Nigeria’s FATF Exit: A New Starting Block for Capital Market Compliance

Nigeria’s recent removal from the Financial Action Task Force (FATF) grey list is undoubtedly a win. The Securities and Exchange Commission (SEC), through Director General Emomotimi Agama, is understandably keen to capitalize on this momentum. Agama’s call for a sustained culture of compliance within Nigeria’s capital markets rings true. This isn’t a victory lap moment; rather, it signals the beginning of a more rigorous phase.

The Director General is right. The world is watching. International investors and global institutions will now be scrutinizing the sustainability of Nigeria’s AML/CFT reforms. They’ll assess if compliance is merely a response to external pressure, or an ingrained principle within the financial ecosystem. The SEC clearly recognizes this, emphasizing the need to move beyond superficial adherence to a deeply rooted compliance culture.

There’s a subtle shift in perspective that I find interesting. The SEC now frames robust compliance as a competitive advantage. A transparent, trustworthy market attracts capital. This idea positions compliance not just as a regulatory burden, but as a key to unlocking investment opportunities.

The renewed Investment and Securities Act 2025 should help provide a stronger legal framework that provides better clarity of regulation and improved trust.

However, challenges remain.

Frana Chukwuogor, Executive Commissioner, Legal and Enforcement at the SEC, highlighted a critical point: effective compliance requires awareness. If market operators, especially compliance officers, aren’t fully informed about regulatory changes, how can they ensure adherence? The SEC’s focus on disseminating information about the new Investment and Securities Act 2025 is therefore essential. It addresses a practical hurdle to fostering a genuine compliance culture.

Ponzi schemes and digital assets, as Chukwuogor mentioned, represent particular areas of concern. These are complex challenges, requiring not only regulatory vigilance but also investor education. The allure of quick returns, often peddled through unregulated channels, can be difficult to resist, particularly in an environment of economic hardship.

The SEC’s intention to actively measure compliance through mandatory filings is a positive step. Enforcement is crucial. Clear consequences for non-compliance will reinforce the message that adherence to global standards is not optional. Sanctions should be applied judiciously and transparently to maintain credibility.

Here’s where my experience kicks in. I’ve seen similar cycles play out in other emerging markets. A period of intense regulatory scrutiny, followed by reforms, then a push for sustained compliance. The crucial factor is consistency. Regulators must maintain their vigilance, even when the international spotlight dims.

Adopting RegTech and SupTech solutions, as Agama suggested, is smart. Technology can automate compliance processes, improve monitoring capabilities, and reduce the risk of human error. Investment in these tools is an investment in the long-term sustainability of Nigeria’s compliance framework.

But technology is not a panacea. Ethical conduct, regular training, and a commitment to integrity are equally important. A strong compliance culture requires buy-in from all stakeholders, from the boardroom to the front lines. This requires strong leadership and a tone at the top that prioritizes ethical behavior above short-term gains.

There’s a potential pitfall to watch out for: over-regulation. Too much red tape can stifle innovation and discourage legitimate business activity. The SEC must strike a balance between robust oversight and a supportive environment for market development. Regulation should be risk-based, focusing on the areas where the potential for abuse is greatest.

Another concern I have revolves around resources. Does the SEC have the capacity to effectively monitor and enforce compliance across the entire capital market? Adequate funding, skilled personnel, and independent oversight are essential to ensure that the regulator can fulfill its mandate.

Nigeria’s capital markets must avoid complacency. Exiting the FATF grey list is a significant step, but the journey towards a truly resilient and compliant market is ongoing. The SEC’s proactive stance is encouraging, but sustained effort, coupled with a collaborative approach involving all stakeholders, is crucial to ensure Nigeria never finds itself on that list again. The focus must remain on building a system that is not only compliant but also fair, efficient, and attractive to both domestic and international investors. This ultimately contributes to a more stable and prosperous Nigerian economy. It will be important to measure the success of these changes over the next several years to determine if Nigeria will be able to sustain its efforts to comply with international standards.

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Keywords: Nigeria FATF exit, capital market compliance, SEC Nigeria, AMLCFT reforms, Investment Securities Act 2025, RegTech SupTech compliance, Ponzi schemes digital assets, Nigeria capital markets