Nigeria’s removal from the Financial Action Task Force (FATF) Grey List marks a significant restoration of confidence in its financial system, affirming the success of the Central Bank of Nigeria’s (CBN) recent reforms while signalling the country’s re-entry into the circle of trusted global economies. COLLINS OLAYINKA writes that more is required to keep the country clean.

The Financial Action Task Force (FATF) has removed Nigeria from its grey list of countries that should be seriously monitored for money laundering and terrorist financing risks. Enlisted since February 2023, Nigeria exited the watchlist following Central Bank of Nigeria (CBN)-led financial sector reforms that included the implementation of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) measures.

For many stakeholders, the exit will expand investment inflows, make foreign bank account opening easier for businesses and support the naira’s rising competitiveness in global markets.

For over two years, Nigeria has been burdened by the grave implications of being on the FATF grey list, limiting its potential in the global financial markets. Being on the list represents one of the worst experiences for any country, its citizens and most importantly, its financial system.

One dire consequence is that financial transactions emanating from watch-list countries are greatly scrutinised because of the high risks associated with the country.

The FATF leads global action to tackle money laundering, terrorism and proliferation financing. The 40-member body, which has the backing of the World Bank Group and International Monetary Fund (IMF), sets international standards to ensure national authorities can effectively go after illicit funds linked to drug trafficking, illicit arms trade, cyber fraud and other serious crimes.

The Paris-based watchdog’s decision on Nigeria represents a huge progress for the country’s financial system as it works to restore investor confidence, reduce the cost of capital and strengthen financial system credibility. Other countries removed from the list are South Africa, Mozambique and Burkina Faso.

“As of February 2025, the FATF has reviewed 139 countries and jurisdictions and publicly identified 114 of them. Of these, 86 have since made the necessary reforms to address their AML/CFT weaknesses and have been removed from the process,” the report said.

The FATF identifies countries or jurisdictions with serious strategic deficiencies to counter money laundering, terrorist financing and financing of proliferation.

“For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing risks emanating from the country,” it said.

By closing gaps in regulatory oversight and enhancing enforcement against illicit financial flows, four countries have now met the FATF’s requirements for delisting, boosting their standing among global financial institutions and capital markets.

Nigeria and South Africa were added to the list in February 2023, while Mozambique was included in October 2022, just as Burkina Faso was added in February 2021.

On assumption of office, the CBN Governor, Olayemi Cardoso, swung into action, dismantling the roadblocks and opaqueness in the financial system that put Nigeria on the list. From reforms in the bureau de change operations, which fall within the other financial sector segment of the economy, to an increase in surveillance and supervision of the deposit money banks, the CBN committed to efforts to make the financial system more transparent.

Part of this was ensuring that the CBN banks met the FATF 40 recommendations, including ensuring that the lenders identified their customers and verified customers’ identities using reliable, independent information.

The compliance process includes Nigeria’s lenders being able to identify the beneficial owners of assets and taking reasonable measures to verify the identities of the beneficial owners.

As required by the law, Nigeria’s financial institutions are also able to understand the ownership and control structure of their customers, obtain information on the purposes of transactions and the intended nature of the business relationship and conduct due diligence on the business relationship.

They equally ensured that scrutiny of transactions is undertaken during every banking relationship.

President of FATF, Elisa de Anda Madrazo, commended the strong political will demonstrated under President Bola Tinubu’s administration. “Nigeria has demonstrated a strong political commitment to fighting financial crimes. However, it is not only the commitment that matters, but also the change and the concrete measures we have seen put in place,” she said.

President of the Bank Customers Association of Nigeria (BCAN), Dr Uju Ogubunka, has described Nigeria’s exit from the FATF grey list as a good development for the country. He commended the CBN’s efforts to ensure that Nigeria is no longer burdened by the growing list of challenges.

He said: “It opens new approaches and opportunities in Nigerian banks and customers’ dealings with international financial institutions. It shows that Nigeria’s financial system is safe for payments and other transactions. It is worth celebrating by all Nigerians,” he said.

Ogubunka advised that the government put in more to ensure that Nigeria does not relapse or return to the list by continuing to do things right and complying with all 40 recommendations set by the FATF.

