Be vigilant of transactions related to Benin Republic, CBN to banks

The Central Bank of Nigeria (CBN) has warned Nigerian banks to be vigilant regarding transactions related to the Benin Republic due to intelligence that suggests the country is increasingly becoming a drug trafficking transit and consumption hub in West Africa.

This was disclosed in a circular sent to Nigerian banks titled “NEED TO IMPLEMENT ENHANCED MEASURES FOR CUSTOMER ON-BOARDING AND DUE DILIGENCE ON EXISTING ACCOUNTS AND TRANSACTIONS RELATED TO BENIN REPUBLIC”, signed by Asuquo Evelyn for the Director of banking supervision.

The apex bank called for additional measures such as re-classify related customers and conducting Enhanced Due Diligence.  CBN also asked Nigerian banks to strengthen its Know Your Customer (KYC) and Customer Due Diligence (CDD) policies, as mandated by regulation.

The CBN said, “We write to bring to your attention an intelligence report availed to the Central Bank of Nigeria (CBN) which indicated that the Benin Republic is increasingly becoming a drug trafficking transit and consumption hub in West Africa.”

The CBN suggested a shield for Nigeria banks to avoid involvement in illicit transactions saying, “In order to ensure that Nigerian banks are not used as conduit for laundering such illicit funds, it has become imperative to intensify the Know Your Customer (KYC) and Customer Due Diligence (CDD) measures in your bank as required by regulation.”

The Bank added “Consequently, you are required to implement additional measures on customers and business relationships linked to Benin Republic. You are also required to re-classify related customers and transactions as high risk and conduct Enhanced Due Diligence (ED) procedures accordingly.”

As a result of the directive, Nigerian banks have implemented the following measures to be applied during account opening involving Beninese nationals, as well as fund transfers to and from the Benin Republic:

Enhanced Due Diligence would be applied to account opening for Beninese prospects and business ties with Beninese signatories, directors, and shareholders. Enhanced Due Diligence would also be applied to funds transfers to and from the jurisdiction, and the purpose of the transfer must be determined.

Nigeria banks would take proactive steps to determine the account’s purpose and the customer’s source of income.

All faulting customers must be classified as “High Risk” for money laundering and marked accordingly in the system.