Fighting Financial Crime: Nigeria’s Strategic Push For Financial Action Task Force (FATF) Grey List Removal By October 2025

Contributor: Jesutofunmi Idowu & Chinwendu Okosa

INTRODUCTION

The Nigerian government has launched an ambitious and transformative project to remove the country from the Financial Action Task Force (FATF) Grey List by October 2025. This initiative, spearheaded by the National Information Technology Development Agency (NITDA) and the Nigerian Financial Intelligence Unit (NFIU), follows a directive from President Bola Ahmed Tinubu to implement a robust Anti-Money Laundering, Counter Financing of Terrorism, and Counter-Proliferation of Firearms (AML/CFT/CPF) Data Management Framework and Platform.^[1] At its core is a cutting-edge anti-crime technology platform designed to tackle long-standing deficiencies in combating money laundering, terrorism financing, and arms proliferation.

Nigeria’s inclusion on the FATF Grey List highlighted significant gaps in the nation’s financial regulatory systems, including weak enforcement of anti-money laundering measures, ineffective systems for tracking terrorism and arms financing, and inadequate strategies to curb illicit financial flows.^[2] This new initiative not only seeks to address these shortcomings but also aims to position Nigeria as a global leader in financial integrity and intelligence. As the deadline approaches, all eyes are on Nigeria’s progress, with this initiative poised to set a new standard in anti-money laundering and counter-terrorism financing measures. This article discusses Nigeria’s initiative to exit the Financial Action Task Force Grey List by October 2025.

UNDERSTANDING THE FATF GREY LIST

The Financial Action Task Force Grey List is a publicly available list of countries identified as having strategic deficiencies in their anti-money laundering and counter-terrorism financing (AML/CFT) systems.^[3] Countries on this list are placed under heightened monitoring by the FATF and are required to work towards addressing the identified weaknesses within a specified timeframe. The FATF, in February 2023, added Nigeria to its list of countries under monitoring, designated as Grey List. This listing required the country to implement an action plan comprising 19 items before May 2025 to avoid the greater danger of being upgraded to the Black List, which comes with dire economic consequences.^[4]

Nigeria, being on the FATF Grey list, has many significant negative implications. Grey-listing implies a high-risk profile and projects a poor image to the rest of the world, thereby reducing the ability of the grey-listed country to effectively engage in financial and economic exchanges and possible partnerships and collaborations.^[5] Significant negative economic consequences of grey-listing include:

1. Reduction in Cross-border Transaction and Investment Inflows: One of the negative impacts of Nigeria being “grey-listed” by the Financial Action Task Force (FATF) is a substantial decrease in cross-border transactions and investment inflows, as international financial institutions become more cautious about dealing with Nigeria due to perceived heightened money laundering risks, leading to reduced business activity and hindering economic growth. Empirical studies have demonstrated that countries subjected to grey-listing experience a discernible decline in cross-border financial activities. For instance, an analysis of financial institutions’ exchange data from the SWIFT Institute indicates a 10% reduction in cross-border payments for jurisdictions under increased monitoring.^[6] Grey-listing reduces financial resources allocated to grey-listed countries by international market actors, and the liabilities of financial institutions in the grey-listed nations are reduced to as low as 15% – 16%.^[7]

2. Reduced Development Assistance and High Borrowing Cost: Grey-listing has damaged Nigeria’s reputation, leading to reduced support from development partners and donor agencies due to concerns about weak institutional frameworks. This status has also increased borrowing costs, making it more expensive for the country to access international funding.^[8]

3. Loss of Correspondent Banking Relationships: FATF grey-listing has led to the exclusion of some local banks from the international banking system and the loss of correspondent banking relationships. Nigeria’s grey-listed status has increased scrutiny and due diligence costs for international businesses, further driving up the already high cost of doing business.^[9] According to the National Bureau of Statistics, Foreign Direct Investment (FDI) dropped by 33% in 2022 and 19% in 2023, and 2024 was the lowest, highlighting the negative impact of the listing on investor confidence. ^[10]

