Regulatory Alerts2012-05-22 | FPR/DIR/GEN/EXP/01/001Exposure Draft,Three-Tiered Know Your Customers (KYC)Requirement Program
This proposed tiered Know Your Customer (KYC) requirement for Nigerian banks aims to strike a balance between ensuring financial inclusion and preventing money laundering and financing of terrorism. The proposed approach categorizes accounts into three levels based on their risk level, with Level 1 being the lowest-risk category that requires minimal documentation for account opening. The tiered KYC requirement proposal incorporates the use of bank agents and mobile banking portals to reach a wider segment of society that otherwise have no access to financial services. The policy would reduce administrative costs for banks as it involves online account opening, fewer paper filings, and reporting requirements. Moreover, the proposed regime calls for continuous monitoring of suspicious transactions by financial institutions, which would enhance the overall effectiveness of AML/CFT measures in Nigeria. By implementing this tiered KYC approach, Nigerian banks could achieve better compliance with international standards while promoting financial inclusion.