Home Community Insights Nigeria Introduces New Anti-Money Laundering Guidelines For Digital Asset Operators

Nigeria Introduces New Anti-Money Laundering Guidelines For Digital Asset Operators

Nigeria Introduces New Anti-Money Laundering Guidelines For Digital Asset Operators

The Nigerian Securities and Exchange Commission (SEC) has developed new anti-money laundering guidelines aimed at enhancing the licensing, registration, and screening processes for digital and virtual asset service providers (VASPs).

In a circular seen by Tekedia, the SEC disclosed that the new guidelines would ensure that criminals are not registered as operators in the capital market.

The SEC further highlighted that the new guidelines will complement the existing regulatory framework, reinforcing the commission’s commitment to ensuring market integrity and investor protection.

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Based on the circular, the new guidelines will serve as additional rules and regulations to the existing ones.

Part of the circular reads,

“In September 2020, the commission released its treatment and classification of digital assets where it specified its regulatory purview over Crypto tokens traded on a recognized exchange, Utility tokens traded on a recognized exchange, security tokens that have features of securities and funds and derivatives of these three types of tokens”.

SEC outlined the existing guidelines issued in May 2022 to include, general requirements for VASPs, issuance of digital assets as securities, digital assets offering platforms (DAOPs), digital assets exchange (DAX), and digital asset custodians (DACs).

Furthermore, the SEC said it has unveiled a new Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and Countering Proliferation Financing (CPF) onboarding manual.

This manual is specifically designed for the licensing, registration, and ongoing screening of beneficial owners of digital and virtual asset service providers (VASPs). The objective according to SEC is to prevent individuals with criminal backgrounds from being registered as operators within the capital market, SEC further noted that it is ready to interface with genuine VASPs based on these clear rules and regulations.

Based on the commission’s recent engagement with the Central Bank of Nigeria (CBN), it said that additional comments are being incorporated into the rules that will soon be exposed to the market for comment before final approval.

By introducing these new regulations, the SEC seeks to enhance the integrity and transparency of the digital asset market while mitigating the risks of financial crime. It also aims to foster greater investor confidence in the digital asset space by establishing clear regulatory standards for AML compliance among digital asset operators.

To enforce compliance with the new regulations, the SEC could introduce stringent penalties for non-compliance, including fines, license revocation, and legal action against violators. By imposing consequences for failure to adhere to guidelines requirements, the SEC aims to incentivize digital asset operators to prioritize compliance and mitigate the risk of financial crime in the digital asset space.

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