What Nigerian FIs Need to Know About EDD in 2025

Let’s be honest. Enhanced Due Diligence (EDD) has never been the easiest thing for banks and fintechs to get right, and that’s normal, considering the delicacy and thoroughness required to complete the high-risk process correctly. For years, compliance teams have approached EDD like ticking off a regulatory checklist, focusing more on filling out forms, demanding piles of documents, and carrying out routine checks – sometimes outdated.

But in 2025, EDD is not business as usual.

If you’re a Nigerian financial institution, you’re in a year where regulators are more watchful, fraudsters are more creative, and customers have far less patience for clunky compliance processes. That means your approach to EDD has to be intentional and built for the realities of today’s financial landscape.

So, what exactly should Nigerian FIs be paying attention to in 2025? Let’s dig in.

1. Regulators are Raising the Bar

According to the United Nations Office on Drugs and Crime (UNODC), 2-5% of the world’s Gross Domestic Product (GDP), amounting to $2 to $5.5 trillion, is laundered annually. Stats such as this explain why the Central Bank of Nigeria (CBN) and the Nigerian Financial Intelligence Unit (NFIU) have both signalled that they’re not going soft on AML/CFT oversight this year.

CBN’s revised “AML/CFT/CPF guidelines” already pushed banks and fintechs to deepen risk-based approaches, but enforcement is what’s changing. For example, in 2024, several banks were fined for weak customer due diligence controls, especially around politically exposed persons (PEPs) and high-value cross-border transactions (CBN reports).

The implication is clear! EDD in 2025 is a survival requirement. If your Financial Institution is still treating EDD as a side process instead of an integral compliance function, you’re setting yourself up for sanctions, reputational damage, and in extreme cases, license withdrawal.

2. Politically Exposed Persons (PEPs) Will Be Under Closer Scrutiny

Nigeria’s political and business landscape makes PEP screening particularly complex. This is mainly due to networks of influence in Nigeria, blurring the lines between business and politics. Last year, investigative reports revealed how shell companies linked to politically exposed persons were funnelling millions through offshore accounts.

That’s exactly the type of case regulators expect FIs to catch through robust EDD.

In 2025, Nigerian FIs need to move beyond just flagging someone as a PEP. The real question is: how do you continuously monitor their activities?

It’s no longer enough to identify risk at onboarding. Therefore, ongoing transaction monitoring looking for unusual flows, sudden spikes, or opaque counterparties must be part of the process. That’s where tools like Sigma’s Risk Monitoring module become indispensable, because manual checks simply can’t keep pace with transaction volumes anymore.

3. Cross-Border Transactions are the New Red Flags

Another big shift in 2025 has been the rise of complex cross-border payments. Nigerian fintechs have made it easier for businesses and individuals to move money in and out of the country, but that also opens new channels for illicit flows.

This year, Nigerian FIs are expected to apply stricter EDD measures on foreign counterparties and correspondent banks. It’s not just about requesting SWIFT details, but also genuinely understanding the beneficial owners behind counterparties and the purpose of those funds. A missed gap here doesn’t just attract fines; it exposes your institution to being used as a laundromat for organised crime and terrorism financing.

4. Technology and AI are now Essential

The reality is that no compliance team, no matter how skilled, can manually handle the volume of customer data, transaction monitoring, and open-source intelligence (OSINT) checks that EDD now requires. You need technology. And not just any technology, AI-driven systems that can spot risks hidden in plain sight.

For instance, some forward-looking banks like Opay are already using machine learning to analyse patterns in customer behaviour, automatically flagging when a transaction deviates from the expected risk profile. Fintechs are leveraging AI to pull in OSINT data from news sources, sanction lists, and even adverse media reports in real-time. This is where a solution like Pastel’s Sigma changes the game. By integrating seamlessly with core banking systems, it allows FIs to set up custom rules, run continuous monitoring, and adapt as threats evolve, all without slowing down customer onboarding.

The real win here isn’t just compliance, but efficiency.

5. Data Quality and Documentation Are Non-Negotiable

Inconsistent or incomplete records have already led to fines against banks in markets like South Africa and Kenya. Nigerian regulators are following suit. Every EDD decision in 2025 must be backed by documentation that is clear, retrievable, and auditable. The days when “we thought it was fine” could hold up in a review are over.

6. Customers are Paying Closer Attention

One overlooked reality about EDD is that it’s no longer just a “compliance back-office thing.” Customers are starting to care about how FIs handle risk. Customer behaviour has shown that banking customers are more likely to trust institutions that can clearly demonstrate strong security and compliance practices.

This connotes that in an environment where fraud and scams dominate headlines, being able to show your customers that you protect them through strong EDD practices is actually a selling point.

7. Collaboration is Non-Negotiable

Fraud and financial crime don’t stop at the border of one institution. In fact, many of Nigeria’s largest fraud rings in recent years succeeded because banks and fintechs were operating in silos. NIBSS reported a 196% increase in fraud losses from N17.67 billion in 2023 to N52.26 billion in 2024, with system vulnerabilities in certain banks and a shift in fraud tactics cited as key drivers.

2025 has shown the need for more industry-wide collaboration, ranging from shared watchlists to data-sharing agreements and public-private partnerships. For FIs, the takeaway is simple: EDD is no longer something you can do alone. The institutions that plug into wider networks and leverage collective intelligence will be miles ahead of those who don’t.

In Conclusion

EDD in 2025 isn’t just about ticking boxes or keeping regulators off your back. It’s about recognising that financial crime has evolved, and so must our defences. Nigerian FIs need to adopt a mindset where EDD is continuous, technology-driven, and customer-conscious.

If you’re leading compliance in a Nigerian bank or fintech, this year is your chance to step up:

• Treat PEP and cross-border monitoring as living processes, not one-time checks.
• Invest in AI-driven tools like Sigma to scale your risk management without burning out your team.
• Join industry collaborations that give you access to richer data and insights.

Because at the end of the day, the question regulators, customers, and stakeholders are asking is the same: Can your institution be trusted to see what others miss?

With the right approach to EDD in 2025, the answer can be a confident yes.