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Terrorism Financing and the CBN’s War Against Illicit Financial Flows
By Zekeri Idakwo Laruba
The fight against terrorism is often imagined in terms of soldiers, intelligence officers, arrests and military operations. Yet behind many terrorist organisations is another battlefield that is less visible but equally consequential: the financial system. Weapons have to be purchased, people moved, communications sustained and networks maintained. That makes the ability to identify, disrupt and freeze illicit financial flows an important component of national security.
It is against this background that the Central Bank of Nigeria’s decision on September 8, 2026, to elevate terrorism-financing supervision to a current supervisory priority deserves to be viewed not simply as another regulatory circular, but as part of the evolution of Nigeria’s financial-security architecture.
In a press release issued by the CBN and signed by Sidi-Ali Hakama, Acting Director, Corporate Communications and Investor Relations Department, the apex bank said it had elevated terrorism-financing supervision as part of its continuing commitment to protecting the Nigerian financial system from abuse by illicit actors. The statement specifically identified terrorism-financing risk management, transaction monitoring, implementation of targeted financial sanctions and terrorism-financing-related suspicious transaction reporting as areas requiring heightened attention.
The significance of the announcement becomes clearer when placed against what Nigeria has been doing since the country came under international scrutiny for weaknesses in its anti-money laundering and counter-terrorism financing framework.
Nigeria was placed on the Financial Action Task Force’s grey list in February 2023 after the international watchdog identified strategic deficiencies in the country’s systems for combating money laundering and terrorist financing. Being placed under increased monitoring was not a declaration that Nigeria was a haven for illicit finance; rather, it meant the country had committed to an action plan to address identified weaknesses.
That development became a catalyst for a much broader institutional response involving the CBN, Nigerian Financial Intelligence Unit, Economic and Financial Crimes Commission, security and law-enforcement agencies, prosecutors and other regulators. The objective was increasingly to move beyond simply having laws on paper towards demonstrating that suspicious financial activity could actually be detected, investigated and disrupted.
The progress eventually produced a major international milestone. On October 24, 2025, FATF announced Nigeria’s removal from increased monitoring, citing improvements including stronger risk-based supervision, enhanced financial-intelligence dissemination, more effective money-laundering and terrorism-financing investigations and prosecutions, and improved inter-agency cooperation.
President Bola Ahmed Tinubu welcomed the decision, describing Nigeria’s removal from the FATF grey list as an important development and reaffirming the government’s commitment to financial transparency and integrity.
For the administration, the achievement had implications beyond regulatory compliance. A country whose financial system is viewed as vulnerable to illicit flows can face greater scrutiny from international banks and investors, creating friction around correspondent banking, cross-border payments and investment. Reuters, reporting the FATF decision, noted that analysts expected delisting to support capital flows and reduce some of the financial friction associated with being under increased monitoring.
But delisting was never supposed to mean that the work was finished. That is perhaps the most important context for understanding the CBN’s September 2026 announcement.
The apex bank is effectively saying that Nigeria cannot celebrate the restoration of international confidence and then relax the controls that helped achieve it.
The CBN’s current approach is particularly important because the financial institutions under its regulatory authority sit at the entry points through which legitimate and illicit money can move. Banks, payment institutions, bureaux de change and other regulated financial businesses are therefore not merely commercial entities; they are also part of the country’s first line of defence against financial crime.
The Bank said it would apply a risk-based supervisory approach through both on-site and off-site engagements to assess the effectiveness of Anti-Money Laundering, Countering the Financing of Terrorism and Counter-Proliferation Financing controls.
That distinction between rules and supervision is crucial. A financial institution may have an AML policy, employ compliance officers and conduct customer identification, but the real question is whether those systems can identify unusual transactions, trace beneficial ownership, detect suspicious patterns and promptly escalate concerns to the appropriate authorities.
The CBN had already been moving in this direction before the latest announcement. On April 17, 2025, the Bank strengthened compliance expectations around targeted financial sanctions, requiring regulated institutions to maintain systems capable of identifying sanctions-list updates, screening customers and transactions and preventing prohibited transactions. The same period also saw the CBN intensify its scrutiny of bureaux de change, including plans for mystery-shopping exercises to test compliance with AML/CFT/CPF and Know-Your-Customer requirements.
