Politically Exposed Person’s guidelines
The Central Bank of Nigeria (CBN) has issued stringent guidelines to banks, aiming to prevent politically exposed individuals and entities from using the banking system to launder illegally sourced funds. In their circular titled “Guidance Note on Politically Exposed Persons (PEPs)” dated June 22, 2023. The CBN requires financial institutions to implement measures that mitigate the risks associated with conducting business relationships with Politically Exposed Persons.
On the other hand, to comply with the guidelines, banks must establish internal databases and promptly report any suspicious transactions involving politically exposed persons to the relevant security agencies. The CBN emphasized the risks of money laundering, terrorism financing, and proliferation financing posed by high-risk customers, including PEPs.
However, if a risk assessment determines that a business relationship with a domestic or international organization PEP presents no higher risk, they can be treated like any other customer.
The CBN stressed the importance of ongoing vigilance, requiring banks to continuously evaluate the status of their customers and determine whether they should be classified as politically exposed persons. Hence, Politically Exposed Person’s accounts should undergo periodic reviews aligned with risk assessment criteria.
However, banks must diligently monitor transactions involving foreign PEPs and high-risk domestic or international organization PEPs. If there are suspicions of funds linked to criminal activities, the bank must file a suspicious transaction/activity report with the Nigerian Financial Intelligence Unit (NFIU). Ultimately, compliance with these Politically Exposed Persons guidelines ensures the financial system’s integrity and helps combat illicit financial activities