounts; unusual volume of transactions, immediate disbursement of deposited funds to multiple accounts and large and frequent cash withdrawals and deposits.
It advised financial institutions to update “Alert” protocols in their AML/ CFT monitoring tools, “in line with the red flags and emerging trends arising from the COVID-19-related financial crimes.”