4. Decline in Economic Growth: The combined impact of reduced investments, exports, and remittances, caused mainly as a result of Nigeria being grey-listed, diminishes overall economic performance. For instance, Nigeria has recorded a decrease in annual non-oil exports by more than $300 million in 2023, as revealed by the Nigerian Export Promotion Council (NEPC).^[11]

NIGERIA’S EFFORT TO EXIT THE FINANCIAL ACTION TASK FORCE’S GREY LIST

The Nigerian government, in order to secure its removal from the FATF grey list by October 2025, is now undertaking a series of strategic measures. To address the concerns that led to Nigeria’s inclusion in the grey list, the Nigerian government is taking a multifaceted approach encompassing the following:

1. Legislative and Regulatory Reforms: Nigeria has enacted some laws to regulate the activities of stakeholders in this sector. These key legislations include the Money Laundering (Prevention and Prohibition) Act, 2022, and the Terrorism (Prevention and Prohibition) Act, 2022. These laws are designed to enhance the legal framework for combating money laundering, terrorism financing, and the proliferation of weapons. They align Nigeria with FATF standards and ensure stricter compliance requirements for individuals and institutions.

2. Strengthening Institutional Framework: The Nigerian Financial Intelligence Unit (NFIU) and the Economic and Financial Crimes Commission (EFCC) have intensified efforts to enhance compliance and enforcement. These agencies now conduct audits, enforce Know Your Customer (KYC) protocols, and ensure timely submission of Suspicious Transaction Reports (STRs). Also, to facilitate Nigeria’s removal from the FATF Grey List, the Central Bank of Nigeria (CBN) issued a directive mandating all commercial banks to restrict access to accounts without a Bank Verification Number (BVN) or National Identity Number (NIN), as such accounts will be subject to a ‘Post No Debit or Credit’ restriction.^[12]

3. Establishment of Police Anti-Money Laundering Units: Another strategic move to bolster national security and enhance the enforcement of financial crime laws is the establishment of the Police Anti-Money Laundering Units by the Inspector-General of Police, IGP Kayode Adeola Egbetokun. This initiative is a strategic move to strengthen the Police’s role in combating financial crimes and countering the methods used by terrorist organizations and other criminal entities to finance their activities. The integration of these units into the national security framework underscores Nigeria’s commitment to upholding international financial integrity, ensuring compliance with regulatory frameworks, and fostering a more secure financial system.^[13]

4. Development of an AML/CFT Data Management Platform: In response to directives from President Bola Ahmed Tinubu, the NITDA and the NFIU have initiated the development and implementation of a comprehensive Anti-Money Laundering/Counter Financing of Terrorism/Counter Proliferation of Firearms (AML/CFT/CPF) Data Management Framework and Platform. This initiative is also to address Nigeria’s deficiencies in combating financial crimes and to facilitate the country’s removal from the Financial Action Task Force (FATF) Grey List by October 2025. ^[14]

5. International Cooperation and Capacity: Nigeria is actively collaborating with international bodies, including the European Union and the International Institute for Democracy and Electoral Assistance (International IDEA), to align its AML/CFT practices with global standards. These partnerships are efforts at boosting capacity building, technical assistance, and the exchange of best practices to bolster Nigeria’s financial crime prevention capabilities.

EXPECTED OUTCOME OF NIGERIA’S INITIATIVE TO EXIT THE FATF’S GREY LIST

Nigeria’s efforts to exit the FATF Grey List are expected to yield several significant outcomes that will positively impact the nation’s financial integrity, global standing, and economic growth. These outcomes include:

1. Enhanced Economic Standing: Removal from the Grey List is anticipated to bolster Nigeria’s global economic reputation, facilitating smoother international trade and investment. By addressing deficiencies in the AML/CFT framework, Nigeria will reduce financial crimes, leading to better resource allocation, improved governance, and long-term economic stability.^[15]

2. Strengthened Regulatory and Enforcement: The reforms, including the development of an AML/CFT data management platform, will strengthen Nigeria’s institutional frameworks. Agencies like the NFIU and the EFCC will have enhanced capacity to detect, prevent, and prosecute financial crimes effectively.^[16]

3. Improved Global Reputation and Financial Integrity: Exiting the FATF Grey List will restore Nigeria’s credibility in the international financial community. It will signal Nigeria’s commitment to global financial standards, strengthening trust among international partners, foreign investors, and financial institutions.^[17]

4. Reduced Risk of Sanction: Staying on the FATF Grey List increases the risk of being blacklisted, which could lead to severe financial sanctions. Exiting the Grey List ensures Nigeria avoids such repercussions, preserving its economic and financial independence.

