The Securities and Exchange Commission, SEC, has ordered Nigerian capital market operators to cut financial ties with North Korean institutions and reject transactions involving Iranian financial institutions, in a move aimed at shielding the country’s financial system from money laundering and terrorism financing risks.
The directive applies to all capital market regulated entities in Nigeria and takes immediate effect. It was contained in a circular released by the commission on August 14, 2026, although the document was dated June 19.
The SEC said the measures are designed to bring Nigeria’s capital market in line with updated risk assessments issued by the Financial Action Task Force, FATF, following its February 2026 plenary. Brandspur Banking News Desk reports that the new rules could require firms to tighten how they screen customers, counterparties and transactions linked to high risk jurisdictions.
For North Korea, the commission ordered Nigerian capital market firms to completely sever correspondent banking relationships with financial institutions incorporated in, owned or controlled by North Korean persons or entities.
The firms must also ensure that North Korean financial institutions do not establish or maintain subsidiaries, branches or representative offices within their operations in Nigeria.
Beyond institutional relationships, operators have been directed to restrict, or where necessary refuse, business dealings involving North Korean nationals, entities, government bodies and persons acting on their behalf.
The implications are significant for firms operating in Nigeria’s financial markets. Any operator with a potential North Korean connection will now have to scrutinise the relationship carefully and ensure it does not fall foul of the new restrictions.
The SEC has also imposed restrictions on dealings with Iranian financial institutions. Capital market operators have been instructed to refuse transactions with such institutions and to decline requests to establish or maintain their branches, subsidiaries or representative offices in Nigeria.
The commission further directed firms not to establish or operate branches or subsidiaries in Iran where weaknesses in the country’s anti money laundering, counter terrorism financing and counter proliferation financing framework could create compliance risks.
Myanmar has been treated differently. Rather than imposing an outright ban, the SEC directed Nigerian operators to apply enhanced due diligence to business relationships and transactions involving the country.
The commission also instructed firms to strengthen controls when dealing with 20 jurisdictions placed under increased monitoring by the FATF. The list includes Algeria, Angola, Bolivia, the British Virgin Islands, Bulgaria, Cameroon, Côte d’Ivoire, the Democratic Republic of the Congo, Haiti, Kenya, Lao PDR, Lebanon, Monaco, Namibia, Nepal, South Sudan, Syria, Venezuela, Vietnam and Yemen.
For businesses and investors using Nigeria’s regulated capital market, the directive means transactions involving these jurisdictions may face closer scrutiny. Firms will have to pay greater attention to the identity of counterparties, the nature of transactions and any warning signs that could indicate illicit financial activity.
The SEC also warned that unusual or suspicious transactions must be reported promptly to the Nigerian Financial Intelligence Unit, NFIU.
Failure to comply could have serious consequences for regulated firms. The commission said breaches of the directive would violate the Investments and Securities Act, 2025, as well as its Anti Money Laundering and Counter Terrorism Financing Rules and Regulations.
Sanctions may include fines, suspension of operations or revocation of a firm’s registration, putting additional pressure on operators to ensure that their compliance systems are working effectively.
The latest order is part of a broader effort by Nigerian authorities to strengthen the country’s financial safeguards against money laundering, terrorism financing and proliferation financing.
It follows an earlier SEC directive requiring capital market operators to subscribe to the Nigeria Sanctions, NigSac, Alerts system after fresh terrorism financing designations by Nigerian authorities.
Under that framework, regulated entities are expected to identify and freeze assets linked to designated individuals and organisations, prevent prohibited dealings and report suspicious transactions to the appropriate authorities.
Taken together, the measures signal a tougher compliance environment for Nigeria’s capital market. For operators, the message from the SEC is clear: international financial relationships must now be subjected to closer scrutiny, particularly where they could expose Nigerian institutions to sanctions, illicit finance or regulatory risks.
