The Central Bank of Nigeria(CBN) Guidelines on Targeted Financial Sanctions (TFS) related to Terrorism & Terrorism Financing were released on the 15th of December 2022 pursuant to the CBN Anti-Money-Laundering/Combating the Financing of Terrorism (AML/CFT) Regulations 2022.
These guidelines were also released pursuant to the United Nations (UN) Security Council Resolution requiring member states to apply Targeted Financial Sanctions (TFS) on any individual or entity designated by 3rd parties, foreign countries, individuals or entities associated with terrorism & terrorism financing as designated by the UNSC’s Al-Qaeda & Taliban Sanctions Committee.
This article will be taking a focused look on certain aspects of these guidelines from their objectives & scope to the nature of TFS and the regulatory requirements imposed on Financial Institutions (FIs) as well the criteria for qualifying as a designated person under these guidelines.
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What is the scope of the CBN TFS Guidelines on Terrorism Financing?
The Guidelines apply directly to all Financial Institutions in Nigeria.
What are the objectives of the CBN Guidelines on Terrorism Financing?
The objectives of the Guidelines are :-
- Assisting FIs to comply with the requirements of extant laws and regulations relating to counter-terrorism and Terrorism Financing.
- Assisting FIs in implementing TFS to prevent and suppress Terrorism Financing in accordance with the relevant United Nations Security Council Resolutions.
- Enabling the CBN to monitor compliance with TFS measures by FIs.
What exactly are Targeted Financial Sanctions (TFS)?
TFS involve restrictive measures that include asset freezing and prohibitions aimed at preventing funds or other assets from being made available, directly or Information, for the benefit of designated persons or entities.
Who or what are “designated persons” under the Guidelines?
Designated persons are individuals or entities possessing either beneficial ownership and/or control of assets deemed eligible for TFS.
What qualifies as “Beneficial ownership and control” under the Guidelines?
Beneficial ownership by a designated person is defined under the Guidelines as inclusive of direct or indirect ownership of at least more than 50% of the shares of a legal entity which qualify the entity for TFS.
Control would apply in the case of controlling alone, pursuant to an agreement with other shareholders, a majority of voting rights of shareholders or members of a legal entity or person as well as :-
– Having the right to use all or part of the assets of a legal person, entity or group.
– Having a power of attorney or authorized signatory over a legal person, entity or group.
What do the Guidelines say regarding the beneficial ownership by designated persons of minority interests?
Regarding minority interests, TFS will not automatically apply. However the Guidelines direct that FIs are to vigilantly monitor such interests in case they become majority interest holding that would qualify for TFS.
What are the reporting requirements for FIs under the CBN Guidelines?
FIs are required by the CBN Guidelines on Terrorism Financing to file STRs (Suspicious Transaction Reports) to the Nigerian Financial Intelligence Unit (NFIU) containing the following requirements :-
- The information or other matter on which knowledge or suspicion is based.
- Any information it holds about the person by the knowledge of which the person can be identified.
- The nature and amount of funds held by the FI for the person at any time up to 5 years prior to the designation being made.
What are the obligations imposed on FIs by the CBN Guidelines on Terrorism Financing?
The obligations imposed on FIs by the Guidelines are the same as the obligations outlined in the Terrorism Prevention & Prohibition Act 2022(TPPA).
Which categories of funds are subject to freezing obligations under the CBN Guidelines?
The following funds can be subject to TFS under the Guidelines:-
– Cash, cheques, claims on money.
– Debts and debt obligations, including trade debts.
– Letters of Credit.
– Insurance & reinsurance policies.
– Financial interests in a sole proprietorship or partnership.
What is a “confirmed match” under the CBN Guidelines?
A confirmed match is when an individual, entity or group matches all the key identifiers prohibited on the sanction lists. The range of information that constitutes identifiers of designated individuals, entities or groups are as follows:-
For Natural Persons
– Aliases or former names
– Date of Birth
– Identification or International Passport Information
– Last known address
For Legal Persons/Entities
– Company Registration codes (RC Numbers)
– Registered addresses
– Branch addresses
– Other information as might be required