enaira Archives - GRF Dalley & Partners

The Central Bank of Nigeria (CBN) has, among its principal objects, the responsibility of issuing legal tender in Nigeria. The eNaira is a Central Bank Digital Currency (CBDC) intended to be legal tender that has parity with the Naira. In view of this, the CBN recently released the Regulatory Guidelines on the eNaira.

Q: What is the difference between a Central Bank Digital Currency (CBDC) and other cryptocurrencies such as Bitcoin?

The major difference between CBDCs and other cryptocurrencies such as Bitcoin lies in the issue of control and decision-making. CBDCs are controlled by a specific entity, hence they are centralized while cryptocurrencies such as Bitcoin are decentralized.

Q: What is the difference between a Central Bank Digital Currency (CBDC) and stablecoins?

The purpose of a CBDC is to be legal tender. It is a digital representation of legal tender. On the other hand, the value of stablecoins is pegged to another asset.

Q: Who are the participants in the eNaira project?

The Guidelines identify the following as participants in the eNaira project:

Central Bank of Nigeria (CBN)
Financial Institutions
Merchants
Ministries, Departments and Agencies (MDAs)
Consumers

Q: Who is responsible for administering the eNaira?

The Guidelines state that the CBN is the authority responsible for administering, minting and issuing the eNaira through the Digital Currency Management System (DCMS).

Q: Are there different eNaira Wallet types?

The Guidelines identify five (5) types of eNaira wallets. They are as follows:

eNaira Stock Wallet: This wallet stores all minted eNaira. It belongs only to the CBN.
eNaira Treasury Wallets: These wallets are maintained by Financial Institutions to store eNaira received from the CBN. A Financial Institution is only allowed to maintain one (1) treasury wallet. Although not mandated to, Financial Institutions may create and fund sub-treasury wallets for branches tied to them.
eNaira Branch Wallets: These wallets can be created and funded by a Financial Institution for its branches. However, it is important to note that the Guidelines fail to make a clear distinction between Branch Wallets and sub-treasury wallets.
eNaira Merchant Speed Wallets: These wallets are used to transact eNaira payments for goods and services.
eNaira Speed Wallets: These wallets are for end users to transact on the eNaira platform.

Q: What changes should Financial Institutions make to their systems to accommodate the eNaira?

By virtue of Paragraph 3.5 of the Guidelines, Financial Institutions are mandated to integrate their backend systems to the DCMS to facilitate the transfer of eNaira between bank accounts and eNaira wallets. Financial Institutions are to make the eNaira wallet feature available on their digital bank channels.

Q: What AML/CFT measures are Financial Institutions supposed to adopt?

Paragraph 10.0 of the Guidelines mandates Financial Institutions to comply with the Money Laundering (Prohibition) Act 2011 (as amended), the Terrorism (Prevention) Act 2011 (as amended) and all subsisting anti-money laundering laws and regulations as may be issued by the CBN from time to time.

Q: How are Financial Institutions expected to handle risk management?

Financial Institutions are expected to adopt appropriate risk management practices. The Guidelines specify that Financial Institutions are to adopt measures including the following:

An Enterprise risk management framework
Appropriate governance structures
Documented and approved policies
Secured information technology infrastructure

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Applicable Laws

The applicable laws in relation to anti-money laundering efforts in Nigeria are:

Money Laundering (Prohibition) Act 2011 (as Amended)
Central Bank of Nigeria (Anti-Money Laundering and Combating the Financing of Terrorism in Banks and Other Financial Institutions in Nigeria) Regulations 2013
Economic and Financial Crime Commission (Establishment) Act 2004
Terrorism Prevention Act, 2012 (as amended)
Banks and other Financial Institutions Act (BOFIA) 1991
Central Bank of Nigeria Act, 2017
National Drug Law Enforcement Act (1990)
Financial Action Task Force Recommendations

The Money Laundering (Prohibition) Act 2011 (as Amended) is the primary legislation that regulates money laundering in Nigeria and is divided into three (3) parts namely Prohibition of Money Laundering, Offences, and Miscellaneous.

General Provisions

What amounts to money laundering under Nigerian law?

Any person or body corporate, in or outside Nigeria, who directly or indirectly conceals or disguises the origin of, converts or transfers, removes from the jurisdiction, or acquires, uses, retains or takes possession or control of any fund or property, knowingly or reasonably ought to have known that such fund or property is, or forms part of the proceeds of an unlawful act commits an offence of money laundering under the Money Laundering (Prohibition) Act 2011 (as amended).

Are the anti-money laundering provisions applicable to corporate bodies?

The anti-money laundering provisions apply equally to corporate bodies.

Is there a limitation on the acceptance of cash payments?

Section 1 of the Money Laundering (Prohibition) Act (as amended) prohibits the making or acceptance of cash payments above the sum of =N= 5,000,000.00 or its equivalent in the case of individuals; or above the sum of =N= 10,000,000.00 or its equivalent in the case of a body corporate.

What is the punishment for money laundering under Nigerian law?

A person found liable upon conviction can be sentenced to a term of not less than seven (7) years but not more than fourteen (14) years imprisonment while a body corporate is liable upon conviction to a fine of not less than 100% of the funds and properties acquired as a result of the offence committed and a withdrawal and/or revocation of its license.

Are there requirements in the law for mandatory disclosure?

A Financial Institution or Designated Non-Financial Institution is required to report to the Economic and Financial Crimes Commission (EFCC) in writing within seven (7) days, any single transaction, lodgment or transfer of funds in excess of =N= 5,000,000.00 or its equivalent in the case of an individual; or =N= 10,000,000.00 or its equivalent in the case of a body corporate.
Any Financial Institution or Designated Non-Financial Institution that fails to make such disclosure is guilty of an offence and liable to a fine of not less than =N= 250,000.00 and not more than =N= 1,000,000.00 for each day the contravention continues.

A person other than a Financial Institution may voluntarily give information on any transaction, lodgment or transfer of funds in excess of =N= 1,000,000.00 or its equivalent in the case of an individual; or =N= 5,000,000.00 or its equivalent in the case of a body corporate.

Enforcement

Who is responsible for enforcement?

Enforcement of the Money Laundering (Prohibition) Act is primarily carried out by the following government agencies, amongst others:

Economic and Financial Crimes Commission (EFCC)
Central Bank of Nigeria (CBN)
National Drug Law Enforcement Agency (NDLEA)
Nigeria Customs Service (NCS)
Nigeria Police Force (NPF)

Which court has jurisdiction over money laundering matters?

Section 20 of the Money Laundering (Prohibition) Act 2011 (as amended) confers, jurisdiction to try offences and impose penalties under the Act, on the Federal High Court of Nigeria.

Compliance with AML/CFT in relation to the Central Bank of Nigeria’s eNaira project

The eNaira is to be recognised as legal tender that has parity of value with the Naira. In view of this, the Regulatory Guidelines on the eNaira issued by the CBN require that Financial Institutions comply with the Money Laundering (Prohibition) Act 2011 (as amended), the Terrorism (Prevention) Act 2011 (as amended) and all subsisting anti-money laundering laws and regulations as may be issued by the CBN from time to time.

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