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The Securities and Exchange Commission (SEC) has directed all capital market-regulated entities in Nigeria to terminate or restrict specified financial relationships with Iran and North Korea, following the latest Financial Action Task Force (FATF) classification of the two countries as high-risk jurisdictions subject to a call for action.
The commission also warned that failure by capital market operators to comply with the directives would constitute a violation of the Investments and Securities Act 2025, as well as the SEC Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Rules and Regulations, and could attract regulatory sanctions.
The sanctions, according to the SEC, may include fines, suspension of operations or revocation of registration. The directives were contained in a circular issued by the commission on the implementation of FATF statements on high-risk jurisdictions subject to a call for action and jurisdictions under increased monitoring.
The FATF’s June 2026 statement lists the Democratic People’s Republic of Korea (DPRK), Iran and Myanmar among jurisdictions subject to a call for action, while a separate list places 20 jurisdictions under increased monitoring. Under the new directives, the SEC ordered all capital market-regulated entities (CMREs) to apply specified measures to transactions and business relationships connected to the affected jurisdictions.
For North Korea, SEC directed CMREs to terminate all correspondent banking relationships with financial institutions incorporated in, owned or controlled by persons or entities in the DPRK. Operators were also directed to ensure that no subsidiaries, branches or representative offices of DPRK financial institutions are established or maintained within their operations.
The commission further ordered CMREs to “Restrict or, where appropriate, refuse business relationships and transactions involving DPRK nationals, entities, government bodies, or persons acting on their behalf.”
For Iran, the SEC directed capital market operators to refuse to process or facilitate transactions with Iranian financial institutions and to decline to establish or maintain subsidiaries, branches or representative offices of such institutions in Nigeria. Operators were also instructed to refrain from establishing or operating branches, subsidiaries or representative offices in Iran where deficiencies in Iran’s AML/CFT/CPF framework may compromise compliance obligations.
The SEC’s action follows the FATF’s continued classification of Iran and the DPRK as high-risk jurisdictions. The FATF says jurisdictions subject to a call for action have significant strategic deficiencies in their regimes for countering money laundering, terrorist financing and proliferation financing. The FATF has specifically maintained its call for countermeasures against the high-risk jurisdictions, citing heightened proliferation-financing risks.
Beyond Iran and North Korea, the SEC directed operators to apply enhanced due diligence to Myanmar, another jurisdiction placed by FATF under the call-for-action category. The commission also identified 20 jurisdictions currently under increased monitoring and directed capital market-regulated entities to apply enhanced monitoring to transactions and business relationships connected to them.
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The jurisdictions listed by the SEC are Algeria, Angola, Bolivia, British Virgin Islands, Bulgaria, Cameroon, Côte d’Ivoire, Democratic Republic of the Congo, Haiti, Kenya, Lao People’s Democratic Republic, Lebanon, Monaco, Namibia, Nepal, South Sudan, Syria, Venezuela, Vietnam and Yemen.
The FATF describes jurisdictions under increased monitoring as countries working with the organisation to address identified strategic deficiencies in their systems for combating money laundering, terrorist financing and proliferation financing.
The SEC’s directive therefore requires capital market operators to take a risk-based approach to relationships and transactions involving the listed jurisdictions rather than treating all of them in the same manner as jurisdictions subject to a call for action.
The commission also directed all CMREs to subscribe to the Nigerian Financial Intelligence Unit’s (NFIU) Nigeria Sanctions (NigSac) Alerts system.
According to the SEC, subscription to the system is mandatory to ensure timely access to terrorist-financing and proliferation-financing designations and to support effective implementation of targeted financial sanctions. The commission further reminded operators that “any unusual or suspicious transactions shall be promptly reported to the Nigerian Financial Intelligence Unit (NFIU).”
The SEC said the measures were being implemented to strengthen compliance with the FATF framework and Nigeria’s obligations relating to anti-money laundering, counter-terrorist financing and counter-proliferation financing.
The development places additional compliance obligations on Nigeria’s capital market operators, particularly those involved in cross-border transactions, correspondent relationships and dealings with foreign financial institutions.
The FATF’s current framework distinguishes between jurisdictions subject to a call for action and those under increased monitoring. While the former category attracts calls for enhanced due diligence and, in serious cases, countermeasures, the latter involves jurisdictions working to address strategic deficiencies under increased monitoring.
