CBN Proposes AI-Powered AML Framework for Financial Institutions

The Central Bank of Nigeria (CBN) has unveiled a draft framework designed to modernize anti-money laundering (AML) practices across the nation’s financial system through the integration of intelligent, automated solutions. The proposed standards aim to enhance efficiency, improve detection accuracy, and ensure compliance with both local regulations and international frameworks like those established by the Financial Action Task Force.
In a circular dated May 20, 2025, and addressed to all regulated financial institutions, the apex bank stated that the proposed standards are a direct response to the increasing digitalization of Nigeria’s financial system and the growing sophistication of financial transactions. The circular, referenced BSD/DIR/CON/AML/018/033, outlines baseline standards for the deployment of automated AML solutions powered by artificial intelligence (AI) and machine learning (ML).
The draft framework was developed following a comprehensive assessment of existing AML tools within the financial sector and incorporates best practices from jurisdictions that have adopted similar technologies. Stakeholders have until June 13, 2025, to submit comments on the draft, after which the final framework will be issued.
Upon the final framework’s issuance, financial institutions will be granted a 12-month period to achieve full compliance. The document explicitly states, “Financial institutions shall align their AML solutions with these baseline standards within 12 months of the issuance of these standards.”
The new standards will apply to a wide range of institutions, including deposit money banks, microfinance banks, primary mortgage banks, digital payment service providers, and all other financial entities operating under the CBN’s AML/CFT/CPF regulatory oversight.
The framework mandates minimum requirements for system functionality, integration, risk assessment, reporting, and data protection. Under the proposed regime, financial institutions will be required to deploy intelligent AML systems capable of real-time transaction monitoring and anomaly detection. These systems must incorporate AI and ML capabilities for behavioral pattern recognition, risk scoring, and adaptive learning to identify potentially suspicious activities such as large cash deposits, cross-border transactions, and cryptocurrency dealings.
Furthermore, the standards stipulate that these systems must seamlessly interface with core banking applications, customer onboarding platforms, and internal transaction processors. Dashboards are required to provide real-time insights, trend analysis, and case management tools. Scalability and configurability are deemed essential, enabling institutions to customize systems according to their specific transaction volumes and risk exposures.
A significant component of the standards focuses on customer due diligence (CDD), Know Your Customer (KYC), and Know Your Customer’s Business (KYB) requirements. Institutions will be required to maintain real-time access to verified identity data and integrate their AML platforms with the Bank Verification Number (BVN) and National Identification Number (NIN) databases for customer onboarding. Beyond onboarding, institutions must also enable continuous risk profiling and reclassification based on updated behavioral and transactional data, including support for enhanced due diligence measures for high-risk individuals or accounts.
For screening purposes, financial institutions will be required to integrate their systems with domestic and international watchlists for sanctions and politically exposed persons (PEPs). These systems must support fuzzy matching algorithms to detect name variations and flag risks that traditional matching methods might miss. Additional requirements include adverse media screening, the maintenance of internal watchlists, and the automatic real-time updating of third-party lists.
The standards also mandate the use of enterprise case management systems that automate the assignment, escalation, and resolution of flagged cases. Institutions must adopt role-based workflows and ensure a complete audit trail is maintained for regulatory inspection. Automated reporting to the Nigerian Financial Intelligence Unit (NFIU) is also a key requirement, with AML platforms needing to generate Suspicious Transaction Reports (STRs), Currency Transaction Reports (CTRs), and Foreign Currency Transaction Reports (FCTRs) as legally required, and be equipped with dashboards to support internal and external compliance oversight.
The CBN is placing a strong emphasis on cybersecurity, requiring AML systems to encrypt data in transit and at rest, enforce multi-factor authentication, and allow only role-specific access to sensitive features. Institutions must also deploy comprehensive audit logging to monitor user activity and system changes.
In addition to internal capabilities, the draft framework addresses vendor oversight, requiring institutions using third-party service providers to ensure full compliance with the CBN’s standards. Detailed documentation of vendor responsibilities and service level agreements is expected.
The CBN stated that it will monitor compliance through regular inspections and validation exercises. Institutions failing to meet the standards within the 12-month implementation window will face regulatory sanctions. While the draft remains open for consultation, the CBN has indicated that financial institutions should begin aligning their AML infrastructure with the proposed requirements, as the timeline for implementation will commence once the framework is finalized, followed by periodic reviews and industry assessments.