Head of Lagos Office at the Inter-Governmental Action Against Money Laundering in West Africa (GIABA), Timothy Melaye, said the government of Nigeria has shown an unwavering commitment to the implementation of AML/CFT measures in the country.

Melaye spoke during the sensitisation seminar for the organised private sector on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) organised by GIABA in Lagos.

Melaye, who represented the GIABA Director-General, Edwin Harris, disclosed that money laundering and terrorism financing pose considerable threats to global peace and security, as well as destabilising the political and financial stability of any nation-state.

“Besides external resources, enormous funds are generated by terrorist networks through legal as well as illegal means, concealed and laundered using existing legal financial framework or unlawful underground networks. The terrorist networks cannot be destroyed, or even made ineffective, unless concerted efforts are made at both national and international levels to efficaciously block their financial sources. The promotion of well-regulated financial systems and services is central to any effective and comprehensive AML/CFT regime,” he said.

According to him, Money Laundering (ML) and the Financing of Terrorism (FT) are increasing in sophistication, inherently transnational and increasingly linked to organised crime, posing a growing threat to consumers, business and government alike.

He said the global nature of economic and financial crime is such that no nation can fight the problem alone, making international cooperation and working closely with our key allies a critical part of the response.

Melaye said the fight against money laundering and international terrorism in recent years has highlighted a third method by which illicit funds may be transferred across borders.

Continuing, Melaye said FATF has signalled its interest in Trade-Based Money Laundering (TBML) by its publication of a report entitled “Trade Based Money Laundering” (TBML Report) in June 2006. Subsequently, in June 2008, the FATF issued its “Best Practices Paper on Trade-Based Money Laundering” (FATF Best Practices Paper), providing more detail about TBML and how to prevent it.

“The TBML Report and the Best Practices of the FATF Reports) Identify TBML as one of the three main avenues of money laundering and define TBML as the process of legitimising the proceeds of crime by moving value through trade transactions to disguise their illicit origins,” he said.

Also speaking during the event, President/Chairman, Compliance Institute Nigeria, Pattison Boleigha, described the grey list as terminology coined by the FATF, which is generally made up of countries from highly developed economies, to check the spate of crime and the abuse of the financial system.

According to him, the signatories to the FITF are expected to guide countries on how to put legislation in place in their various countries to fight money laundering, terrorism financing and lately, proliferation of weapons of mass destruction.

He said not meeting the FATF recommendations has some dire consequences for the business environment, including having Nigeria’s name published globally as a country that is not doing enough to fight financial crime, difficulties in business consummation and lack of trust from foreign investors.
“In addition to that, our financial system suffers a lot because correspondent banks will not want to do business or open correspondent banking relationships with our banks and other financial institutions,” he added.

Notwithstanding the gains so far, the monetary authority is committed to consolidating the reforms. As part of this, the CBN and the Bank of Angola signed a memorandum of understanding (MOU) at the just-concluded 2025 International Monetary Fund (IMF) /World Bank Annual Meetings in Washington, DC, to strengthen financial sector regulations and fight money laundering.

Cardoso, who signed on behalf of the CBN alongside the Governor of the Central Bank of Angola, Manuel Antonio Tiago Diaz, said the MoU aligned with Africa’s broader goals of economic integration and financial stability.

Both apex bank leaders said the partnership marked a critical development between the two institutions in their efforts to deepen bilateral cooperation and technical exchange.

Both institutions, as stipulated by the MoU, are expected to establish a bilateral forum for the reciprocal exchange and sharing of technical assistance between the authorities to enhance capacity in the execution of their respective functions. They are also expected to cooperate and collaborate in cross-border supervision of authorised institutions and the exchange of cybersecurity information between them.

According to them, the institutions are to partner on licensing, supervision, resolution planning and implementation of resolution measures for cross-border financial establishments. They are also to ensure a transparent and smooth periodic exchange of information, as well as procedures for the exchange of information.

The cooperation will also extend to exchange control, financial markets and foreign reserves management, currency management and economic research of the MoU implementation will be a win-win for both parties.