Compliance Technology

Politically exposed persons — PEP requirements in Nigeria

Politically exposed persons (PEPs) are individuals who hold or have held prominent public positions, along with their close associates and family members. Nigerian financial institutions are required to identify PEPs, apply enhanced due diligence, and obtain senior management approval before establishing or continuing a business relationship. The CBN issued detailed PEP Guidance Notes in June 2023.

Who qualifies as a PEP in Nigeria?

The MLPPA 2022 and CBN PEP Guidance Notes (June 2023) define PEPs as individuals who are or have been entrusted with a prominent public function. The definition covers three categories:

CategoryExamples
Domestic PEPs — Nigerian nationals in prominent public rolesPresident, Vice President, state governors, senators, House of Representatives members, federal ministers, CBN Governor, heads of government agencies, military chiefs, ambassadors, senior judges
Foreign PEPs — nationals of other countries in prominent public rolesHeads of state and government, senior politicians, senior military officers, senior executives of state-owned enterprises, senior international organisation officials
PEP associates — close connections of a PEPImmediate family members (spouse, children, parents, siblings), known close business associates, and entities where the PEP holds a beneficial ownership interest

Once identified as a PEP, a customer retains that status for a minimum of 12 months after leaving the prominent public position. Institutions must continue applying PEP-level monitoring and review during this cooling-off period.

CBN PEP Guidance Notes — June 2023

The CBN issued PEP-specific Guidance Notes in June 2023 to address a gap in practice: many Nigerian institutions were either failing to identify domestic PEPs (focusing only on foreign PEPs) or were applying blanket account closure policies rather than risk-based enhanced due diligence. The guidance notes clarified that:

  • Domestic PEPs must receive the same level of scrutiny as foreign PEPs — the CBN explicitly rejected a lighter-touch approach for Nigerian politicians and officials
  • PEP status alone does not justify refusing to open or maintain an account — refusal must be based on the institution's risk assessment, not PEP classification alone
  • Senior management approval is required before establishing a relationship with a PEP, and periodically during the relationship
  • The source of wealth and source of funds for PEP accounts must be verified and documented

Enhanced due diligence (EDD) for PEPs

All PEPs are classified as high-risk customers and require enhanced due diligence. EDD for PEPs includes:

  • Verification of source of wealth — how the PEP accumulated their overall net worth
  • Verification of source of funds — the origin of the specific funds being deposited or transacted
  • Senior management sign-off before account opening and at annual review
  • Enhanced ongoing transaction monitoring — more frequent review of alerts, lower thresholds for escalation
  • Adverse media screening — ongoing review of news and public records for negative information
  • Annual KYC refresh — PEP relationships must be reviewed at least annually

PEP screening in automated systems

The CBN 2026 automated AML baseline standards require automated PEP screening as one of the 12 mandatory capabilities. This means screening customer names against PEP databases at onboarding, when customer data changes, and when PEP lists are updated — not just at the point of initial account opening. A customer who becomes a PEP after onboarding (e.g. is appointed to a government position) must be identified through ongoing screening and escalated to PEP status with appropriate EDD applied.

Frequently asked questions

Must a Nigerian bank refuse to open an account for a PEP?
No. Nigerian institutions are not required to refuse accounts to PEPs. The CBN Guidance Notes (June 2023) explicitly state that PEP classification alone is not sufficient grounds for refusal. The institution must conduct a risk-based assessment. If the risk can be managed through EDD and enhanced monitoring, the relationship can proceed with senior management approval. Blanket refusal of all PEPs is not compliant with the CBN's risk-based approach guidance.
When does PEP status end after a person leaves public office?
The CBN guidance requires institutions to apply PEP-level treatment for at least 12 months after the person leaves the prominent public position. After this cooling-off period, the institution conducts a risk assessment to determine whether continued enhanced monitoring is warranted. In practice, many institutions continue heightened monitoring for longer, particularly for senior figures who retain significant influence or public profile after leaving office.
Does the PEP requirement apply to fintechs and digital banks?
Yes. All CBN-licensed institutions are required to identify and apply EDD to PEP customers. For digital banks and fintechs operating without branch networks, automated PEP screening at onboarding is essential — there is no relationship manager to identify a PEP through a face-to-face conversation. The CBN 2026 automated AML standards require automated PEP screening as a mandatory system capability.

Free resource for Nigerian compliance teams

The NFIU STR/CTR Rejection Codes Reference Guide — every common goAML rejection explained with root causes and fixes.

Download the free guide