How Nigerian banks can exit FATF grey list – Chrisol Correia

Article summary

• Correia said Nigerian banks will have to invest in the latest risk compliance technologies to exit the Financial Action Task Force (FATF) Grey List.
• He observed that the banks could also have been pushed by the competition from fintech to let go of some compliance practices to retain their customers.
• He also acknowledged that Nigerian banks Banks had invested in people and training and process and technology but the industry is changing at a faster pace.

The Head of Financial Crime Risk Management at FACCTUM, Chrisol Correia, has said that Nigerian banks will have to invest in the latest risk compliance technologies to exit the Financial Action Task Force (FATF) Grey List.

Speaking in a chat with Nairametrics at the sideline of a meeting with the representatives of Nigerian banks and fintech, Correia said the greylisting has now put financial institutions in Nigeria under serious pressure from the global financial crime community. While noting that Nigerian banks have indeed invested in people and compliance technologies in the past, he said the changing pace of financial crimes and technologies means that they have to be continuously deploying the latest technologies.

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He observed that the banks could also have been pushed by the competition from fintech to let go of some compliance practices to retain their customers. According to him, the fintechs do not have the bricks-and-mortar compliance experience that the banks have, which is why they are exposed to more risks than the banks.

Why new technologies

Explaining why the banks would have to go for new technologies to achieve financial crime compliance, Correia said:

• “Nigerian banks are currently under some pressure from the financial crime compliance community at the moment. Some of those are a result of the recent Greylisting of Nigeria by the Financial Action Task Force.
• “What that means is that for many Nigerian institutions doing business internationally, all of a sudden, they’re perceived to be a higher risk because of the national status of the greylist. It means they have to demonstrate effectively effective compliance a lot more quickly, to a lot more detail, and a much greater audience than they have done in the past.
• “So, what we wanted to do was to introduce some of the new technologies we’ve developed to help banks and emerging markets manage these types of problems. We think it’s relevant to the problem, but it’s also very sustainable in terms of affordability. We believe in empowering customers with a low code or no code type of product approach, which means they configure products themselves or their risk profiles.”

Financial inclusion drives

While noting that the banks have also invested a lot in driving financial inclusion through different financial products, he said the new services also place more compliance burden on them.

• “Banks in Nigeria have invested continuously in people and training and process and technology. I think the one thing that stands out though, is that the pace of change is increasing so quickly. There is competition from fintechs, the introduction of new payment mechanisms that are quicker and cheaper for customers; corporate banking services that are more accessible for micro-sized firms, etc. All these are positive for financial inclusion.
• “To address the risks that come with these opportunities, it’s becoming more and more important that compliance systems have the capacity. So, my personal view is that over the last few years, compliance systems have been squeezed hard, and there isn’t a lot of juice left in them.
• So, if you’re sending money from A to B, you expect it to get from A to B in microseconds. And if there’s a delay for compliance reasons, you’re just gonna go down to the next guy. But those problems of friction are created when the process can’t respond as nimbly or as quickly because the technology is old, so that’s my biggest takeaway, I think for any bank anywhere,” he said.

Earlier in February this year, the Financial Action Task Force placed Nigeria and South Africa on the global financial watchdog’s grey list denoting nations with shortcomings in tackling illicit financial flows, a move that scars their international reputations and may raise costs for banks and asset managers. At the same time, Morocco and Cambodia were taken off the list after improving their controls.

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