Nigeria is inching toward removal from the Financial Action Task Force (FATF) grey list after integrating cryptocurrency and digital asset regulation into the newly signed Investments and Securities Act (ISA) 2025.
The landmark law, endorsed by President Bola Tinubu, aims to correct the systemic weaknesses in Nigeria’s anti-money laundering (AML) and counter-terrorism financing (CFT) frameworks — key deficiencies that earned the country a spot on the FATF’s increased monitoring list just over a year ago.
The law signals a turning point for Africa’s largest economy, which had been under pressure from international partners to plug regulatory loopholes exploited by money launderers and illicit financial networks operating through both traditional and digital finance channels.
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Nigeria was officially grey-listed by the FATF on February 24, 2023, over concerns that its legal and institutional frameworks lacked the rigor to adequately prevent and respond to financial crimes. Being placed on the list, often viewed as a red flag for investors and financial institutions, meant the country was subjected to enhanced monitoring and increased scrutiny from global partners, affecting cross-border financial transactions and foreign investment flows.
But the ISA 2025, which now recognizes virtual and digital assets as securities, has been described by government officials and regulatory insiders as a critical legislative move toward fixing those gaps. Dr. Emomotimi Agama, Director-General of the Securities and Exchange Commission (SEC), said on Wednesday that the updated law offers a pathway to escape the constraints of the grey list.
“The AML-CFT issue is what brought about our inclusion in the grey list; the inclusion of this law provides us an avenue to exit that grey list, and that is very critical to the international community,” he said during a press briefing.
The updated ISA does more than just recognize digital assets. It seeks to bring the vast and fast-moving crypto space into a structured and supervised regulatory environment, a move analysts say could bolster both investor confidence and market transparency.
Agama said the law reinforces Nigeria’s message to the global financial community. “We are open for business, but we will protect legitimate enterprises,” he said.
Clamping down on bad actors in crypto
Beyond attracting new investors, the SEC’s move aims to clean up a sector that has been under the microscope for its use in funding terrorism, laundering money, and evading capital controls.
Dr. Agama clarified that cryptocurrency trading, under a regulated environment, would not undermine the Naira — a concern raised by central bankers and some economists. Instead, the SEC would enforce compliance and clamp down on rogue actors.
“SEC now has the power to clamp down on such entities,” he said. “We encourage everyone in this space to come under regulation to seek clearance.”
To support this, the Commission has introduced two regulatory programmes — the Regulatory Incubation Programme and the Accelerated Regulatory Incubation Programme. These initiatives are designed to evaluate risks posed by crypto and digital finance operators, offer tailored regulatory guidance, and help genuine innovators operate sustainably.
Dr. Agama disclosed that a new cohort of startups and financial technology providers will be admitted into the incubation process in the coming quarter following comprehensive assessments.
Building investor confidence through oversight
The updated legal framework also reinforces investor protection through improved Know Your Customer (KYC) protocols, a major pain point in past regulatory gaps. With stricter KYC, authorities can separate genuine actors from fraudsters, reducing the risk of scams and financial abuse — a critical consideration as more Nigerians turn to crypto for savings and cross-border transactions.
“Once this happens, the tendency is that investors will be more confident, because they know that we have their back,” Agama said.
The SEC is working closely with institutions like the Central Bank of Nigeria (CBN), the Economic and Financial Crimes Commission (EFCC), and the Nigeria Financial Intelligence Unit (NFIU) to ensure coordinated enforcement, especially across borderless digital transactions.
Digital assets now officially recognized
The SEC’s new powers are outlined in Section C, page 188 of the ISA’s clean copy. It formally categorizes digital assets as securities and brings them under the purview of securities exchange regulations.
According to the provision, a registered exchange now includes any organized platform that:
(a) Brings together buyers and sellers of securities, virtual assets, commodities, or financial instruments;
(b) Matches bids and offers of multiple buyers and sellers of such assets;
(c) Where matched offers result in legitimate transactions.
This legislative clarity is expected to help prevent the abuse that had become rampant in Nigeria’s crypto ecosystem, often operating in a regulatory vacuum. With clear definitions, oversight responsibility, and enforcement powers now spelled out, regulators say it will be harder for malicious actors to game the system.
Exit from the grey list will open doors
While Nigeria’s exit from the FATF grey list has not yet been confirmed, the ISA 2025 may be the strongest case yet for removal. Countries like Morocco and Pakistan recently exited the list after implementing similar structural reforms in their financial systems, and Nigerian officials are banking on this development to deliver the same result.
If successful, Nigeria could regain access to smoother cross-border financial operations, reestablish trust with international investors, and improve its standing in global finance.
But experts warn that enforcement is key. While the ISA provides the structure, the challenge lies in execution. A regulatory framework is only as effective as the political will and institutional integrity behind it.