AI: CBN’s new digital finance regulator

The Central Bank of Nigeria (CBN) is taking a bold step to modernise how financial institutions detect and prevent money laundering. On May 20, 2025, the apex bank released a draft framework introducing advanced anti-money laundering (AML) standards powered by artificial intelligence (AI) and machine learning (ML). The circular gives financial institutions just 12 months to fully align once the final version is issued.

This move marks a shift from traditional, rules based systems to a smarter, technology-driven approach to compliance. For banks, fintechs, and even cryptocurrency-related firms, the message is clear: the future of compliance is real-time, data-led, and intelligent.

The New Standards at a Glance

According to the CBN circular, all regulated institutions will be expected to implement:

• Real-time transaction monitoring

• Risk scoring of customers and transactions

• Behavioral pattern recognition using AI/ML models

These standards aim to improve the early detection of suspicious activity, reduce false positives, and strengthen the overall effectiveness of Nigeria’s AML regime. Institutions affected include banks, mortgage lenders, fintechs, and potentially virtual asset service providers (VASPs) especially those integrated into the formal financial system.

Why This Matters

This framework is part of Nigeria’s broader efforts to enhance financial integrity, particularly after being placed on the Financial Action Task Force (FATF) grey list for strategic AML/CFT deficiencies. Implementing advanced surveillance tools aligns with global trends and shows Nigeria’s intent to meet international compliance standards.

It also reflects the growing complexity of financial crime in today’s digital landscape. Fraudulent transactions are getting more sophisticated, and manual reviews can no longer keep up. AI and ML offer faster detection, better pattern analysis, and the ability to learn from evolving threats.

Crypto and Fintechs: Prepare or Be Left Behind

While the circular does not explicitly mention cryptocurrency, it includes fintechs—and many fintech platforms today offer crypto services either directly or through partners.

This raises an important point: as crypto adoption increases, so does regulatory scrutiny. Platforms dealing in virtual assets will likely be expected to integrate with AML systems that can:

• Monitor blockchain wallet activity,

• Score transaction risk in real time, and

• Flag patterns associated with fraud, scams, or illicit finance.

This development should also prompt VASPs to re-evaluate their compliance readiness. Those seeking licenses or planning to operate within Nigeria’s financial space must begin aligning with these AI-led standards.

Key Challenges to Watch

Of course, implementing AI and ML in AML processes is not without its hurdles:

Cost: Smaller firms may find it expensive to deploy or maintain advanced AML solutions.

Skills gap: Many institutions lack in-house data science or compliance automation teams.

System readiness: Legacy infrastructure may need upgrades to integrate new tools.

This makes early preparation critical, especially for fintechs and VASPs that may be playing catch-up with traditional banks.

What Institutions Should Do Next

Stakeholders have until June 13, 2025, to submit comments on the draft. Now is the time for institutions to:

• Conduct AML capability audits

• Engage with RegTech providers or AML specialists

• Participate in industry-wide discussions to shape final guidelines

Waiting until the final circular is released may leave little time for proper implementation.

Don’t Just Comply. Evolve

The CBN’s framework signals a new era of compliance where technology plays a central role in safeguarding the financial system. For financial institutions—whether banks, fintechs, or crypto-related businesses—this is a chance to move from reactive compliance to proactive intelligence.

Those who begin the transition early will not only meet regulatory expectations but also build stronger trust, improve operational efficiency, and stay ahead in a fast-changing digital economy.