In Nigeria’s ever-evolving financial landscape, the fight against money laundering has become more than a regulatory obligation, it’s a battleground. From regulatory demands to institutional inertia, from technological gaps to cross-border pressures, the Anti-Money Laundering (AML) ecosystem is caught in a tug of war.
This writeup unpacks the conflicting forces shaping Nigeria’s AML space and the implications for compliance officers, financial institutions, and regulators.
Between Stringent Regulation and Weak Enforcement
Nigeria has no shortage of AML regulations. The Money Laundering (Prevention and Prohibition) Act, 2022, the CBN AML/CFT Regulations, and the recent 2025 Exposure Draft on Baseline Standards for Automated AML Solutions all form part of an increasingly rigorous framework.
Yet enforcement often tells a different story.
Many institutions are technically non-compliant, but rarely face proportionate penalties especially when political or institutional affiliations come into play. This inconsistency creates a dual reality: while some financial institutions go above and beyond to stay compliant, others risk nonchalance, banking on weak enforcement.
💬 “Why invest in automated systems when we’ve never been audited?” is still a real sentiment in some mid-sized firms.
This uneven terrain puts compliant institutions at a competitive disadvantage and demotivates the very professionals trying to uphold regulatory standards.
Between Manual Processes and a Push for Automation
The 2025 CBN Exposure Draft mandates a paradigm shift from manual to intelligent, automated AML systems. But the infrastructure and budget required for this transition are a luxury for many financial institutions especially microfinance banks, fintech startups, and rural-facing institutions.
Even in larger banks, legacy systems and siloed departments often resist the integration of newer, smarter tools like:
- Real-time transaction monitoring
- AI-assisted PEP & sanctions screening
- Risk-based customer profiling
🔍 According to a 2024 industry survey, only 28% of Nigerian financial institutions currently use automated AML tools at scale.
So while regulators are pulling the sector toward digitization, real-world capacity and resources are pulling it back causing stagnation, confusion, and anxiety.
Between Global Expectations and Local Realities
Nigeria is a key regional player in West Africa’s financial ecosystem and a member of GIABA (Inter-Governmental Action Group Against Money Laundering in West Africa). The FATF (Financial Action Task Force) has also put increased pressure on Nigeria to comply with international AML standards.
But applying global AML expectations without local adaptation leads to friction. For instance:
- Some customer onboarding KYC requirements ignore Nigeria’s digital ID challenges.
- Risk profiling templates based on Western standards don’t reflect the complexities of Nigeria’s cash-heavy informal sector.
- Small institutions are expected to implement controls designed for billion-dollar banks.
This mismatch is one of the biggest pain points for Nigerian compliance professionals: they’re stuck between meeting global benchmarks and managing real, local limitations.
Between Regulatory Oversight and Institutional Pushback
While regulatory bodies like CBN, NFIU, and EFCC are pushing for deeper AML integration, internal resistance within financial institutions often slows progress.
Many business units still see compliance as:
- A blocker to customer onboarding
- A risk-averse bottleneck to innovation
- A cost center with little direct return on investment
This has led to poor collaboration, underfunding of compliance departments, and passive-aggressive adoption of new tools or policies.
💬 “When you flag a high-risk customer, the sales team pressures you to ‘be flexible.’ It’s a constant tug of war,” noted a compliance manager at a Lagos-based fintech.
Between Transparency and Reputation Management
Another subtle but powerful tug of war is between doing the right thing and protecting the brand. Some institutions quietly avoid reporting suspicious transactions (SARs) or deactivating politically exposed accounts to avoid headlines, media scrutiny, or loss of clients.
Yet, failure to report can result in even more damaging consequences both legally and reputationally.
Until compliance is seen as a value driver, not a liability, this battle between transparency and self-preservation will continue.
So, What’s the Way Forward?
1. Harmonize Global Standards with Local Context
Regulators and international bodies must adapt AML frameworks to Nigeria’s financial realities, including informal sector dynamics and digital infrastructure challenges.
2. Foster RegTech Adoption
Support initiatives and partnerships that make automated AML tools more accessible to small and mid-sized institutions especially through sandboxing, shared services, or licensing subsidies.
3. Prioritize Consistent Enforcement
The AML playing field must be level. Institutions should be held accountable regardless of political ties or industry size.
4. Encourage Cross-Department Collaboration
Compliance officers shouldn’t fight internal battles alone. Executive leadership must integrate compliance into strategic decision-making not just as an afterthought.
Final Thoughts
The tug of war shaping Nigeria’s AML space is more than a policy issue, it’s a daily operational reality for professionals on the ground. As the pressure mounts from regulators, clients, and internal teams, the need for clarity, fairness, and technology becomes more urgent than ever.
At Probe Compliance, we help institutions turn compliance chaos into clarity. From real-time screening to intelligent transaction monitoring, our solutions are built to simplify your AML journey so you don’t get caught in the middle.
👉 Let’s talk about how we can support your team.
👉 Or book a free demo today.