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By Chinwendu Obienyi
With Nigeria’s financial system under increasing scrutiny, the Central Bank of Nigeria (CBN) has moved to fortify its defences by launching a dedicated compliance department.
Announced last week, the apex bank stated that the initiative is aimed at tightening oversight on financial crimes, enhancing corporate governance and ensuring adherence to Environmental, Social and Governance (ESG) standards.
The creation of this department, analysts note, signals the CBN’s commitment to modernising Nigeria’s financial regulatory architecture and positioning the country as a credible and globally aligned financial hub.
In a nutshell, the new department ensures that the nation’s banking system is no safe haven for dirty deals or illicit funds.
The Nigerian banking sector has in recent years faced an alarming rise in financial fraud. In July 2025, the CBN reported a 45 per cent year-on-year increase in fraud, with digital channels, including unregulated virtual asset platforms, accounting for nearly 70 per cent of losses.
The surge has highlighted vulnerabilities in the financial ecosystem, particularly in areas where oversight had previously been fragmented or inconsistent. According to a circular signed by Olubunmi Ayodele-Oni, the new department was created in the first quarter (Q1) of this year, full operations have commenced since the second quarter (Q2).
The compliance department, according to the circular, seeks to centralize regulatory functions that were previously scattered across multiple units. Its core focus areas include financial crime supervision (covering anti-money laundering, counter-terrorism financing, and sanctions compliance), market conduct supervision, enterprise security supervision, and corporate governance and ESG oversight.
Experts say that the creation of a compliance department is a strategic response to the increasingly sophisticated nature of financial crimes. “With the growing complexity of fraud and digital transactions, a centralized compliance function is critical to prevent systemic risks,” said Chinwe Egwim, Chief Economist at Coronation Merchant Bank.
She added that having a dedicated unit ensures that AML and CFT regulations are applied consistently and proactively across the financial sector.
Beyond traditional financial crimes, the department will also monitor emerging risks associated with new financial technologies and unregulated platforms. This reflects a growing understanding that non-prudential risks, including digital fraud and cyber threats, can have systemic implications if left unchecked.
One of the most significant features of the new department is its focus on Environmental, Social, and Governance (ESG) risks. Globally, financial regulators are increasingly emphasizing ESG compliance as a crucial aspect of sustainable business practices. Nigeria’s CBN is now aligning with this trend, signaling to investors and stakeholders that corporate governance, ethical operations, and social responsibility are non-negotiable in the country’s financial sector.
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Ndidi Nnoli-Edozien, a social entrepreneur and sustainability expert, notes that “the CBN’s emphasis on ESG risks demonstrates a recognition that financial institutions must go beyond profitability to consider their environmental and social impacts. This is vital for attracting responsible investment and building long-term resilience.”
For banks and other financial institutions, this implies a need to strengthen board oversight, integrate ESG frameworks into corporate strategies, and ensure transparency in reporting. While some institutions may face initial compliance costs, the long-term benefits such as improved investor confidence, access to global capital, and risk mitigation, are substantial.
The establishment of the compliance department offers several immediate and long-term benefits for Nigeria’s financial ecosystem. First, this brings about centralized reporting and guidance, help reduce confusion, ensure consistency in supervision, and minimize overlaps in regulatory requirements.
Proactive monitoring of financial crimes, market conduct, and ESG practices reduces the likelihood of systemic shocks. Also, banks and financial institutions now have a single point of contact for compliance matters, streamlining communication and reporting.
Finally, ESG oversight ensures that institutions prioritize ethical operations, sustainability, and social responsibility in their business practices.
Dean of Lagos Business School, Olayinka David-West emphasizes the broader significance, “This initiative not only strengthens Nigeria’s domestic regulatory environment but also positions the country competitively in the global financial market. It demonstrates that the CBN is proactively addressing both traditional and emerging risks.”
While the move has been widely praised, some industry observers caution that implementation will be key. Effective enforcement will require adequate staffing, technical expertise, and clear protocols for monitoring and reporting. Additionally, banks will need support in integrating ESG frameworks into their governance structures, a process that may require training, technology upgrades, and cultural shifts within institutions.
Moreover, consistent engagement with fintech firms and digital platforms will be crucial, as these channels are increasingly used for both legitimate transactions and fraudulent activity. The department’s success will therefore depend not only on regulatory authority but also on collaboration with industry players.
Looking ahead, the CBN’s establishment of a Compliance Department represents more than a bureaucratic reshuffle; it is a strategic shift towards holistic oversight of Nigeria’s financial sector. By consolidating financial crime supervision, market conduct monitoring, enterprise security, and ESG governance, the bank is laying the foundation for a more resilient, transparent, and globally aligned financial ecosystem.
For financial institutions, this marks a pivotal moment to reassess internal compliance frameworks, strengthen risk management, and embrace sustainability as a core business principle. For investors and the broader economy, it signals that Nigeria is serious about curbing financial crimes, enhancing governance, and aligning with international best practices.
As Nigeria continues to deepen its financial markets, the CBN’s compliance department could well become a model for regulatory modernization across Africa, demonstrating how proactive supervision can safeguard the integrity of the financial system while promoting sustainable economic growth.
