CBN Customer Due Diligence Rule
The Central Bank of Nigeria (CBN) has implemented new regulations regarding customer due diligence, aiming to combat financial crimes and enhance compliance with anti-money laundering and counter-terrorism financing standards. Hence, these regulations are known as the Customer Due Diligence Regulations 2023. Meanwhile, it applies to both individuals and legal entities. Here are key points to understand about the CBN’s new customer due diligence rules.
Scope of the Regulations
The regulations cover financial institutions under the CBN’s regulatory purview. Therefore requiring them to establish internal processes and procedures for conducting CBN customer due diligence rules.
Information and Documentation
Additionally, financial institutions must identify customers and collect specific details. The details include legal names, addresses, contact information, identification documents, account types, nature of banking relationships, and signatures. Meanwhile, the identification of politically exposed persons is of particular importance.
Verification Process: CBN Customer Due dilligence Rule
However, to verify customer identities, financial institutions must rely on reliable and independent source documents, data, or information. For individuals, this involves confirming details like date of birth, residential address, contact information, and the validity of official documentation. In the case of legal entities, institutions must conduct searches on public registries, review financial statements, and examine board resolutions.
Record-Keeping
On the other hand, the regulations emphasize the importance of maintaining accurate and up-to-date customer information. Financial institutions are required to retain records obtained through CBN customer due diligence rules, including account files, business correspondence, and analysis results, for a minimum of five years after the termination of a business relationship or an occasional transaction.
Regular Reviews
Meanwhile, financial institutions must conduct periodic reviews of customer records based on risk categories. Therefore, high-risk customers require annual reviews, medium-risk customers require reviews every 18 months, and low-risk customers require reviews every three years.
Ultimately, compliance with these new regulations is crucial for financial institutions. They have to ensure adherence to CBN guidelines, enhance due diligence practices, and contribute to the overall integrity of the financial system.
Note: It is advisable to refer directly to the CBN’s official documentation for the most accurate and up-to-date information on these regulations
