Nigeria's Central Bank has fined 29 banks a combined ₦15 billion ($9 million) for violating anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. The move is seen as a significant step towards strengthening compliance measures in the country's financial sector.

The fines were announced by the Central Bank governor, Olayemi Cardoso, at the annual bankers' dinner on Friday. The penalties are expected to push more fintechs and crypto fintech companies to ramp up compliance hiring, as the regulator tightens its grip on the industry.

The need for stronger compliance measures in Nigeria's financial sector has been highlighted by the illicit money flows in the country, which have led to tighter Know Your Customer (KYC) processes for fintechs and closer monitoring of remittance startups on enhanced due diligence (EDD) checks. The regulatory troubles faced by Binance, a leading crypto exchange, have also underscored the importance of compliance in the industry.

Compliance professionals are increasingly in demand in Nigeria's financial services industry, with four top Nigerian fintechs – OPay, Palmpay, Kuda, and Moniepoint – hiring a total of 24 compliance officers in 2024. Crypto companies, such as Yellow Card, have also made key compliance hires this year.

The penalty fines on the 29 banks will likely keep everyone on their toes as they try to tighten security. One message is clear: non-compliance is expensive. The fines are expected to have a ripple effect on the entire financial ecosystem, as banks and fintechs alike are forced to re-examine their compliance measures.

In related news, the Central Bank has also announced plans to penalise banks that fail to provide cash to customers at their automated teller machines (ATMs). The move is seen as a response to the cash shortages at ATMs and banking halls, which have been exacerbated by the cashless policy.

The Central Bank has set up a new monitoring system to ensure banks comply with the directive, and any bank that fails to measure up to the new standards will be penalised. The regulator has also announced plans to inject an additional ₦1.4 trillion ($833.5 million) into the economy to alleviate cash shortages at ATMs and bank branches.

The developments come as Nigeria's financial sector continues to evolve, with fintechs and crypto companies playing an increasingly important role. As the industry grows, the need for stronger compliance measures and tighter regulation will only continue to grow.