Central Bank of Nigeria increases oversight of cyber and terrorism financing risks

The Central Bank of Nigeria (CBN) has issued warnings and intensified supervision regarding systemic risks within the nation's financial sector.

Addressing the 19th Annual Banking and Finance Conference in Abuja, Dr. Rakiya Opemi Yusuf, Director of the Payments System Supervision Department, cautioned banks and fintech companies about growing cybersecurity and third-party technology risks. Yusuf highlighted that the increasing interconnectivity of the financial system, driven by artificial intelligence and digital platforms, creates a ‘one-fire’ effect. This means a vulnerability in a single institution, cloud operator, or technology vendor could spread across interconnected platforms and disrupt the wider financial ecosystem.

In a separate regulatory move, the CBN has elevated terrorism financing supervision to a current supervisory priority. The bank is increasing scrutiny on regulated financial institutions to prevent exploitation by illicit actors. This enhanced monitoring will focus on four key areas: terrorism financing risk management, transaction monitoring, the implementation of targeted financial sanctions, and suspicious transaction reporting. The CBN intends to use a risk-based approach, combining on-site examinations with off-site monitoring to ensure institutions maintain effective compliance and internal controls.