AML Compliance Requirements for Chartered Accountants in Nigeria

Chartered Accountants in Nigeria come under the purview of Anti-Money Laundering (AML) compliance as they are classified as Designated Non-Financial Businesses and Professions (DNFBPs) according to the Money Laundering (Prevention and Prohibition) Act, 2022, referred to as Nigeria’s MLA, 2022. This blog attempts to draw out the Anti-Money Laundering, Counter-Financing of Terrorism, and Counter-Proliferation Financing (AML, CFT, and CPF) compliance requirements for chartered accountants in Nigeria.

The MLA, 2022, requires chartered accountants in Nigeria to undertake AML measures, taking into account the AML/CFT legal framework in Nigeria. The Institute of Chartered Accountants of Nigeria (ICAN) is the governing body that controls the accounting profession in Nigeria.

AML/CFT Legal Framework in Nigeria

The AML/CFT legal framework in Nigeria impacting chartered accountants consists of the following laws and regulations:

• The Money Laundering (Prevention and Prohibition) Act (MLA), 2022 (MLPPA)
  • Brings licensed professional accountants under the purview of DNFBPs.
• The Terrorism (Prevention and Prohibition) Act, 2022 (TPPA)
  • Charts out Targeted Financial Sanctions (TFS) measures to be undertaken by DNFBPs.
• The Proceeds of Crime (Recovery and Management) Act, 2022
  • Draws out record-keeping requirements in alignment with Financial Action Task Force (FATF) recommendations.
• Economic and Financial Crimes Commission (Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction for Designated Non-Financial Businesses and Professions, and Other Related Matters) Regulations, 2022
  • Regulates DNFBPs and Professionals in Nigeria for AML/CFT and CPF compliance.

AML Compliance Requirements for Chartered Accountants in Nigeria

Chartered Accountants in Nigeria need to ensure compliance with the following AML, CFT, and CPF compliance requirements:

Compliance with MLPPA and TPPA

The provisions of MLPPA and TPPA need to be adhered to. Chartered Accountants must ensure compliance with AML and TFS compliance requirements provided for under these acts.

Reporting Obligations

• Prompt response to RFIThe Nigerian goAML administration guide provides steps for DNFBPs to promptly respond to Request Further Information (RFI) through the goAML message board. Through the goAML portal, a chartered accountant subject to AML compliance can find which reports require RFI and complete the requirement through the portal promptly.

• STR submissionThe MLPPA requires suspicious transaction reporting (STR) submission.It requires chartered accountants to file STR within 24 hours after the transaction has taken place by drawing up a written report that contains all relevant and necessary details such as the identity of the beneficiaries of such transactions, actions and measures taken to file such report, and so on to Nigerian Financial Intelligence Unit (NFIU).

• Annual AML, CFT and CPF employee training programme submission to SCUMLChartered Accountants are required to submit a yearly report on the measures taken to train employees on the AML/CFT and CPF measures every year prior to 31^st March.

AML, CFT and CPF Program Implementation

Chartered Accountants in Nigeria are required to ensure compliance with the AML/CFT and CPF laws and regulations. Discussed below are the AML compliance measures that chartered accountants in Nigeria need to implement, such as:

• Internal policies, procedures, and controls
  Chartered Accountants must have in place adequate internal AML /CFT and CPF policies, procedures, and controls to counter ML, TF, and PF.

• Customer Due Diligence (CDD)
  Chartered Accountants must keep a documented record of the CDD measures they intend to implement during the customer onboarding and ongoing monitoring of business relationships.The CDD measures must clearly state the methods used for customer onboarding and customer screening.

• Application of due diligence proportionate to the identified risk
  Chartered Accountants in Nigeria must adopt a Risk-Based Approach (RBA), meaning that they shall implement risk mitigation measures proportionate to the identified risk. Implementation of overly stringent AML measures hampers business, whereas lenient measures may let criminals pass through the mitigation measures and misuse the chartered accountants’ operations for their illicit activities.

• Appointment of a compliance officer
  The chartered accountants in Nigeria need to appoint an AML compliance officer to oversee AML compliance measures of their operations at the headquarters, branch, and local offices.

• Establishment of an internal audit unit
  An internal audit unit must be established to ensure compliance with implemented AML/CFT and CPF measures and identify gaps, if any.

• Submission of CTRs, CBTR to SCUML
  Chartered Accountants in Nigeria must ensure the filing of Currency Transaction Reports (CTRs) and Cash Based Transaction Reports (CBTRs) to the SCUML whenever such a situation necessitating the filing of such reports arises.

• Rendition of Suspicious Transactions Reports (STRs) on ML, TF, and PF to the NFIU
  Chartered Accountants must ensure timely filing of the STRs in a proper narrative with the NFIU.

Record keeping

The records such as transaction records, cash transaction registers, and files, correspondences, and communications with clients must be stored for a duration of 5 (five) years.

• Centralisation of information collected
  Chartered Accountants must take measures to make available the information collected by their business centrally throughout all branches and offices.

Training and awareness

Chartered Accountants must train their employees regarding the implementation of AML/CFT and CPF compliance measures in accordance with their AML/CFT and CPF policies, procedures, and controls.

Chartered Accountants must retrain their employees as and when there is any regulatory or policy change.

Targeted financial sanctions implementation

The TPPA prescribes implementing TFS measures by DNFBPs, requiring chartered accountants to screen their customers across relevant and applicable sanctions lists to identify if any of their customer names come into any of the sanctions lists.

Identification, assessment and management of ML, FT, and PF risks

Chartered Accountants must take adequate measures to identify, assess, and manage the ML/FT and PF risks they are exposed to. This requires a risk-based approach while devising strategies to counter the ML, FT, and PF risks.

Governance

The governance structure of a chartered accountant’s practice must make way for having a person responsible for overseeing the compliance of AML/CFT and CPF regulations, a designated chief AML compliance officer must be appointed who acts as a point of contact between the employees and the senior management of a chartered accountant firm and ensures communication with regulatory bodies while ensuring timely filing of regulatory reports.

Independent testing and controls

The independent AML audit that tests the efficacy of AML control measures deployed by a chartered accountant firm and looks for any discrepancy or redundancy in the compliance process devised for the firm. The independent testing and controls help ensure that the findings of such AML audits are unbiased and fair, giving a clear picture of the AML/CFT and CPF measures.

Record-keeping

Chartered Accountants need to ensure compliance with the record-keeping requirements prescribed by the laws and regulations and ensure that such records of compliance measures taken are easily accessible for furnishing to any regulatory authority whenever needed.

Conclusion

The chartered accounting profession is governed by the AML/CFT and CPF laws in Nigeria. Chartered Accountants operating in Nigeria must have adequate and appropriate AML/CFT and CPF policies, procedures, and controls in place based on the requirements prescribed in the laws and regulations. The Institute of Chartered Accountants of Nigeria is the governing body that controls the accounting profession in Nigeria.