This progression illustrates a broader change in financial regulation: supervision is increasingly becoming more active, data-driven and risk-focused rather than simply dependent on periodic compliance returns.
The Nigerian Financial Intelligence Unit is an important part of this architecture. Its mandate includes receiving and analysing suspicious transaction and activity reports and disseminating financial intelligence to competent authorities. The NFIU describes its role as helping safeguard Nigeria’s financial system and contributing to the global fight against money laundering, terrorism financing and related crimes.
The sheer scale of financial reporting also demonstrates the volume of information available to the authorities. Suspicious transaction reporting has become a major component of the country’s financial-intelligence system, although it is important to distinguish between a suspicious transaction report and proof of criminal activity. A report signals that a transaction or pattern warrants further examination; it does not automatically mean that the customer is guilty of terrorism financing or money laundering.
This distinction is important for maintaining public confidence. Strong financial surveillance must protect the country without turning ordinary banking activity into an assumption of criminality.
The same balance applies to financial inclusion. Nigeria wants more people and businesses to enter the formal financial system, not fewer. Excessively cumbersome compliance requirements could unintentionally push vulnerable customers towards informal channels, precisely where transactions may be harder to monitor. The challenge for regulators is therefore to make the formal system both secure and accessible.
This is where technology becomes increasingly important. Modern transaction-monitoring systems can identify unusual patterns, rapid movements of funds, multiple linked accounts and other indicators that would be difficult to detect manually. But technology is only as effective as the regulatory framework, institutional capacity and human intelligence supporting it.
The CBN’s latest intervention also fits into a wider national effort involving institutions beyond the apex bank. FATF specifically recognised Nigeria’s stronger inter-agency cooperation as one of the factors behind its 2025 delisting. The NFIU, EFCC, security agencies, regulatory authorities, financial institutions and prosecutors each occupy different parts of the chain, making cooperation essential.
That is why the fight against terrorism financing cannot be treated as the responsibility of the CBN alone. The apex bank can regulate banks and other financial institutions, but intelligence must be shared, suspicious transactions investigated, assets traced and, where appropriate, cases prosecuted.
Nigeria’s economic managers have also increasingly linked financial integrity to the wider investment environment. Taiwo Oyedele, who became Minister of Finance and Coordinating Minister of the Economy in April 2026, inherited an economic reform programme in which restoring confidence in Nigeria’s institutions and improving the country’s investment environment remain important objectives.
His predecessor, Wale Edun, was the coordinating minister during the October 2025 FATF delisting, so statements attributed to him on that milestone belong to that earlier period rather than to the current administration of the Ministry under Oyedele. The distinction matters because the financial-integrity reforms span several stages and should not be presented as the work of a single officeholder.
The larger lesson is that Nigeria’s financial system has become part of the country’s security infrastructure. The days when national security could be viewed entirely through the prism of physical borders and military operations are gone. In an increasingly digital economy, money can cross borders in seconds, pass through several accounts and jurisdictions and potentially finance criminal activity without the movement of a single physical note.
Consequently, monitoring financial flows is not an alternative to conventional security operations; it complements them.
The CBN’s September 8 announcement should therefore be understood as a continuation rather than a beginning. Nigeria has moved from the pressure of FATF grey-listing, through regulatory reforms and enhanced inter-agency cooperation, to eventual delisting in October 2025. The current decision shows that the country intends to consolidate those gains rather than allow them to become temporary compliance achievements.
Hakama’s closing message in the September 8 statement was deliberately measured: “Further supervisory engagement will be undertaken as appropriate.” That language captures the new reality of financial regulation. The objective is not a one-off crackdown but continuous supervision based on evolving risks.
For Nigeria, the ultimate test will be whether this vigilance translates into fewer opportunities for terrorist organisations and other illicit actors to exploit legitimate financial institutions, while preserving the confidence of ordinary customers and legitimate businesses.
The battle against terrorism may still be fought on the streets, in forests and at the borders. Increasingly, however, another front is being fought inside databases, bank accounts, payment platforms and transaction-monitoring systems.
And in that battle, following the money may prove just as important as following the gun.
Zekeri Idakwo Laruba is an Editor, Economic Confidential and PRNigeria Fellowship Coordinator. He is also a fact-checker.
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