How Cardoso-Led CBN Reforms Exited Nigeria From FATF Grey List

The Financial Action Task Force (FATF) on Friday removed Nigeria from its grey list of countries that should be increasingly monitored for money laundering and terrorist financing risks. Nigeria, enlisted since February 2023 exited the watchlist following Central Bank of Nigeria (CBN’s) Governor, Olayemi Cardoso-led financial sector reforms implementing Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) measures.

For many stakeholders, especially bank customers, Nigeria’s exit from the watchlist will expand investment inflows, make foreign bank account opening easier for businesses and supports naira’s rising competitiveness in global markets.

For over two years, Nigeria has been burdened by the grave implications of being in the Financial Action Task Force (FATF) grey list, limiting her potential in the global financial markets.

Being in that lists represents one of the worst experiences for country businesses, her citizens and most importantly, its financial system.

The implication is that financial transactions emanating from watch-list countries are double-checked, and given greater scrutiny because of the high risks associated with the country.

The FATF leads global action to tackle money laundering, terrorist and proliferation financing.

The 40-member body, which has the backings of the World Bank Group and International Monetary Fund (IMF) sets international standards to ensure national authorities can effectively go after illicit funds linked to drugs trafficking, the illicit arms trade, cyber fraud and other serious crimes.

The Paris-based watchdog’s decision represents a huge progress for Nigeria financial system as it works to restore investor confidence, reduce the cost of capital and strengthen financial system credibility.

Other countries removed from the list include, South Africa, Mozambique and Burkina Faso.

“As of February 2025, the FATF has reviewed 139 countries and jurisdictions and publicly identified 114 of them. Of these, 86 have since made the necessary reforms to address their AML/CFT weaknesses and have been removed from the process,” the report said.

FATF identifies countries or jurisdictions with serious strategic deficiencies to counter money laundering, terrorist financing, and financing of proliferation.

“For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing risks emanating from the country,” it said.

By closing gaps in regulatory oversight and enhancing enforcement against illicit financial flows, the four nations have now met the FATF’s requirements for delisting, boosting their standing among global financial institutions and capital markets.

Nigeria and South Africa were added to the list in February 2023 while Mozambique was included in October 2022 and Burkina Faso initially in February 2021.

CBN’s Milestone Contributions To FATF List Exit

On assumption of office, the leadership of the Central Bank of Nigeria (CBN) led by Olayemi Cardoso swung into action, dismantling the roadblocks and opaqueness in the financial system that put Nigerian on the list.

From reforms in the bureau de change operations, which falls within the other financial sector segment of the economy, to the increase in surveillance and supervision of the deposit money banks, the CBN under Cardoso left no stone unturned to ensure that Nigeria exits the grey list.

The CBN under Cardoso ensured that the banks met the FATF 40 recommendations, including ensuring that the lenders identify their customers and verify customer’s identity using reliable, independent source documents, data or information.

Part of the compliance records include Nigeria’s lenders being able to identify the beneficial owner, and taking reasonable measures to verify the identity of the beneficial owner, such that they become satisfied that beneficial owner in every transaction is known.

As required by the law, the Nigeria’s financial institutions are also able to understand the ownership and control structure of their customers, obtain information on the purpose and intended nature of the business relationship and conduct due diligence on the business relationship.

They equally ensured that scrutiny of transactions are undertaken throughout the course of every banking relationship.

President, Bank Customers Association of Nigeria (BCAN), Dr. Uju Ogubunka, described Nigeria’s exit from the FATF grey list as a good news and development, for the country.

He praised the CBN’s efforts at ensuring that Nigeria is no longer burdened by the grew list challenges, following its exit.

He said, “It opens new approach and opportunities in Nigeria banks and customers dealings with international financial institutions. It shows that Nigeria’s financial system is safe for payments and other transactions. It is worth celebrating by all Nigerians,” he said.

Ogubunka advised that government should do more to ensure that Nigeria does not relapse, or return into the list by continuing to do things right and continuously complying with all the 40 recommendation set by the FATF.

CBN/ Bank of Angola pact

The CBN and Bank of Angola Memorandum of Understanding (MOU at the just concluded 2025 International Monetary Fund (IMF) /World Bank Annual Meetings in Washington DC was also a major step to strengthen financial sector regulations and fight money laundering.

Cardoso, who signed on behalf of the CBN alongside the Governor of the Central Bank of Angola, Manuel Antonio Tiago Diaz, noted that the MoU aligns with Africa’s broader goals of economic integration and financial stability.

Both apex bank leaders said the partnership marks a critical development between the two institutions in their efforts to deepen bilateral cooperation and technical exchange.

Both institutions are by the MoU expected to establish a bilateral forum for the reciprocal exchange and sharing of technical assistance between the authorities, to enhance capacity in the execution of their respective Central Bank functions.

