The Central Bank of Nigeria (CBN) has issued a new directive to banks and other financial institutions on customer due diligence (CDD) regulations.
Banks are now to apply the use of Beneficial Ownership (BO) register for the verification of company directors and signatories to prevent fraud and determine politically exposed persons (PEP) involved in different companies to tackle corruption.
The apex bank in a statement on its website last week said the new regulation is pursuant to the Money Laundering (Prevention and Prohibition) Act 2022.
According to CBN, “financial institutions shall verify the identity of a legal person or legal arrangement by — (a) undertaking search on a public registry or database such as CAC or similar database, other commercial enquiries and through any other available sources of information to confirm:
“(i) the existence of the legal person or legal arrangement, (ii) whether the legal person or legal arrangement has not been, or is not in the process of being dissolved, struck off, wound up or terminated, (iii) the information on the directors and shareholders or persons or entities holding similar positions, including their PEP status, (iv) information on a person with significant control, and (v) information on BO, and its PEP status”, CBN said.
“(b) reviewing a copy of the latest annual report, audited accounts or relevant financial statement, where applicable; (c) reviewing a copy of the board resolution or applicable resolution ; (d) utilizing the documentation from a reliable independent source proving the name, form and current existence of the customer; (e) utilizing an independent information verification process, such as accessing public and private databases ; (f ) obtaining prior bank references, where applicable ; (g) visiting the entity ; and (h) confirming the contact details provided through a phone call, email and physical letter to the business address.
CBN also added that when banks are conducting CDD for customers who are legal entities (companies), such banks should understand the company’s ownership and control structures.
“When conducting CDD measures in relation to customers that are legal persons or legal arrangements, FIs shall — (a) understand the ownership and control structure; (b) at the time of establishing new relationships or whenever there is a change in ownership, identify and verify the identity of the BOs who exercise control through ownership or controlling interest, including voting rights ; (c) subject all account signatories, Directors and BOs to the requirements for identification and verification of individuals provided in regulations.
“Identification and verification of signatories, directors, and beneficial owners of legal persons and legal arrangements (d) conduct status enquiry from CRMS and at least two Credit Bureaux to determine their credit status; (e) ascertain that the customer is not banned from the use of clearing system due to issuance of dud cheque; and (f ) maintain a BO register that indicates the names, identification details and nature of beneficial ownership, including shareholding, voting rights, controlling interests, source of wealth, and PEP status”.