Nigeria's Central Bank Overhauls Cash Policy Amid Money Laundering Concerns

Nigeria's Central Bank has announced sweeping changes to cash deposit and withdrawal policies, removing long-standing limits while introducing new measures to combat money laundering and authorized push payment fraud. The policy overhaul, detailed in a circular signed by Director of Financial Policy and Regulation Dr. Rita Sike, will take effect on January 1, 2026, fundamentally reshaping how Nigerians interact with physical currency.

The revisions come as regulators grapple with the dual challenges of reducing the economy's heavy reliance on cash while strengthening safeguards against financial crimes. The central bank's move to eliminate deposit limits and substantially increase withdrawal thresholds marks a significant departure from policies implemented over the past decade to encourage electronic payments.

Background and Context

Nigeria's cash management policies have evolved considerably since the central bank first began imposing restrictions to reduce the costs and risks associated with physical currency. Previous measures, including deposit limits and withdrawal caps, were designed to accelerate adoption of electronic payment channels and address security concerns. However, according to the CBN's latest circular, these policies required streamlining to "reflect present-day realities" amid changing economic conditions.

The policy shift occurs against a backdrop of persistent challenges with money laundering in Nigeria's financial system. The country has faced ongoing scrutiny from international financial watchdogs regarding its anti-money laundering and counter-terrorist financing frameworks. The removal of previous exemptions for embassies, diplomatic missions, and aid-donor agencies suggests a move toward more uniform application of financial regulations.

Key Figures and Entities

The policy changes were authorized by Dr. Rita Sike, Director of the Financial Policy and Regulation Department at Nigeria's Central Bank, whose signature appears on both the cash policy circular and draft guidelines for addressing authorized push payment fraud. The directives apply to all Deposit Money Banks, Other Financial Institutions, and the general public, with specific exemptions for revenue-generating accounts of federal, state, and local governments, as well as microfinance banks and primary mortgage institutions.

The Nigeria Inter-Bank Settlement System (NIBSS) emerges as a key player in the new fraud prevention framework, with the CBN empowered to direct the settlement system to withhold fraudulent transactions. The policy also establishes clear responsibilities for financial institutions in investigating and resolving customer complaints related to authorized push payment fraud.

Legal and Financial Mechanisms

The revised policy introduces a new fee structure for cash withdrawals exceeding the increased weekly limits of N500,000 for individuals and N5 million for corporates. Excess withdrawals will incur fees of 3% for individuals and 5% for corporate customers, with revenue split 40% to the CBN and 60% to the financial institution. Banks must create separate accounts to warehouse these processing charges and submit monthly returns on cash transactions above specified limits to CBN supervisory departments.

Simultaneously, the central bank has released draft guidelines addressing authorized push payment (APP) fraud, mandating a 14-day resolution period for customer complaints. The framework requires customers to report fraud incidents within 72 hours through designated channels, with financial institutions obligated to acknowledge reports within 24 hours and provide unique case reference numbers. Reimbursement will be denied for customers who fail to report within the stipulated timeframe without reasonable justification, though exceptions may apply for circumstances beyond customer control.

International Implications and Policy Response

The policy changes signal Nigeria's ongoing efforts to align its financial regulatory framework with international standards while addressing domestic challenges. The removal of special exemptions for diplomatic entities and the introduction of stricter APP fraud measures reflect the country's response to global pressure to strengthen anti-money laundering controls. The new reporting requirements and fee structures aim to create a more transparent financial system while managing the costs associated with cash handling.

Financial inclusion advocates have raised concerns that the new withdrawal limits, while increased from previous caps, may still pose challenges for businesses and individuals operating in Nigeria's largely informal economy. The CBN has invited public comments on the draft APP fraud guidelines, indicating a willingness to refine the approach based on stakeholder feedback before final implementation.

Sources

This report draws on the Central Bank of Nigeria's circular titled "Revised Cash-Related Policies" signed by Dr. Rita Sike, Director of Financial Policy and Regulation, along with draft guidelines addressing authorized push payment fraud. Information also incorporates statements from CBN officials and previous reporting on Nigeria's financial regulatory framework between 2019 and 2024.