5. Improved Diaspora Remittances: Exiting the Grey List is expected to streamline diaspora remittances, thereby reducing the costs and complexities involved in Nigerians abroad sending money home. ^[18] Nigeria receives over $20 billion each year from diaspora remittances and recently raised $900 million through a diaspora bond to support the economy.^[19] However, being on the grey list makes it hard to receive these funds, as banks and other financial institutions have put in place very difficult measures to access such funds. With the high inflation and other economic challenges Nigeria is facing, these remittances are crucial for both the people and the country’s foreign currency reserves. Upon achievement of this, Nigerians abroad will find it easier and cheaper to send money home, among other benefits.

6. Access to Global Financial Markets: Nigeria’s removal from the Grey List will reduce barriers to accessing global financial markets. Financial institutions will no longer face restrictions or heightened due diligence when conducting transactions involving Nigeria, facilitating smoother trade and capital inflows.^[20]

7. Alignment with Global Best Practices: The initiative positions Nigeria as a leader in compliance with international financial crime standards. This alignment not only boosts Nigeria’s global standing but also encourages regional cooperation in combating financial crimes across Africa.

8. Attraction of Developmental Aid and Partnership: Countries compliant with FATF standards are often considered for developmental aid and strategic partnerships. Exiting the Grey List will open doors to more opportunities in this regard.

RECOMMENDATION

The initiative of the Nigerian government to exit the Financial Action Task Force (FATF) Grey List by May 2025 is highly commendable, and in other to achieve this, as already noted in this paper, significant steps are being taken towards achieving this goal. As of October 2024, Nigeria had made significant progress in addressing the deficiencies identified by the FATF, completing approximately 30% of the mandated action plan. This achievement obviously reflects the country’s commitment to strengthening its anti-money laundering (AML) and counter-terrorism financing (CFT) framework.^[21]

Although, these efforts demonstrate a step in the right direction, a substantial portion of the action plan still remains unfulfilled. However, Nigeria can further look into steps taken by Countries that have successfully exited the FATF Grey List, leveraging international partnerships, drawing lessons and technical expertise from nations that have overcome similar challenges, to fast-track its compliance efforts.

CONCLUSION

Nigeria’s resolve to exit the FATF Grey List by October 2025 represents a critical step towards restoring its financial integrity and enhancing its global reputation. Through comprehensive legislative reforms, institutional strengthening, and strategic international collaboration, the government has demonstrated a clear commitment to addressing the deficiencies that led to its grey-listing. Achieving this milestone will not only bolster Nigeria’s economy and attract foreign investments but also reaffirm its position as a reliable partner in the global fight against financial crimes.

