As published on leadership.ng, Monday 16 January, 2023.
The Central Bank of Nigeria (CBN) has directed banks and other financial institutions to unveil beneficial owners of accounts belonging to their customers.
The latest directive, contained in a guideline which was signed by the CBN Director, Financial Policy and Regulation Department, Chibuzor Efobi, would ensure that banks unveil beneficial owners of legal arrangements in line with provisions of extant AML/CTF laws and regulations.
Titled Ultimate Beneficial Ownership of Legal Persons and Legal Arrangements, the guideline noted that given the growing use of corporate vehicles, such as companies, trusts, foundations and other types of legal persons and legal arrangements by criminals to cover up and convert the proceeds of crime, global standards (Financial Action Task Force (FATF) demand that countries “ensure that adequate, accurate and timely information on” beneficial ownership is accessible to check corporate vehicles from being abused in the financial system.
According to the apex bank, its regulations on AML/CFT and countering proliferating financing of weapons of mass destruction in financial institutions requires financial institutions to understand the structure of legal persons and legal arrangements and undertake customer due diligence measures to mitigate the risks thereof.
The apex bank said the development is a fresh measure to address Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) and Countering Proliferation Financing of Weapons of Mass Destruction (CPF).
The CBN issued the directive on Friday in the guideline titled ‘Guidance on Ultimate Beneficial Owners of Legal Persons and Legal Arrangements.’
The directive will take off with immediate effect, according to the apex bank.
“Financial institutions are required to unveil the beneficial owners of legal persons and legal arrangements in line with provisions of extant AML/CFT laws and regulations,” the apex bank said.
The CBN said it issued the guideline to financial institutions (FIs) under the its regulatory purview as defined under the Central Bank of Nigeria (Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction in Financial Institutions) Regulations, 2022, (CBN AML/CFT/CPF Regulations).
According to the apex bank, the objective of the guidance is to assist financial institutions in identifying and verifying the beneficial owners of legal persons and legal arrangements in line with extant AML/CFT/CPF laws and regulations.
The guideline said that, “Beneficial owner (BO) refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or legal arrangement.”
Other criterion is the beneficial owner holds at least 5 per cent of the issued shares in the legal person either directly or indirectly; ii. controls a customer and/or the natural person (but not limited to) who: a. exercises at least 5 per cent of the voting rights in the legal person either directly or indirectly; b. holds a right directly or indirectly, to appoint or remove majority of the directors or similar positions of the legal person.”
The CBN said in the guideline that aside from the details of the customer, financial institutions must obtain Beneficial Owner’s information from a public register like Corporate Affairs Commission “CAC”) and publicly available sources.
According to the new law, the records of account files and business correspondence, and results of any analysis undertaken, either in electronic or written form for at least five years following the termination of the business relationship.