CBN released new guidelines for licensing of banks

• CBN released new guidelines for licensing of banks and other financial institutions
• What the guideline is saying

Guidelines for granting licenses to banks and other financial organizations have been released by the Central Bank of Nigeria. It is for use by people and organizations asking for licenses to operate as banks or other financial institutions, according to the apex bank.

The Anti-Money Laundering, Combating The Financing of Terrorism, and Countering Proliferation Financing of Weapons of Mass Destruction (AML/CFT/CPF) organization is responsible for the regulation.

The central bank claims that the rules will make it easier for financial institution promoters to meet AML/CFT/CPF standards when requesting operational licenses.

Anyone applying for a license is obliged to take the requirements into consideration, which are also outlined in the guidelines.

For the first time, the central bank has released stringent guidelines that match its application procedure for banking licenses with considerations for financing of terrorism, the purchase of weapons, and other forms of instability.

This will probably make obtaining a banking license much more difficult and rigorous. Additionally, applicants could have to make an investment to show that they are aware of the risks associated with money laundering, terrorism financing, and proliferation financing.

The CBN will be investigating the shareholders of prospective bank applicants more than ever, paying particular attention to individuals who may have had prior criminal histories or connections to crime.

One important and persuasive finding is that applicants must be cautious of sanctions, particularly those coming from foreign nations and Nigerians. For instance, the success of bank applicants’ applications may be impacted if the funders or supporters are from nations that have been sanctioned.

What the guideline is saying

The guidelines’ scope includes both new and pending applications (including those awaiting final approval). view below:

Despite the fact that the rules mention things like aims, breadth, and applicability as requirements for licensing applications, we believe that they are not sufficient justifications to reject applications for a banking license.

a) Failure to demonstrate understanding of the ML/TF/PF risks inherent in the business;

b) Inability to address the AML/CFT/CPF licensing requirements satisfactorily, especially during the capital verification exercise;

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c) Misrepresentation of facts and false declaration;

d) Criminal record of a party to the application indicating conviction or any other offence that constitutes financial crime;

e) Opaque ownership structure;

f) Discovery that a party to the application is on the sanctions lists;

i. United Nations Security Council (“UNSC”);

ii. United States Office of Foreign Assets Control (“OFAC”);

iii. Her Majesty’s Treasury, United Kingdom (“HMT”);

iv. European Union (“EU”); v. French Ministry of Economy, Finance and Industry (MINEFI);

vi. Nigerian sanctions list; and

vii. Any other sanctions list as may be advised from time to time

g) Inability to address observed deficiencies in licencing application within specified timeline.

h) Any other condition that the CBN may specify

Download the guidelines.