They are also expected to cooperate and collaborate in the cross-border supervision of authorized institutions and exchange of cybersecurity information between them.

According to them, the institutions are to partner on licensing, supervision, resolution planning and implementation of resolution measures for cross-border financial establishments.

They are also to ensure transparent and smooth periodic exchange of Information as well as define procedures for exchange of information.

The cooperation will also extend to exchange control, financial markets and foreign reserves management, currency management and economic research.

The partnership further extends to payment, clearing and settlement systems management, financial sector development, banking supervision and regulation as well as Anti-Money Laundering and Countering the Financing of Terrorism.

Both central bank leaders said it is their hope that the outcome of the MoU implementation will be a win-win for both parties.

Views From Stakeholders

Head Lagos Office at Inter – Governmental Action Against Money Laundering In West Africa (GIABA), Timothy Melaye said the government of Nigeria has shown unwavering commitment to the implementation of AML/CFT measures in the country.

Melaye spoke during the sensitisation seminar for organised private sector on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) organised by GIABA in Lagos.

Melaye, who represented GIABA Director-General, Edwin Harris, disclosed that money laundering and terrorism financing pose considerable threats to global peace and security as well as destabilizing political and financial stability of any nation state.

“Besides external resources, enormous funds are generated by terrorist networks through legal as well as illegal means, concealed and laundered using existing legal financial framework or unlawful underground networks.

“The terrorist networks cannot be destroyed, or even made ineffective, unless concerted efforts are made at both national and international levels to efficaciously block their financial sources. The promotion of well-regulated financial systems and services is central to any effective and comprehensive AML/CFT regime,” he said.

According to him, Money Laundering (ML) and the Financing of Terrorism (FT) is increasing in sophistication, inherently transnational, and increasingly linked to organised crime, posing a growing threat to consumers, business, and government alike.

He said the global nature of economic and financial crime is such that no nation can fight the problem alone, making international cooperation and working closely with our key allies a critical part of the response.

Melaye, said the fight against money laundering and international terrorism in recent years has highlighted a third method by which illicit funds may be transferred across borders.

Continuing, Melaye said FATF has signalled its interest in Trade-Based Money Laundering (TBML) by its publication of a report entitled “Trade Based Money Laundering” (TBML Report) in June 2006. Subsequently, in June 2008, the FATF issued its “Best Practices Paper on Trade Based Money Laundering” (FATF Best Practices Paper), providing more detail about TBML and how to prevent it”.

“The TBML Report and the Best Practices of the FATF Reports) identify TBML as one of the three main avenues of money laundering and define TBML as the process of legitimizing the proceeds of crime by moving value through trade transactions to disguise their illicit origins,” he said.

The involvement of the private sectors engaged in the movement of goods and services is necessary to raise awareness and understanding of ML/TF risks amongst trade associations that play an active role in facilitating transactions that could be abused specifically for ML/TF through movement of cash and of transfer of funds to indulge in laundering.

Also speaking during the event, President / Chairman, Compliance Institute Nigeria, Pattison Boleigha, described the grey list as terminology that is coined by the FATF, which is generally made up of countries from highly developed economies, to check the spate of crime and the abuse of the financial system.

According to him, the signatories to the FITF are expected to guide countries on how to put legislation in place in their various countries to fight money laundering, terrorism financing and lately, proliferations of weapons of mass destruction.

He said not meeting the FATF recommendations has some dire consequences on the business environment, including having Nigeria’s name published across the whole world as country that is not doing enough to fight financial crime, difficulties in business consummation and lack of trust from foreign investors.

“In addition to that, our financial system suffers a lot because correspondent banks will not want to do business or open correspondent banking relationships with our banks and other financial institutions,” he added.

Understanding FATF Rules

In a report posted on its website, FATF said it identifies jurisdictions with weak measures to combat money laundering and terrorist financing (AML/CFT) in two FATF public documents that are issued three times a year.

The FATF’s process to publicly list countries with weak AML/CFT regimes has proved effective.

According to FATF, said it researches how money is laundered and terrorism is funded, promotes global standards to mitigate the risks, and assesses whether countries are taking effective action.
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“In total, more than 200 countries and jurisdictions have committed to implement the FATF’s Standards as part of a co-ordinated global response to preventing organised crime, corruption and terrorism. Countries and jurisdictions are assessed with the help of nine FATF Associate Member organisations and other global partners, the IMF and World Bank,” it said.

“The FATF’s decision-making body, the FATF Plenary, meets three times per year and holds countries to account if they do not comply with the Standards. If a country repeatedly fails to implement FATF Standards then it can be named a Jurisdiction under Increased Monitoring or a High Risk Jurisdiction. These are often externally referred to as “the grey and black lists,” it said.