The Central Bank of Nigeria (CBN) is working on introducing the automation of Anti Money Laundering and Combating Financing Terrorism (AML/CFT) in the Nigerian financial system as it yesterday released a draft Baseline Standard for Automated Anti-Money Laundering Solutions.
Calling for comments on the draft, the CBN said automation had become necessary with the high level of digitalisation within the financial system. According to the Director Banking Supervision, Dr Olubukola Akinwunmi, the standard is meant to promote operational efficiency and regulatory compliance to AML/CFT requirements by financial institutions.
Noting that the proposed standards are in line with global best practices, the CBN said it would encourage the adoption of emerging technologies to enhance detection and reporting of suspicious transactions in real time.
The standard which will apply to deposit money banks, microfinance banks, mortgage banks, digital payment service providers as well as other financial institutions, will require integration of the AML solutions with financial systems.
According to the draft, the AML solutions are to include risk profiling, politically exposed persons as well as other high risk profiling, risk assessment, identification and verification, sanction screening, transaction monitoring and regulatory reporting.
Consequently, financial institutions are to deploy AML solutions with a centralised dashboard that would offer real time reporting, trend analysis, tracking and case management. Also, the solution which will include AI driven fuzzy matching algorithms to detect name variations and similarities “shall integrate with domestic and global watchlists for sanctions screening.
“Institutions shall conduct periodic system Stress Testing & validation to ensure reduction of False Positive. The institution should define a predetermined threshold for false positives and ensure that the false positive rate remains below this threshold.
“The AML solution shall have Al/ML capabilities for anomaly detection, behavioural pattern recognition, automated risk scoring, and adaptive learning to recommend improvements based on insights from flagged alerts and resolution outcomes.
“The solution shall have real-time alerts for cross-border transactions (where applicable), excessive cash deposits, crypto-related transactions or other high-risk activities as defined in line with extant AML regulations. Time taken to screen and make decisions on such alerts shall not exceed the predetermined timeline.
“The AML solution must incorporate comprehensive transaction monitoring capabilities, using multiple risk scenarios based on configurable filtration rules and customer segmentation to detect suspicious activities.
“The AML solution shall have real-time access to the customer due diligence information for risk profiling, screening and transaction monitoring. Financial Institutions shall automate its onboarding process with real-time customer identification and verification in line with AML/CFT/CPF Regulations. The system must have the capability for integration with BVN and/or NIN databases to ensure real-time identification and verification.”
Asides these, the solution shall have a comprehensive KYC/KYB capability, including automated customer risk profiling, transactional behaviour, historical data, other risk factors derived from ML/TF/PF risk assessments and typologies.
