By Bukar Mohammed
Nigeria has taken bold and decisive steps to address the deficiencies that led to its inclusion on the Financial Action Task Force (FATF) grey list. Through an intensive rerating process, the country has met technical compliance requirements and significantly improved its Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) framework.
At the forefront of this remarkable progress is the outstanding leadership of the Director and CEO of the Nigerian Financial Intelligence Unit (NFIU), whose strategic reforms, policy enforcement, and interagency coordination have strengthened Nigeria’s compliance framework. Under his stewardship, the NFIU has:
Spearheaded enhanced financial intelligence gathering,
Strengthened collaboration with law enforcement agencies, and
Ensured rigorous implementation of FATF recommendations to drive both technical compliance and effectiveness.
Alongside the NFIU’s success, the Federal Inland Revenue Service (FIRS), under its Executive Chairman, has played an unprecedented role in tackling Illicit Financial Flows (IFF)—one of the most critical areas of FATF’s concerns.
FIRS: The Driving Force Against IFF and Financial Crimes
With its Executive Chairman also serving as the Special Adviser to the President on Revenue, the FIRS has evolved into a strategic institution in Nigeria’s fiscal policy and economic decision-making. Recognizing the direct link between IFF, tax evasion, and financial crime, FIRS now operates both as a tax administration and a law enforcement agency, strengthening the country’s AML/CFT enforcement.
A groundbreaking reform in this fight has been the establishment of the Special Purpose Investigation (SPI) Division within FIRS—an elite unit dedicated to identifying, investigating, and disrupting complex tax fraud schemes, trade mispricing, and illicit capital outflows.
Through the SPI Division, FIRS:
Works closely with the EFCC’s Tax Fraud Section to investigate and prosecute tax-related money laundering offenses.
Collaborates with the Interagency Task Force on AML/CFT, which includes the NFIU, CBN, NDLEA, and other law enforcement agencies, to tackle illicit financial flows and financial crimes from a tax perspective.
Leads efforts in Beneficial Ownership Transparency, ensuring that shell companies and anonymous corporate structures cannot be used to launder illicit funds.
By taking an enforcement-driven approach, FIRS is bridging the gap between tax compliance and financial crime prevention, making it a central player in Nigeria’s successful AML/CFT framework.
Nigeria Has Met FATF Compliance except for Few Effectiveness Issues – Why Is It Still on the Grey List?
Remaining on the grey list despite achieving technical compliance and demonstrating effectiveness presents unwarranted economic, financial, and diplomatic burdens on Nigeria:
1. Unjustified Market Disruptions and Restricted Access to Global Financial Markets
Nigerian businesses and financial institutions face unnecessary enhanced due diligence, transaction delays, and loss of correspondent banking relationships, despite complying with FATF standards.
International banks continue to overcharge Nigerian institutions due to perceived risks that no longer reflect Nigeria’s actual AML/CFT status.
2. Negative Perception for Foreign Direct Investment (FDI)
Investors perceive grey-listed countries as high-risk, even when they have addressed all compliance concerns.
Nigeria’s rerating in technical compliance should translate into increased FDI, but remaining on the list misrepresents the country’s risk profile.
3. High Cost of International Transactions
Nigerian financial institutions face higher compliance costs due to unnecessary scrutiny, despite meeting FATF standards.
These additional costs increase transaction fees, making international trade and remittances more expensive for Nigerian businesses and individuals.
4. Risk of Unjustified Blacklisting Pressure
Nigeria has avoided FATF blacklisting through aggressive reforms, but prolonged grey-listing creates undue reputational risk, affecting international credit ratings and economic partnerships.
5. Damage to Nigeria’s Global Reputation
Being on the grey list weakens Nigeria’s position in global financial negotiations, trade agreements, and security collaborations.
This is despite the country setting a regional precedent in tackling Illicit Financial Flows (IFF) and enforcing AML/CFT measures.
The Politics Behind FATF Grey-Listing and the Role of the United States
Nigeria’s case within FATF is not just about technical compliance; it is also a political matter influenced by global power dynamics.
U.S. Influence on Nigeria’s FATF Status
The United States has historically played a dominant role in Nigeria’s FATF evaluations. Through agencies such as:
- – The Department of the Treasury,
- – The Financial Crimes Enforcement Network (FinCEN), and
- – The State Department,
the U.S. has exerted diplomatic and economic pressure on Nigeria’s AML/CFT reforms.
Despite Nigeria’s demonstrated compliance, U.S. agencies have maintained tough positions in past assessments. However, with a new U.S. administration focused on financial cooperation, Nigeria must leverage diplomatic engagement to secure full U.S. backing for removal from the grey list.
Mobilizing Support from Key FATF Members
Beyond the U.S., Nigeria must rally the support of other FATF member states, including:
- – The European Union,
- – The United Kingdom,
- – Asian financial hubs like Singapore and Hong Kong, and
– African allies within the Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA).
What Must Be Done Now?
With technical compliance achieved, the next steps require a strong diplomatic push and enhanced strategic engagement:
1. Prioritize Diplomatic Engagement with FATF Member States
Nigeria must intensify high-level diplomatic engagements with key FATF decision-makers, especially within the U.S., EU, and the UK.
The Ministry of Foreign Affairs, NFIU, and FIRS should mobilize strong international support for delisting.
2. Showcase AML/CFT Enforcement Results
While technical compliance is in place, Nigeria must continue demonstrating effectiveness, including:
- – Successful money laundering and terrorism financing convictions,
- – Asset recoveries, and
- – Implementation of Beneficial Ownership Transparency measures.
3. Strengthen Regional and International Partnerships
Nigeria must continue leveraging GIABA’s influence within the FATF framework to advocate for its removal.
Collaboration with global financial institutions and regional bodies will reinforce confidence in Nigeria’s AML/CFT reforms.
4. Sustain Private Sector Compliance Readiness
Financial institutions and businesses must remain fully aligned with international AML/CFT standards.
Banks and fintech firms must proactively engage with FATF evaluators to demonstrate seamless compliance.
FATF Must Act with Transparency and Fairness
Nigeria has successfully addressed the issues raised in previous FATF assessments and has met technical compliance requirements.
The NFIU Director’s leadership, the Interministerial AML/CFT Committee’s strategic coordination, and the FIRS Chairman’s aggressive crackdown on Illicit Financial Flows (IFF) have positioned Nigeria as one of the strongest AML/CFT jurisdictions in Africa.
Now, FATF must uphold transparency and fairness by delisting Nigeria. Any further delay would be an injustice to the country’s achievements and send the wrong message to other jurisdictions striving for compliance.
The time for Nigeria’s removal from the grey list is now.
BUKAR Mohammed is a public analyst from Kano.
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