Regulators, financial institutions and civil society groups have agreed to standardise the process for onboarding non-profit organisations (NPOs) across Nigerian banks.

The move, it was gathered, was in a bid to ease restrictions that had hindered the operations of charities and humanitarian groups.

The decision was reached at the fourth general meeting of the Multi-Stakeholder Working Group on Charities (MSWGC), held in Lagos, with participants drawn from the Economic and Financial Crimes Commission, Special Control Unit Against Money Laundering (SCUML), Nigerian Financial Intelligence Unit (NFIU), Central Bank of Nigeria, Corporate Affairs Commission, commercial banks and non-profit representatives.

Stakeholders raised concerns that anti-money laundering measures, meant to safeguard the financial system, were being applied too broadly, making it difficult for legitimate organisations to open accounts, receive donations and carry out programmes.

The Executive Director of Spaces for Change, Victoria Ibezim-Ohaeri, said the situation had become increasingly difficult for civil society groups, with many unable to access funds despite operating within regulated channels.

“Banks are making it difficult for NPOs to open bank accounts, to operate, to move money. Even when they receive donations, they cannot access those funds to implement their projects.

“These organisations want to remain within the financial system. They want to use regulated channels so that their transactions can be monitored. But some of these restrictions are pushing them out,” she said.

A key issue, according to participants, is the continued classification of NPOs as high-risk customers by many banks, leading to stringent due diligence requirements regardless of their size or activities.

This, they noted, ran contrary to the revised Recommendation 8 of the Financial Action Task Force, which discourages blanket risk categorisation of non-profits.

Consultant to the working group, Pattison Boleigha, attributed the problem largely to gaps in understanding of the updated global standards, noting that regulators and financial institutions needed to align on expectations.

Stakeholders also pointed to regulatory uncertainty following amendments to the Money Laundering (Prevention and Prohibition) Act and the Terrorism Prevention Act in 2022, which removed NPOs from the list of mandatory reporting entities. While regulators say the changes are clear, banks maintain they require formal directives from the apex bank before adjusting compliance procedures, citing the risk of heavy sanctions.

Despite the challenges, participants say engagement over the past four years has yielded progress.