Nigeria’s AML Compliance Still Faces Integration, Data and Automation Gaps

Abstract

Nigeria’s anti-money laundering compliance landscape is evolving, but financial institutions continue to face significant operational and technological challenges.

A new Regfyl industry report, based on responses from 227 compliance professionals, identifies fragmented systems, manual processes, poor data quality and the cost of compliance technology as major obstacles.

The report found that 70 percent of respondents cited system integration as a key challenge, while 63 percent identified false positives as a major problem in transaction monitoring. Beneficial ownership verification also remains difficult, with 70 percent highlighting it as a leading KYB challenge.

Meanwhile, 83 percent of respondents said cost remains a major barrier to adopting new compliance technology.

The findings come as Nigerian regulators continue to strengthen AML, counter-terrorist financing and sanctions-compliance requirements.

For financial institutions, the message is clear: compliance is moving beyond simply having controls in place. Institutions are increasingly expected to demonstrate that their systems are integrated, risk-based, data-driven and effective in detecting and reporting financial crime.

Nigeria’s financial institutions are making progress in strengthening anti-money laundering controls, but fragmented systems, manual processes, weak data quality and the cost of compliance technology continue to pose significant challenges, according to a new industry report by Regfyl.

The State of AML Compliance in Nigeria 2026 report, based on responses from 227 compliance professionals across the financial sector, found that institutions are increasingly focused on modernising their anti-money laundering, counter-terrorist financing and counter-proliferation financing frameworks.

However, the report said many institutions still rely on a combination of automated tools and manual processes, leaving compliance teams to move information between systems and perform repetitive tasks across different stages of the AML lifecycle.

The survey was conducted between September and November 2025, before several important developments in Nigeria’s AML regulatory environment in 2026.

Integration remains a major compliance challenge

According to the report, 70 per cent of respondents identified limitations in system integration as one of their biggest AML challenges, while 61 per cent pointed to reliance on manual processes and 44 per cent cited data-quality problems.

The findings indicate that the presence of individual compliance technologies does not necessarily translate into an integrated AML framework.

Institutions may have separate systems for customer screening, identity verification, transaction monitoring and reporting, but connecting information across those systems remains a challenge.

Regfyl said the resulting fragmentation can lead to duplicated work, slower investigations, repeated data entry, inconsistent customer information and higher operating costs.

The report found that process improvement was the leading priority for 2026, identified by 77 per cent of respondents, followed by technology upgrades at 75 per cent and staff training at 47 per cent.

KYC and beneficial ownership remain difficult

The report also highlighted continuing challenges around customer identification and know-your-business controls.

Sixty-five per cent of respondents identified the reliability and authenticity of identity documents as a challenge, while 35 per cent reported inconsistent access to authoritative identity databases.

Beneficial ownership presented an even greater concern, with 70 per cent identifying the establishment of a company’s true beneficial owners as their leading KYB challenge.

Address verification was another area of concern. Fifty-five per cent cited the cost of physical verification, while 45 per cent pointed to document reliability.

The findings suggest that financial institutions are increasingly concerned not merely with whether a customer has undergone a KYC procedure, but with whether the information obtained provides sufficient confidence about the customer’s identity and risk profile.

False positives continue to burden transaction monitoring

Transaction monitoring also emerged as a significant operational challenge.

The report found that 63 per cent of respondents identified false positives as their primary transaction-monitoring challenge, while 37 per cent cited staff capacity.

Regfyl said poorly integrated transaction-monitoring systems can make it difficult for institutions to distinguish genuinely unusual activity from legitimate transactions because investigators may not have immediate access to relevant customer, KYC or risk-profile information.

The report said effective monitoring increasingly depends on appropriately calibrated rules, customer risk information, regular tuning and the ability to explain why an alert was generated.

That issue has gained additional significance following the Central Bank of Nigeria’s 2026 Baseline Standards for Automated AML/CFT/CPF Solutions, which establish minimum expectations for automated financial-crime controls at CBN-regulated institutions.

Regulatory reporting remains heavily manual

Regulatory reporting was another area where respondents reported operational difficulties.

Sixty-six per cent identified the challenge of gathering information from multiple systems as their primary reporting problem, while 34 per cent cited issues associated with the NFIU reporting portal.

Regfyl said fragmented reporting processes can create additional risks of errors, delays, incomplete information and weak audit trails when compliance personnel have to manually extract, reconcile and re-enter information.

The report also recorded industry support for changes to aspects of the reporting framework, including more dynamic institution-based thresholds for currency transaction reports.

However, Regfyl stressed that such findings represent respondents’ views and do not change existing statutory reporting requirements. Financial institutions remain obligated to comply with applicable reporting thresholds and timelines.

Technology investment faces cost and integration barriers

While financial institutions are prioritising technology upgrades, the report found that cost remains the biggest obstacle to adopting new compliance technology.

Eighty-three per cent of respondents cited cost as a barrier, followed by vendor reliability at 61 per cent, integration complexity at 56 per cent and data-security concerns at 49 per cent.

Only 14 per cent identified staff capability as a barrier to technology adoption.

The findings point to a compliance technology market in which institutions are looking beyond individual product features and increasingly considering whether systems can integrate with existing infrastructure, protect sensitive information and demonstrate measurable effectiveness.

Regulatory expectations are also rising

The report comes against the backdrop of significant changes to Nigeria’s international and domestic AML framework.

Nigeria was removed from the Financial Action Task Force’s list of jurisdictions under increased monitoring after completing its agreed action plan. FATF nevertheless called for continued work with GIABA to sustain improvements to the country’s AML/CFT framework.

In March 2026, the CBN also introduced baseline standards governing automated AML/CFT/CPF solutions for regulated financial institutions, raising expectations around system configuration, integration, governance, tuning and effectiveness.

Regulatory scrutiny has continued across other parts of the financial sector. In August 2026, the Securities and Exchange Commission directed capital-market regulated entities to implement updated FATF-related measures and made subscription to Nigeria’s Sanctions (NigSac) Alerts system mandatory for entities that had not already subscribed. The SEC warned that non-compliance could attract regulatory sanctions.

Shift from compliance activity to effectiveness

The Regfyl findings suggest that the next phase of AML development in Nigeria will focus increasingly on how effectively institutions operate their controls rather than simply whether individual controls exist.

For financial institutions, that means connecting customer identification, screening, transaction monitoring, investigations and regulatory reporting while improving the quality and reliability of the underlying data.

The report also points to a growing convergence between AML, fraud, cybersecurity and broader financial-crime risks, increasing the need for institutions to approach these risks through more integrated compliance frameworks.

With regulatory expectations continuing to evolve, institutions face pressure to demonstrate that their AML systems are not only in place but properly governed, integrated, risk-based and capable of producing reliable outcomes.