Established by the CBN Act of 1958, the CBN serves as Nigeria's central bank and primary monetary authority. It plays a critical role in safeguarding the Nigerian economy through various functions:
Monetary Policy: The CBN formulates and implements monetary policy to ensure price stability and promote economic growth.
External Reserves Management: The CBN manages Nigeria's external reserves, which are essential for maintaining a stable exchange rate and supporting international trade.
Financial System Regulation: The CBN acts as the chief regulator of the Nigerian financial system, overseeing banks and other financial institutions to ensure their stability and soundness.
Issuing Currency: The CBN has the exclusive authority to issue Nigeria's legal tender, the Nigerian Naira (NGN).
Banker to the Government: The CBN serves as the banker and financial advisor to the Federal Government of Nigeria.
Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT): The CBN plays a critical role in safeguarding Nigeria's financial system from money laundering and terrorist financing activities. It achieves this through:
Issuing AML/CFT Regulations: The CBN establishes comprehensive AML/CFT regulations that financial institutions must adhere to. These regulations outline Know Your Customer (KYC) requirements, customer due diligence (CDD) procedures, suspicious activity reporting (SAR), and other measures to deter and detect money laundering.
Supervisory Activities: The CBN actively supervises banks and other financial institutions to ensure their compliance with AML/CFT regulations. This includes on-site inspections, reviewing suspicious activity reports, and enforcing penalties for non-compliance.
Guidance and Awareness: The CBN issues guidance notes and circulars to provide clarity on AML/CFT regulations and best practices for financial institutions.
Also read: Tier-1 Transition: Navigating CBN's New Customer Verification Requirements
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