Registration and Compliance in Nigeria
Introduction
If you own a business or run a non-profit organisation (NPO) in Nigeria, you might have heard of the Special Control Unit Against Money Laundering (SCUML).
SCUML is an essential arm of the Economic and Financial Crimes Commission (EFCC) that regulates designated non-financial businesses and professions (DNFBPs) and Non-Political Organisations (NPOs), ensuring they comply with anti-money laundering (AML) and counter-financing of terrorism (CFT) laws.
As part of the Money Laundering (Prevention and Prohibition) Act, 2022, SCUML ensures that businesses and NPOs in specific sectors follow proper KYC (Know Your Customer) procedures, report suspicious activities, and stay compliant with regulations. SCUML registration is mandatory for DNFBPs and NPOs.
Here's everything you need to know.
What is SCUML Registration and Why is it Important?
SCUML registration is a compliance requirement for businesses in Nigeria involved in specific non-financial sectors. SCUML's primary role is to regulate and supervise these businesses to prevent money laundering and the financing of terrorism. Failing to register with SCUML can have serious consequences for businesses, including:
1. Restrictions on corporate accounts: You may be unable to open or maintain a corporate account with a bank.
2. Sanctions and penalties: Businesses that fail to register or comply with SCUML regulations could face legal action and financial penalties.
Which Businesses Need to Register with SCUML?
The Money Laundering (Prevention and Prohibition) Act, 2022 stipulates that businesses in the following sectors must register with SCUML:
1. Dealers in Luxury Goods: Including jewellery, designer goods, and precious stones.
2. Dealers in Automobiles: Car dealerships and automobile traders.
3. Hotels and Hospitality Businesses: Hotels, motels, restaurants, and event centres.
4. Tax Consultants and Audit Firms: Individuals or firms offering tax and financial consulting services.
5. Casinos, Pools, Betting, and Lottery Businesses: Operators of gaming and gambling services.
6. Real Estate Businesses: Estate surveyors, valuers, agents, brokers, and developers.
7. Construction Companies: Builders, contractors, and related service providers.
8. Supermarkets and Retail Stores: Businesses selling goods in bulk or wholesale.
9. Non-Governmental Organisations (NGOs): Non-profits and charity organisations.
10. Consultants and Consulting Firms: Providers of business, technical, and management consulting services.
11. Dealers in Precious Metals: Including gold, silver, and other precious metals.
SCUML Regulation of Non-Profit Organisations (NPOs)
Non-Profit Organisations (NPOs) are also required to register with SCUML. Under the Money Laundering (Prevention and Prohibition) Act, 2022, must comply with anti-money laundering (AML) regulations to prevent misuse of funds for illicit activities.
Why SCUML Regulation is Important for NPOs: SCUML regulation ensures that NPOs:
1. Maintain transparency in financial operations.
2. Prevent misuse of charitable donations for money laundering or terrorism financing.
3. Build trust with donors, governments, and other stakeholders.
SCUML Compliance Requirements for NPOs:
1. Registration: NPOs receiving substantial foreign or domestic funding must register with SCUML.
2. KYC Compliance: Conduct due diligence to verify the identity of donors, partners, and beneficiaries.
3. Reporting Suspicious Activities: NPOs must report suspicious transactions to the Nigerian Financial Intelligence Unit (NFIU).
4. Ongoing Due Diligence: Regular checks on donations, particularly international funding, are required to ensure legitimacy. NPOs must maintain auditable financial records and comply with all relevant reporting requirements to stay compliant with SCUML and prevent misuse of their funds.
What Happens if You Don't Register with SCUML?
Failing to register your business with SCUML can lead to significant problems, including:
1. Inability to open a corporate bank account: Banks require SCUML registration for businesses to operate corporate accounts.
2. Restricted financial transactions: If you are found non-compliant, your business may face restrictions on accessing or moving funds.
3. Legal sanctions: Businesses that don't adhere to SCUML regulations could face penalties or legal action.
To avoid these issues, it is crucial to register your business with SCUML and comply with all reporting and regulatory obligations.
How to Register with SCUML:
To apply for registration visit the official website of Scuml, you will be required to provide the following information and documents (General):
1. CAC Registration Documents: Submit your Certificate of Incorporation, Memorandum, and Articles of Association, Status Report or CAC co2, co7 for old companies.
2. Tax Identification Number (TIN): Provide a printout or Tax Clearance Certificate (TCC).
3. Bank Verification Number (BVN): Of at least one director or trustee.
4. National Identification Number (NIN): Of at least one director or trustee.
5. Valid Identification: Government-issued ID of at least one director or trustee.
6. Bank Account Details: Account number and name of the business.
7. Phone Number and Email Address: Contact details of the business and its representatives.
8. Business Information: A description of the business and its operations.
9. Proficiency Certificate when required
Note: If your business has yet to open a corporate bank account, you can use the account details of a director, proprietor or trustee for the registration process.
Compliance, Reporting and Due Diligence
Once your business is registered with SCUML, you are required to:
1. Conduct customer due diligence (CDD) to verify the identity of your customers and the beneficial owners of the business.
2. Report suspicious activities: Any transactions that seem unusual or out of the ordinary must be reported to the Nigerian Financial Intelligence Unit (NFIU).
3. File regular reports: Businesses must file reports on certain transactions exceeding thresholds, such as ₦5,000,000 for individuals, ₦10,000,000 for corporate entities.
4. Comply with ongoing training: SCUML requires that businesses regularly train staff to identify and report money laundering activities.
Penalties for Non-Compliance with SCUML
Non-compliance with the Money Laundering (Prevention and Prohibition) Act, 2022 and SCUML guidelines can result in:
1. Fines: A fine of up to ₦250,000 for each day the business continues non-compliance.
2. Suspension or revocation of license: Licensing authorities can suspend or revoke your business's license if you fail to comply with SCUML's requirements.
3. Legal sanctions: Severe violations may result in criminal prosecution.
Why SCUML Registration is Important
SCUML registration is not just about meeting legal requirements; it helps build trust with your customers, partners, and financial institutions. It ensures that your business is part of the fight against money laundering and terrorism financing, contributing to a safer and more transparent business environment in Nigeria.
Conclusion
If your business falls into one of the categories listed above, registering with SCUML is not optional; it is a legal requirement. Non-compliance could restrict your business's ability to operate smoothly, from opening a corporate bank account to facing potential legal penalties. It's important to note that SCUML registration is free.
For SCUML registration, regulatory compliance, or any questions, feel free to contact us at 09029926107.
This blog post is intended for general informational purposes only.