Guiding Newcomers: A Guide for User Onboarding in Nigeria
In the dynamic world of finance, Nigeria's financial sector is making significant strides. Last year alone, Nigerian fintech start-ups raised an impressive $1.5 billion [1]. However, with this growth comes the need for robust measures to combat money laundering and ensure the integrity of transactions.
The Central Bank of Nigeria (CBN) has outlined specific Anti-Money Laundering (AML) measures and Know Your Customer (KYC) requirements for businesses operating in the Nigerian financial sector. These regulations, as defined and amended by the CBN, emphasise a risk-based approach to managing transactions and the need for thorough KYC processes [2].
Under the risk-based approach, financial institutions are expected to assess the risk of each transaction to ensure proactive identification and mitigation of potential money laundering activities. The CBN has also issued a guidance note for Other Financial Institutions (OFIs) to help them identify, assess, and minimise the risks of terrorist financing and money laundering [2].
For KYC, financial institutions must verify the identity of their customers through robust processes. This includes verifying the identity of individuals and legal entities, ensuring that the customer is not a shell company or involved in illicit activities. Enhanced due diligence is required for high-risk customers or transactions, and institutions must continuously monitor customer transactions to detect and report suspicious activities [2].
While the specifics of the 2013 and 2019 regulations may not be detailed in the search results, they likely follow this general framework. The CBN's emphasis on a risk-based approach and KYC procedures aligns with international standards, such as those recommended by the Financial Action Task Force (FATF) [3].
In addition to these regulations, businesses must also address the issue of document integrity. To build the most secure onboarding for Nigerian users, businesses should introduce automated document screening, database checks, and facial biometrics. To detect tampered documents, a four-step screening process is recommended, including checking document integrity, security features, image authenticity, and validating Machine Readable Zones (MRZs) [4].
Sumsub, a leading provider in digital identity verification solutions, has recently expanded its services to include Nigeria. Their new product, Non-Doc Verification, allows users to get verified with just their ID number and passing a liveness check. This service is now available in Nigeria, along with Indonesia, Brazil, and India [5].
In the realm of identity documentation, Nigeria has introduced several key initiatives. The National Electronic Identity Card (e-ID card) is issued by the National Identity Management Commission to Nigerians after enrollment to the National Identity Database and getting an NIN. The Digital ID, a virtual version of the National Electronic Identity Card, can only be verified on the official Mobile ID App [6].
The Voter Card, issued by the Independent National Electoral Commission, is another important document. It is used to prove the identity of voters during elections and can be verified by checking the Voter Verification Platform [7]. However, Nigeria has some of the highest rates of ID forgery in the world, highlighting the need for vigilance in verifying these documents.
Nigeria's efforts in the digital identity sphere are not limited to these initiatives. The country has produced 5 out of Africa's 7 fintech unicorns and has the highest cryptocurrency use rate in the world [1]. Despite the Central Bank of Nigeria's prohibition on cryptocurrency businesses, the integrity of Nigerian documents can be checked based on templates from official resources like the Public Register of Authentic identity and travel Documents Online (PRADO) and the official site of the National Identity Management Commission [8].
In conclusion, navigating Nigeria's financial sector requires a keen understanding of AML measures and KYC requirements. By adhering to these regulations and implementing robust document verification processes, businesses can ensure a secure and compliant onboarding process for Nigerian users.
The Central Bank of Nigeria (CBN) has outlined AML measures and KYC requirements for businesses in the Nigerian financial sector, which aligns with international standards such as those recommended by the Financial Action Task Force (FATF) [3]. For secure onboarding of Nigerian users, businesses should introduce automated document screening, database checks, and facial biometrics [4].
In addition to these regulations, businesses must also address the issue of document integrity, as Nigeria has some of the highest rates of ID forgery in the world [7]. With Nigeria producing 5 out of Africa's 7 fintech unicorns and having the highest cryptocurrency use rate in the world, the integrity of Nigerian documents can be checked based on templates from official resources [8].
