Nigeria’s ₦146.6 trillion money supply puts banks on compliance watch as forex flows, sanctions risks and election spending test financial controls

Nigeria’s expanding money supply, rising foreign exchange transactions and shifting international financial conditions are creating fresh challenges for banks, regulators and compliance professionals, with the Central Bank of Nigeria (CBN) facing an increasingly delicate balancing act between monetary stability and financial system integrity.

An economic assessment by Access Bank ahead of the CBN’s November Monetary Policy Committee (MPC) meeting highlights developments that extend beyond interest rates, raising important questions about liquidity management, foreign exchange transparency, anti-money laundering controls and sanctions compliance across Nigeria’s banking sector.

The report puts Nigeria’s broad money supply, measured by M3, at ₦146.60 trillion in September 2026, up 5.40 per cent from ₦139.09 trillion in August. However, the expansion requires closer examination. Central Bank bills held by money-holding sectors rose sharply to ₦5.60 trillion, accounting for approximately 74.4 per cent of the monthly increase in M3. “However, the increase does not necessarily translate into a corresponding rise in cash readily available for spending or lending, as much of the expansion was driven by increased holdings of CBN bills.”, the report suggests

For financial institutions, the development reinforces the importance of effective liquidity-risk management, balance-sheet monitoring and the ability to distinguish between monetary expansion, actual deposit growth and credit available for productive economic activity.

With the foreign exchange market presenting another important compliance challenge, Access Bank’s assessment highlights increased forex market activity, while CBN data show sthat Nigeria’s foreign exchange utilisation reached $18.3 billion in the second quarter of 2026, with invisible transactions accounting for approximately 72 per cent. Financial services alone accounted for $9.6 billion of utilisation.

This growing volume of cross-border financial activity increases the importance of robust customer due diligence, beneficial ownership identification, transaction monitoring and verification of the economic purpose of international transfers.

Banks are also expected to intensify scrutiny of fragmented transactions, unexplained third-party transfers, suspected round-tripping and unusual cross-border fund movements, particularly those involving high-risk jurisdictions, to ensure legitimate trade, investment and portfolio flows are not exploited to disguise the origins or destinations of illicit funds.

International geopolitical tensions also reinforce the need for effective sanctions-risk management. Nigerian banks, particularly institutions maintaining correspondent banking relationships, have been advised to ensure that customers, beneficial owners, counterparties and transactions are screened against applicable United Nations and Nigerian targeted financial sanctions requirements.

According to the report, weak sanctions controls could expose banks to regulatory penalties, damage their reputations, trigger restrictions from correspondent banking partners and potentially undermine their access to international financial markets.

With the 2027 general elections approaching, increased government expenditure, political financing and public procurement transactions introduce additional financial integrity risks.

Compliance departments have been urged to pay particular attention to politically exposed persons, related-party transactions, unusual contractor payments, unexplained cash movements and transactions inconsistent with established customer profiles. Banks are expected to conduct enhanced due diligence on high-risk customers and promptly report suspicious transactions to the relevant authorities in line with regulatory requirements.

The CBN’s AML/CFT/CPF requirements are placing greater emphasis on measurable compliance outcomes, compelling banks to strengthen automated transaction monitoring, sanctions screening, risk-based customer assessments, suspicious activity escalation and independent compliance oversight rather than rely solely on documented policies and procedures.

Access Bank projects that the CBN’s Monetary Policy Committee could maintain the benchmark interest rate at 23 per cent at its November meeting, although the final decision rests with the committee.

Ultimately, Nigeria’s financial sector faces the dual challenge of managing rising liquidity and maintaining foreign exchange stability while ensuring that increased financial activity does not create opportunities for money laundering, terrorist financing, sanctions evasion and other financial crimes.

For banks, regulators and compliance professionals, the priority is to strengthen financial crime controls alongside broader efforts to safeguard monetary and financial stability, ensuring that the growth of the banking system is matched by greater transparency, effective monitoring and regulatory accountability.