Nigeria’s Securities and Exchange Commission (SEC) has introduced stricter measures aimed at preventing money laundering, terrorism financing and other illicit financial activities within the country’s capital market.
Under the new directive, capital market operators are required to cut financial relationships with institutions connected to North Korea and reject transactions involving Iranian financial institutions. The measures form part of Nigeria’s implementation of updated guidance issued by the Financial Action Task Force (FATF).
The SEC issued the directive in a circular dated June 19, which was released to the market on August 14. It applies to all capital market regulated entities (CMREs) under the Investments and Securities Act, 2025, as well as the SEC’s anti-money laundering and counter-terrorism financing rules.
Restrictions on North Korea and Iran
For North Korea, the SEC has directed regulated entities to terminate correspondent banking and other financial relationships with institutions linked to the Democratic People’s Republic of Korea (DPRK).
CMREs are also prohibited from maintaining subsidiaries or representative offices connected to DPRK interests and are expected to restrict or reject transactions involving North Korean nationals, companies and government entities.
The requirements for Iran are similarly restrictive. Capital market operators must refuse transactions involving Iranian financial institutions and must carefully assess whether maintaining branches, subsidiaries or representative offices connected to Iran presents unacceptable compliance risks.
Myanmar, however, has not been subjected to the same blanket restrictions. Instead, firms are required to apply enhanced due diligence when dealing with customers or transactions associated with the country.
Increased Scrutiny of High-Risk Jurisdictions
The SEC has also instructed market operators to strengthen monitoring of transactions and relationships involving jurisdictions currently under FATF increased monitoring.
The jurisdictions include Algeria, Angola, the British Virgin Islands, Cameroon, Côte d’Ivoire, Kenya, Lebanon, Monaco, Namibia, South Sudan, Venezuela and Yemen, among others.
CMREs are expected to conduct enhanced due diligence, identify potential risks and maintain adequate documentation to demonstrate compliance.
Where transactions appear unusual or suspicious, firms must make the appropriate reports to the Nigerian Financial Intelligence Unit (NFIU).
The SEC warned that failure to comply with the new requirements could result in regulatory sanctions, including fines, suspension or revocation of registration.
Stronger Sanctions Compliance
The latest directive forms part of a wider effort by Nigerian authorities to strengthen the country’s AML/CFT framework.
The SEC has also directed regulated entities to subscribe to the Nigeria Sanctions (NigSac) Alerts system and take appropriate action, including freezing assets linked to individuals and entities designated under applicable sanctions regimes.
For banks, brokers, fund managers and other capital-market operators, the changes mean that sanctions screening, customer due diligence and transaction-monitoring systems may need to be reviewed and upgraded.
SEC Admits More Crypto Firms Into Regulatory Sandbox
Alongside the tougher sanctions measures, the SEC is continuing to expand its regulatory framework for digital assets.
The commission has admitted three additional Virtual Asset Service Providers (VASPs) into its Accelerated Regulatory Incubation Programme (ARIP). They are Pisi Payments Solution Limited, BC Access Nigeria Limited, which operates as Blockchain.com in Nigeria, and Yellow Card Financial Limited.
Their admission brings the number of virtual-asset firms participating in the regulatory sandbox to 14.
The approvals are issued as Approval-in-Principle (AIP), meaning the companies can participate within the conditions and scope established by the SEC. An AIP should not be interpreted as a full operating licence.
Participants remain subject to regulatory supervision and must meet continuing requirements relating to compliance, operations, investor protection and risk management.
Blockchain.com’s General Manager for Africa, Owen Odia, said participation in ARIP would allow the company to work with the SEC on testing safeguards and contributing to the development of Nigeria’s long-term digital-asset regulatory framework.
What the New Rules Mean for Market Operators
The SEC’s latest actions demonstrate a two-pronged regulatory strategy.
On one hand, the commission is strengthening barriers against jurisdictions and transactions considered vulnerable to illicit financial activity. On the other, it is creating a controlled environment in which legitimate digital-asset companies can develop their businesses under regulatory supervision.
Capital-market operators should therefore review their correspondent banking arrangements, customer-screening procedures and transaction-monitoring systems without delay. Firms should ensure that DPRK-linked relationships are terminated where required, Iranian financial-institution transactions are blocked, and enhanced due diligence is applied to customers and transactions connected to FATF-monitored jurisdictions.
Companies should also ensure that suspicious transactions are reported promptly to the NFIU and that all compliance actions are properly documented.
For VASPs participating in ARIP, the priority should be strict adherence to the conditions attached to their AIPs, stronger consumer-protection measures and continued engagement with the SEC.
Balancing Financial Security and Innovation
Nigeria’s latest regulatory measures reflect an attempt to reduce the country’s exposure to money laundering and terrorism financing while continuing to encourage innovation in the digital-asset sector.
Although stronger sanctions controls could increase compliance costs for capital-market operators, they may also strengthen confidence in Nigeria’s financial system and reduce exposure to illicit finance.
At the same time, the expansion of ARIP provides legitimate crypto businesses with a structured route to test products and services under regulatory oversight.
The overall direction is clear: Nigeria is tightening controls around high-risk financial relationships while building a more closely supervised environment for digital assets. For market participants, effective sanctions screening, AML/CFT compliance and regulatory engagement will increasingly be critical to maintaining access to the Nigerian financial market.