Why FATF placed Nigeria on Grey List, how the country won its way back
When the Financial Action Task Force (FATF) placed Nigeria on its grey list in February 2023, authorities described the move as unfair. However, the global body’s decision underscored deep concerns about Nigeria’s anti-money laundering and counter-terrorism financing framework.
Countries on the FATF grey list are considered to have deficiencies in preventing money laundering, terrorist financing and proliferation financing. This means the world body does not fully trust their financial systems until identified gaps are addressed.
The FATF, an intergovernmental organisation that sets global standards to protect the financial system, assesses countries’ compliance with Anti-Money Laundering/Countering the Financing of Terrorism and Proliferation (AML/CFT/P) standards.
Grey-listing carries significant implications. It discourages foreign investment, damages reputation, and increases borrowing costs. It can also lead to loss of correspondent banking services and, if unaddressed, escalation to the FATF blacklist of high-risk jurisdictions.
A 2021 report by the International Monetary Fund found that grey-listed countries experienced “a large and statistically significant reduction in capital inflows.”
FATF Mutual Evaluation Exercise
Nigeria’s second FATF Mutual Evaluation Exercise began in 2019 and was published in 2021. It covers both technical compliance and effectiveness compliance. While the former covers legal, regulatory and institutional frameworks, the latter measures the achievement of desired outcomes.
The country’s results were mixed: Compliant, 7; Largely Compliant, 14; Partially Compliant, 14; Non-Compliant, 2; High/Substantial Effectiveness, 0; Moderate Effectiveness, 2; and Low Effectiveness, 9.
These poor ratings placed Nigeria under GIABA’s Enhanced Follow-up Process and the FATF International Cooperation Review Group (ICRG) process. GIABA is the Inter-Governmental Action Group against Money Laundering in West Africa.
Under the ICRG, Nigeria was given a one-year observation period to implement 84 recommended actions. The government established a national task force, amended key laws, launched a beneficial ownership register, and operationalised the National Sanctions Committee.
By 2023, FATF acknowledged that Nigeria had addressed 69 of the 84 actions, but the remaining 15 were considered strategically important, prompting the greylisting in February 2023.
FATF’s 19-Point Action Plan
Following its greylisting, FATF issued Nigeria a 19-point action plan to be completed within set timelines or risk blacklisting.
Key recommendations included implementing targeted financial sanctions in line with United Nations Security Council resolutions on terrorism and weapons of mass destruction.
Between 2023 and 2025, Nigeria submitted six progress reports demonstrating progress, and the FATF determined that the country has addressed all 19 action items.
FATF conducted an on-site visit in August 2025 and, at its October plenary, delisted Nigeria from the grey list — alongside Burkina Faso, Mozambique and South Africa.
Nigeria’s Reform Push
Presidential spokesperson Bayo Onanuga said Nigeria treated the FATF decision not as a setback but as “a call to action.”
In response, the government carried out sweeping legal and institutional reforms, including the enactment of the Money Laundering (Prevention and Prohibition) Act, 2022, the Terrorism (Prevention and Prohibition) Act, 2022, and the Proceeds of Crimes (Recovery and Management) Act, 2022.
It also launched the Beneficial Ownership Register, strengthened inter-agency coordination, and enhanced the capacity of law enforcement and regulatory institutions to detect and prosecute complex financial crimes.
Section 9 of the Terrorism Act 2022 established the Nigeria Sanctions Committee, comprising 16 government ministries, departments, and agencies and chaired by the Attorney-General of the Federation. The Nigerian Financial Intelligence Unit (NFIU) serves as its secretariat.
Persistent challenges
Despite the reforms, Nigeria still faces obstacles in fully implementing targeted financial sanctions. These include: delays from stakeholders, limited information on subjects linked to terrorism financing, name similarities with designated individuals, focus on freezing bank accounts rather than all economic resources, and limited use of technology and inadequate training, especially among Designated Non-Financial Businesses and Professions (DNFBPs).
Delisting
Announcing Nigeria’s removal from the grey list, President Bola Tinubu described it as “a major milestone in the nation’s journey towards economic reform, institutional integrity and global credibility.”
“The exit from the FATF grey list marks the beginning of a new chapter in the nation’s financial reform agenda as Nigeria will sustain the already institutionalised reforms, deepen institutional collaboration and continue to build a financial system that Nigerians and the world can trust.”.
Hafsat Bakari, the NFIU’s chief executive officer, called the development “a true test of our resilience and unwavering commitment to reform,” adding that it “signals to the world that Nigeria can meet and exceed global standards in financial integrity.”
She urged continued collaboration among stakeholders to sustain the progress.
Nigeria’s first FATF experience
Nigeria was first listed among FATF’s Non-Cooperative Countries and Territories in 2001.
The country responded by repealing the Money Laundering Decree of 1995, enacting the Money Laundering (Prohibition) Act 2003, and later establishing the Economic and Financial Crimes Commission (EFCC).
FATF delisted Nigeria in 2006.
Since then, Nigeria has continued to strengthen its legal framework, culminating in the enactment of the 2022 laws.
The country is scheduled for its third mutual evaluation exercise in 2027, marking the next major test of its commitment to financial transparency.