REFERENCE

1. Itesgenew, “Nigeria launches ambitious initiative to exit FATF Grey List by 2025” (2025)https://www.itedgenews.africa/nigeria-launches-initiative-to-exit-fatf-grey-list-by-2025/ accessed 17th February,2025. ↑
2. I.M Abu, “Terrorism financing: FATF’S verdict, and salient activities of Nigeria’s”(2025) https://nctc.gov.ng/ova_doc/terrorism-financing-fatfs-verdict-and-salient-activities-of-nigerias/ accessed 17th February,2025. ↑
3. K. Boguslavska, ‘FATF grey list: truth and myths” (2025) https://baselgovernance.org/blog/fatf-grey-list-truth-and-myths#:~:text=In%20fact%2C%20in%20the%20FATF’s,country%20(see%20box%20b) accessed 17th February, 2025. ↑
4. EFCC,”FATF Grey List: EFCC, NFIU Step up Exit Plan” (2024) https://www.efcc.gov.ng/efcc/news-and-information/news-release/9919-fatf-grey-list-efcc-nfiu-step-up-exit-plan? accessed 17th February,2025. ↑
5. EnterpriseNGR, “Navigating Out of the Financial Action Task Forces Grey-listing: Lessons for Nigeria”(2024) https://enterprisengr.com/navigating-out-of-the-financial-action-task-forces-grey-listing-lessons-for-nigeria/# accessed 17^th Feburuary,2025. ↑
6. Collin, Cook & Soramaki, “The Impact of Anti-Money Laundering Regulation on Payment Flows: Evidence from SWIFT Data” (2017) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2893790 accessed 17th February ,2025. ↑
7. M.Kida & S. Paetzold, “The Impact of Gray-Listing on Capital Flows: An Analysis Using Machine Learning” (2021) https://www.imf.org/en/Publications/WP/Issues/2021/05/27/The-Impact-of-Gray-Listing-on-Capital-Flows-An-Analysis-Using-Machine-Learning-50289 accessed 17th February,2025. ↑
8. C.Maslen, “The Impact of Grey-listing by the Financial Action Task Force (FATF)”(2024)https://www.u4.no/publications/the-impact-of-grey-listing-by-the-financial-action-task-force-fatf.pdf accessed 17th February,2025. ↑
9. S&P Global, “Nigerian Banking Outlook 2024” (2024) https://www.spglobal.com/_assets/documents/ratings/research/101592100.pdf accessed 17th February,2025. ↑
10. K. Okojie, “Nigeria’s non-oil exports drops to $4.5bn in 2023, says NEPC”(2024) https://businessday.ng/news/article/nigerias-non-oil-exports-drops-to-4-5bn-in-2023-says-nepc/ accessed 17th February,2025. ↑
11. Op-cit p.3 ↑
12. Abimbola, “After 20 months, Nigeria struggling to exit FAFT grey list”(2024)https://punchng.com/after-20-months-nigeria-struggling-to-exit-faft-grey-list/?utm accessed 17th February,2025. ↑
13. ACP Olumuyiwa Adejobi, “TERRORISM FINANCING: IGP ESTABLISHES POLICE ANTI-MONEY LAUNDERING UNITS, REITERATES AGAINST ECONOMIC SABOTAGE” (2025) https://www.npf.gov.ng/news/details/555#:~:text=The%20Inspector%2DGeneral%20of%20Police,in%20Kano%20and%20Nasarawa%20States accessed 17th February,2025. ↑
14. Z.Adaramola,”Nigeria Launches Initiative To Exit FATF Grey List By 2025″ (2025) https://sciencenigeria.com/nigeria-launches-initiative-to-exit-fatf-grey-list-by-2025/#:~:text=A%20cross%20section%20of%20stakeholders,grey%20list’%20since%20February%202013 . accessed on 17th February, 2025. ↑
15. N. Chiejina, “Nigeria halfway to existing FATF grey list’ ( 2024) https://thenationonlineng.net/nigeria-halfway-exiting-fatf-grey-list/?utm accessed 17th February ,2025 ↑
16. Op-cit p.6 ↑
17. O. Mayowa, ” Nigeria eyes FATF grey list exit by Q2 2025 amidst intensified anti-money laundering efforts” (2024) < https://globalfinancialdigest.com/nigeria-eyes-fatf-grey-list-exit-by-q2-2025-amidst-intensified-anti-money-laundering-efforts/?utm> accessed 18th ,2025. ↑
18. N. Chiejina, “Nigeria halfway to existing FATF grey list’ ( 2024) https://thenationonlineng.net/nigeria-halfway-editing-fatf-grey-list/?utm accessed 17th February ,2025 ↑
19. Ecofin Agency, “Nigeria Aims to Exit FATF Gray List by 2025 to Boost Remittances and Foreign Investment”(2024) https://www.ecofinagency.com/finance/2810-46076-nigeria-aims-to-exit-fatf-gray-list-by-2025-to-boost-remittances-and-foreign-investment accessed 17th February,2025. ↑
20. Op-cit p.6 ↑
21. Op-cit p.3 ↑