Nigeria models targeted AML rules to curb Africa's $88bn outflows
African nations are adopting Nigeria’s risk-based approach to anti-money laundering rules to combat $88 billion in annual illicit financial flows without triggering bank de-risking of non-profit groups.
African governments must adopt targeted anti-money laundering measures to combat an estimated $88 billion in annual illicit financial flows without imposing blanket regulations on non-profit organizations, the United Nations warned at a conference in Abuja. The guidance, issued as delegates from more than 30 countries convened to discuss Financial Action Task Force (FATF) standards, underscores a shifting regulatory approach across the continent's emerging markets.
The primary focus of the conference was the 2023 revision of FATF Recommendation 8, which dictates how countries regulate non-profits to prevent terrorist financing. Ben Saul, UN Special Rapporteur on the Promotion and Protection of Human Rights while Countering Terrorism, noted that the updated standard clarifies only vulnerable organizations should face targeted measures. “Most non-profit organisations do not pose any risk of terrorist financing at all,” Saul said.
For financial institutions operating in Africa, the distinction between blanket and risk-based regulation carries significant compliance implications. Saul highlighted a growing trend of banks denying services to non-profits due to perceived compliance risks, a practice that disrupts legitimate humanitarian capital flows and forces organizations to operate without basic banking access. He warned that excessive reporting requirements divert resources from development activities, noting that “civil society engagement can reduce unnecessary regulation and strengthen the effectiveness of compliance measures.”
Nigeria is positioning itself as the regional model for this balanced approach. Harry Erin, Director of the Special Control Unit Against Money Laundering at the Economic and Financial Crimes Commission, said the country conducted a comprehensive National Terrorist Financing Risk Assessment of the non-profit sector. The assessment involved the Nigerian Financial Intelligence Unit, the Office of the National Security Adviser, and the Corporate Affairs Commission, replacing broad assumptions with evidence-based analysis. “The Financial Action Task Force has made it abundantly clear that Recommendation 8 is not about regulating or restricting all non-profit organisations,” Erin said.
Samuel Diminas, Board Chairman of Spaces for Change, framed the broader economic stakes of these illicit outflows. “These are not abstract numbers. They represent schools that remain unbuilt, hospitals left unequipped, and opportunities denied to millions of Africans,” he said. For investors, reducing these massive capital leaks is critical to the long-term fiscal health and infrastructure development of African economies.
Victoria Ibezim-Ohaeri, executive director of Spaces for Change, noted that Nigeria's decade-long reform journey is already influencing policy shifts across West Africa. By replacing regulatory confrontation with inter-agency dialogue, Nigeria aims to demonstrate that strict international compliance can coexist with operational freedom for legitimate charitable and development capital.
