Nigerian capital market operators have been directed to immediately tighten controls on transactions linked to North Korea and Iran, following a fresh directive from the Securities and Exchange Commission (SEC) as part of efforts to strengthen the country’s anti-money laundering and counter-terrorism financing framework.
The directive, contained in a circular issued to all capital market regulated entities (CMREs) on August 14, but dated June 19, 2026, requires firms to terminate specified financial relationships with institutions connected to North Korea and refuse certain transactions involving Iranian financial institutions.
The SEC said the measures were based on updated statements issued by the Financial Action Task Force (FATF) at its February 2026 plenary session, which highlighted jurisdictions presenting significant risks relating to money laundering, terrorist financing and proliferation financing.
According to the Commission, the directive was issued pursuant to the Investments and Securities Act, 2025, as well as the SEC AML/CFT Rules and Regulations. It requires regulated entities to immediately introduce enhanced restrictions, monitoring and due diligence measures for transactions associated with jurisdictions identified as high risk.
North Korea Faces Full Financial Restrictions
For the Democratic People’s Republic of Korea (DPRK), commonly known as North Korea, the SEC directed capital market operators to completely sever correspondent banking relationships with affected financial institutions.
Under the directive, firms are required to:
“Terminate all correspondent banking relationships with financial institutions incorporated in, owned, or controlled by persons or entities in the DPRK.
“Ensure that no subsidiaries, branches, or representative offices of DPRK financial institutions are established or maintained within their operations; and
“Restrict or, where appropriate, refuse business relationships and transactions involving DPRK nationals, entities, government bodies, or persons acting on their behalf.”
The measures effectively shut off formal correspondent banking and related capital market channels between Nigerian regulated entities and financial institutions linked to North Korea.
The SEC’s action means affected operators must review existing relationships and ensure that they do not maintain prohibited institutional arrangements or facilitate transactions involving designated DPRK-linked persons and entities.
SEC Restricts Dealings With Iranian Banks
The Commission adopted a similarly restrictive approach towards Iranian financial institutions, directing Nigerian capital market firms to refuse to process or facilitate transactions involving such institutions.
“Refuse to process or facilitate transactions with Iranian financial institutions and decline to establish or maintain subsidiaries, branches, or representative offices of such institutions in Nigeria,” the statement reads in part.
The SEC also directed regulated entities to refrain from establishing or operating branches, subsidiaries or representative offices in Iran where weaknesses in the country’s anti-money laundering, counter-terrorism financing and counter-proliferation financing framework could undermine their compliance obligations.
In practical terms, Nigerian capital market operators are expected to avoid institutional financial relationships that could expose them to heightened regulatory and compliance risks connected to Iranian financial institutions.
Myanmar Subject to Enhanced Due Diligence
Unlike North Korea and Iran, Myanmar was not placed under the same blanket restrictions. Instead, the SEC directed capital market operators to apply enhanced due diligence to business relationships and transactions connected to the country.
This means firms are expected to conduct closer scrutiny of Myanmar-related transactions, assess associated risks and apply additional monitoring where necessary before proceeding with business dealings.
The approach reflects differences in the risk classifications and compliance measures outlined in the FATF framework.
20 Jurisdictions Placed Under Enhanced Monitoring
Beyond the specific restrictions involving North Korea and Iran, the SEC has directed Nigerian capital market operators to strengthen their compliance controls for transactions involving jurisdictions placed under FATF’s increased monitoring regime.
The 20 jurisdictions listed by the Commission are Algeria, Angola, Bolivia, British Virgin Islands, Bulgaria, Cameroon, Côte d’Ivoire, Democratic Republic of the Congo, Haiti, Kenya, Lao PDR, Lebanon, Monaco, Namibia, Nepal, South Sudan, Syria, Venezuela, Vietnam and Yemen.
Jurisdictions placed under increased monitoring are generally countries that have committed to addressing strategic deficiencies in their anti-money laundering and counter-terrorism financing systems while remaining subject to enhanced international monitoring.
The classification does not necessarily mean that every transaction involving the listed jurisdictions is prohibited. Rather, financial institutions and other regulated entities are expected to apply stronger risk-based controls and pay closer attention to potentially suspicious activities.
Suspicious Transactions Must Be Reported
The SEC also reminded regulated entities of their obligation to report unusual or suspicious transactions to the Nigerian Financial Intelligence Unit (NFIU).
The Commission said the directive takes immediate effect, making compliance a requirement for all affected capital market operators.
Failure to comply, it warned, would amount to a violation of the Investments and Securities Act, 2025, and the SEC AML/CFT Rules and Regulations.
Possible regulatory sanctions include fines, suspension of operations and revocation of registration, depending on the nature and severity of the breach.
Directive Comes Amid Wider Sanctions Push
The latest SEC circular is part of a broader effort by Nigerian authorities to strengthen monitoring of financial activities and prevent the country’s financial system from being exploited for money laundering or terrorism financing.
Recently, the Commission also issued an urgent directive requiring capital market regulated entities to subscribe to the Nigeria Sanctions (NigSac) Alerts system following fresh terrorism-financing designations by Nigerian authorities.
Under that directive, operators were required to identify and freeze assets linked to designated individuals and entities, report suspicious transactions to the NFIU and prevent dealings with sanctioned persons.
The SEC similarly warned that failure to comply with sanctions-related directives could lead to fines, suspension of operations or revocation of registration under the Investments and Securities Act, 2025.
The latest measures therefore place additional compliance responsibilities on Nigerian capital market firms, requiring them to monitor international transactions more closely and ensure that their relationships do not expose the domestic financial system to prohibited or high-risk activities.
What the New Directive Means for Operators
The SEC’s decision to restrict financial dealings with North Korea and Iran comes as Nigeria continues to align its regulatory framework with international standards on anti-money laundering, counter-terrorism financing and counter-proliferation financing.
The measures also come against the backdrop of recent sanctions designations by the Nigeria Sanctions Committee involving individuals and Bureau de Change operators accused of facilitating terrorism financing linked to the Islamic State West Africa Province (ISWAP).
The designations were subsequently echoed by the United States Treasury, which sanctioned several Nigerian BDC operators and individuals over alleged ISIS-related financial facilitation.
Against this backdrop, the SEC’s latest circular signals a continued tightening of Nigeria’s financial-sector compliance regime.
For capital market operators, the directive means greater scrutiny of international counterparties, stricter transaction monitoring and increased responsibility to identify relationships that could present sanctions, money laundering or terrorism-financing risks.
The Commission’s position is clear: regulated entities must align their operations with FATF risk classifications and take immediate steps to prevent their platforms and financial channels from being used in activities capable of exposing Nigeria’s financial system to international sanctions and regulatory breaches.