CAC Accuses Banks Of Allowing Inactive Companies To Operate

The Registrar-General of the Corporate Affairs Commission (CAC), Hussaini Magaji (SAN), has accused some banks and financial institutions of weakening Nigeria’s anti-corruption and regulatory compliance efforts by permitting inactive and non-compliant companies to continue business operations and financial transactions.

Magaji also revealed that the Commission has forwarded 248 suspected fake company registrations to the Economic and Financial Crimes Commission (EFCC) for investigation and possible prosecution. In addition, three CAC staff members were handed over to the Independent Corrupt Practices and Other Related Offences Commission (ICPC) over alleged professional misconduct.

He made the disclosures on Tuesday in Abuja during an Anti-Corruption Day presentation and panel discussion marking the Commission’s 35th anniversary.

Addressing representatives of several anti-corruption and law enforcement bodies, the CAC Registrar-General cautioned that Nigeria’s corporate regulatory framework would remain susceptible to abuse if compliance enforcement is not applied consistently across all relevant institutions.

“Let me state clearly: at CAC today, no company without full disclosure of its Persons with Significant Control (PSC) is recognised as compliant. Companies that fail to disclose their PSC are flagged as inactive, and such status renders them unfit for credible transactions,” he said.

Magaji expressed worry that some financial institutions continued to overlook these regulatory measures.

“However, we face a serious challenge. While CAC may flag such companies as inactive, some financial institutions, particularly banks, continue to allow these inactive companies to operate, open accounts, and transact freely. This is a major weakness in our national compliance chain. We must join hands to stop it,” Magaji added.

He emphasised the need for a unified regulatory approach, noting that companies that fail to meet compliance requirements should not benefit from legal privileges.

“If a company is non-compliant, it must not enjoy the privileges of legality. Our collective success depends on enforcing this principle across the board,” he said.

Magaji noted that the Commission had implemented several internal reforms aimed at promoting transparency and stamping out corruption within its operations.

“In the year under review, I had cause to surrender three members of staff to the ICPC for alleged misconduct involving suspicious and unauthorised tampering with company records. This was done to eliminate the chances of compromise and strengthen integrity within our processes.”

He further disclosed that the Commission uncovered 248 fictitious company registrations that were unlawfully inserted into the CAC database and subsequently reported to the EFCC.

“Within the same period, I submitted to the EFCC a list of 248 fake company registrations illegally inserted into our system through unlawful means, for investigation and prosecution,” Magaji disclosed.

He explained that the entities lacked verifiable corporate identities and failed to contribute to government revenue through taxation. He added that an additional 15 suspicious entities had also been submitted for further investigation.

“Notably, despite these actions, no legitimate legal challenge has been brought against CAC regarding the removal and reporting of these illegal registrations,” he said.

Magaji also renewed his call for the creation of a unified national register for beneficial ownership data, warning that Nigeria’s current multi-layered system creates loopholes that could facilitate corruption, money laundering, and illicit financial activities.