The federal government has introduced a new policy requiring financial institutions to report high-value transactions to tax authorities, in line with recent amendments to the Nigerian Tax Act.
Under the revised provisions, all banks, insurance companies, stockbrokers, and other financial institutions are mandated to submit quarterly returns to the Federal Inland Revenue Service (FIRS), which is set to be renamed the Nigeria Revenue Service by January 2026. As part of the implementation, financial institutions must report any individual transactions that cumulatively reach ₦25 million monthly, and ₦100 million for corporate entities.
The Act stipulates that: “Every person who has an obligation to deduct and remit tax under this Act or any other tax legislation shall render monthly returns to the appropriate tax authority.” It further specifies that financial institutions must submit quarterly reports—including details of new and existing customers whose monthly transactions meet or exceed the stated thresholds—regardless of whether the tax authority makes a formal request.
Previously, only transactions of ₦5 million and above were required to be flagged, primarily as a safeguard against illicit financial activity. However, the updated law is considered part of a broader strategy to improve anti-money laundering compliance and strengthen the regulatory framework around financial activities.
The move also aligns with Nigeria’s commitment to meeting global financial standards. In 2023, the country was placed on the grey list by the Financial Action Task Force (FATF) due to gaps in its systems for tackling money laundering and terrorism financing. Since then, authorities have accelerated reforms. Notably, in November 2024, the Nigerian Financial Intelligence Unit reported measurable progress in five of the FATF’s key areas of concern.
