Monitor Political Appointees’ Accounts Regularly, CBN Tells Banks
The Central Bank of Nigeria has ordered banks and other financial institutions in the country to regularly screen accounts of Politically Exposed Persons. It stated this in its circular to banks and other financial institutions on Friday titled, ‘Guidance notes on Politically Exposed Persons’, which was signed by the Director, Financial Policy and Regulation Department, Chibuzor Efobi.
In the circular, it stated that, ““PEP accounts should be subject to periodic reviews as may be determined by the FI in line with risk assessment.
“Frequency of the periodic reviews should be determined by the risk of the customer and documented appropriately. FIs should also review their PEP database frequently.”
It added that, “On a regular basis, transactions and account activities should be monitored and scrutinised for money laundering/terrorist financing/ proliferation financing risks.”
The CBN explained domestic PEPs to be those entrusted with prominent public positions in Nigeria, while those entrusted with prominent public positions in any other foreign jurisdiction were foreign PEPs.
It noted that in view of the corruption level in Nigeria, domestic PEPs were rated highly vulnerable to financial risks, therefore, by default, most domestic PEPs were considered high risk.
Foreign PEPs and PEPs with prominent functions in international organisations should be categorised based on the level of risk as assessed by financial institutions, it stated.
The CBN said customer due diligence should continue after establishing a relationship with the customer.
“The behaviour of the customer, transactions and accounts should be in line with the expected level of activity. Ongoing monitoring is crucial as a customer risk profile may change over time.”
The CBN stated that financial institutions, in the ordinary course of their businesses, established business relationships with PEPs, who may be vulnerable to corruption and portend reputational and financial crime risks to the FI.
PEPs, it stated, posed a high risk of money laundering, financing of terrorism and proliferation financing due to the possibility that individuals holding such positions may misuse their power and influence for personal gain or advantage to themselves, close family members and associates.
The CBN said, “Such individuals may also use their families or close associates to conceal illicit funds and assets.
“In addition, they may also seek to use their power and influence to gain representation and/or access to, or control of, legal entities for similar purposes.”
