The Compliance Institute, Nigeria (CIN) has advised banks in the country against doing business with countries like North Korea and Iran that have been placed on economic sanctions by the U.S.
The President of CIN, Mr Pattison Boleigha gave the advice on Thursday in Abuja at a Workshop on Sanctions and Counter Proliferation Compliance, jointly organised by the CIN and the Centre for a New American Security.
Boleigha said that the workshop was aimed at educating financial institutions on sanctions compliance and how to ensure that Nigerian financial institutions were not used for money laundering or terrorism financing.
He also advised the banks against transactions with entities in countries that had been sanctioned by the European Union and the United Nations which could lead to rheir being blacklisted from world trade.
“The Nigerian anti-money laundering laws requires that every financial institution puts in place mechanisms and control to ensure that they comply with the sanctions regime and protect the Nigerian financial system from being abused by sanctioned entities .
“If the financial institutions don’t put these measures in place, they could also be sanctioned by financial regulators like the CBN, NAICOM and SEC for not keeping to those requirements of the law.
“For direct implications for the financial institutions, they could loose their Corresponding Banking Licenses.
“This is huge because there is hardly any bank that can survive today in Nigeria without a Corresponding Banking License which allows them to transact with foreign banks and in foreign currencies.
“A lot of Corresponding banks have shutdown businesses with their Responding banks in Nigeria likely because of failure on the part of the Responding Banks to keep to the Sanctions Compliance regime,” he emphasized.
Boleigha said that the U.S. government could also blacklist erring institutions from ever doing business in the country if caught transacting with countries placed on economic sanctions by the U.S. Office of Foreign Assets Control (OFAC).
Mr Abimbola Adeseyoju, the Chairman, Partnership and Communications, CIN said that banks should avoid non-compliance, especially at a time that Nigeria was preparing for the Financial Action Task Force (FATF) mutual evaluation coming up in September, 2019.
He said that the evaluation by FATF would show the world that Nigeria engages in best financial practices.
Meanwhile, Mr John Hughes, Adjunct Senior Fellow, Centre for a New American Security, said banks could be fined billions of dollars and face reputational damage if found in violation of the U. S. Sanctions Compliance.
“They could also be potentially subject to other sanctions or even be sanctioned themselves, depending on what they are doing.
“I should stress that these are not just U.S. and EU, there also are a number of United Nations sanctions that are obligatory for all UN member-states including Nigeria,” he added.
Hughes, however, noted that there were “no particular concerns” regarding financial institutions in Nigeria at the moment.
“I think Nigeria has actually done a pretty good job of providing some of the tools and resources for their banks.
“You have a very competent regulator here that has been very active both in the region and internationally, so I think that banks here are doing a pretty good job in terms of sanctions compliance,” he said.
He, however, urged banks to continue to do the necessary “Know Your Customers” checks so they know the sort of things their clients are into and ensure banks’ services are not misused.