2 years, 37 reforms after: How Nigeria clawed its way off the FATF grey list

In the Financial Action Task Force’s (FATF) plenary in Paris on October 24, 2025, Nigeria’s name was struck from the infamous “grey list”, a roster of nations under heightened global scrutiny for lapses in combating money laundering and terrorist financing.

The decision, announced alongside the delistings of South Africa, Mozambique, and Burkina Faso, capped a gruelling two-year odyssey for Africa’s most populous nation. It was not a red-carpet triumph but a gritty validation of incremental, often unglamorous toil: late-night policy drafts, cross-agency skirmishes, and a quiet overhaul of a financial system long plagued by opacity and distrust.

The grey list, formally known as jurisdictions under increased monitoring, is no mere footnote in global finance. Since Nigeria’s addition in February 2023, it has cast a shadow over the economy, triggering enhanced due diligence from international banks, inflating transaction costs, and deterring investors wary of reputational risks.

The FATF’s mutual evaluation report that year had laid bare the deficiencies, including weak enforcement of anti-money laundering (AML) laws, fragmented intelligence sharing, and inadequate supervision of high-risk sectors like real estate and non-profits.

Nigeria’s rating on the FATF’s 40 core recommendations hovered at partial compliance for most, far from the “compliant” or “largely compliant” benchmarks required for trust. For everyday Nigerians, from diaspora remitters to Lagos traders wiring funds abroad, it meant delays, fees, and a nagging sense that their country’s financial plumbing was suspect.

Yet, the path off the list was no quick fix. It demanded a 19-point action plan, forged in partnership with FATF and the Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA).

By mid-2025, Nigeria had ticked nearly every box, achieving a compliant or largely compliant status on 37 of the 40 recommendations. This is a leap from the pre-listening era. The reforms were surgical and included legislative overhauls to plug loopholes, institutional tweaks for better coordination, and operational grit to turn policy into prosecutions.

At the heart of this was the enactment of two cornerstone laws in 2022, predating the grey listing but accelerated under President Bola Tinubu’s administration.

The Money Laundering (Prevention and Prohibition) Act and the Terrorism (Prevention and Prohibition) Act criminalised a broader swath of illicit activities, including undeclared cross-border transfers and proliferation financing, the funding of weapons of mass destruction.

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These weren’t abstract statutes. They armed prosecutors with sharper tools. By 2024, the Economic and Financial Crimes Commission (EFCC) reported a 40% uptick in convictions for financial crimes, many tied to drug trafficking rings in the Niger Delta and terrorist cells in the northeast.

But laws alone don’t deter launderers. Nigeria’s real legwork unfolded in the trenches of implementation. The Nigerian Financial Intelligence Unit (NFIU), under CEO Hafsat Abubakar Bakari, spearheaded the charge.

Bakari, a career intelligence operative with a no-nonsense demeanour, drove the operationalisation of a national Beneficial Ownership Register in 2024.

This digital ledger, hosted by the Corporate Affairs Commission, unmasks the true owners behind shell companies, which are a perennial haven for dirty money in oil-rich Nigeria.

“The register has exposed over 500 opaque entities since launch,” noted an NFIU report, enabling freezes on assets linked to $150 million in suspected proceeds. Bakari’s team also revamped risk assessments, mandating banks and telecoms to flag high-risk customers using AI-driven analytics. This was a shift from reactive policing to predictive vigilance.

Inter-agency friction was another battleground. Pre-2023, the NFIU, Central Bank of Nigeria (CBN), EFCC, and police often siloed intelligence, letting leads evaporate. Tinubu’s administration, upon assuming office in May 2023, activated the National Task Force on AML/CFT, chaired by Attorney-General Lateef Fagbemi.

This body, with alternate chairs Finance Minister Wale Edun and Interior Minister Olubunmi Tunji-Ojo, enforced weekly coordination meetings.

“We broke down walls,” Fagbemi later recounted in a June 2025 briefing, where shared platforms led to 200 joint operations, dismantling networks funnelling funds to Boko Haram affiliates.

Supervision extends to “designated non-financial businesses and professions” (DNFBPs), i.e., real estate agents, lawyers, and jewellers, who are often complicit in money laundering. Tunji-Ojo’s Interior Ministry rolled out mandatory training for 10,000 DNFBP operatives by Q1 2025, coupled with spot audits that resulted in $80 million in unreported cash hauls.

Edun’s Finance Ministry, meanwhile, integrated FATF standards into the CBN’s banking guidelines, imposing risk-based penalties that slashed non-compliance fines from 15% to under 5% of inspected firms.

Sector-specific pushes included the Ministry of Solid Minerals, under Dele Alake, auditing artisanal gold mines, hotspots for smuggling, and the Ministry of Aviation, led by Festus Keyamo, screening high-value cargo manifests for illicit flows.

Budgetary support for these upgrades flowed through the 2024 national budget’s digital transformation priorities, with President Tinubu approving a key collaboration between the NFIU and the National Information Technology Development Agency (NITDA) to lead ‘Project Exit‘, an initiative to overhaul the AML/CFT data management system and compliance platform, enhancing secure data-sharing and intelligence integration to meet FATF standards.

Defence Minister Mohammed Badaru Abubakar and Foreign Affairs Minister Yusuf Tuggar ensured military intelligence fed into financial probes, while the National Security Adviser coordinated sanctions enforcement via Fagbemi’s Nigeria Sanctions Committee.

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This wasn’t seamless. Critics, including civil society watchdogs, flagged early delays: the beneficial ownership register launched six months late in 2024 due to data privacy clashes. Prosecutions lagged in rural courts, overburdened by backlogs.

The timeline  

• 2023-2025: Tinubu’s administration, with figures like Hafsat Abubakar Bakari (NFIU), Wale Edun (Finance), and Lateef Fagbemi (Justice), scaled up enforcement, coordination, and additional reforms (e.g., Beneficial Ownership Register, DNFBP audits), achieving C/LC on 37 Recommendations.
• 2021: FATF’s Mutual Evaluation Report rated Nigeria Compliant/Largely Compliant on only 13 of 40 Recommendations, with 4 Non-Compliant and the rest Partially Compliant, prompting grey list risks.
• 2022: Nigeria passed the three key laws under then-President Muhammadu Buhari, addressing legal gaps but lacking full enforcement.
• February 2023: Grey list designation due to slow progress in implementation, triggering the 19-point action plan.

Unlocking flows in a fragile landscape

For Nigeria’s $440 billion economy, the delisting is less a fireworks display than a slow-release valve. Grey-list stigma had exacted a toll. Remittances, the lifeblood for 10 million households, faced 10-15% higher fees and delays, costing an estimated $2-3 billion annually in lost efficiency.

Foreign direct investment (FDI) inflows cratered to $2.3 billion in 2023 from $5.4 billion pre-listing, as banks “de-risked” by curtailing Nigerian exposures. Portfolio investors, spooked by compliance burdens, routed funds elsewhere. So, the Nigerian Stock Exchange saw 20% less foreign participation.

Post-delisting, projections paint a pragmatic uplift. Now, there’d be a possible 10-15% drop in remittance costs within six months, injecting $1-2 billion extra into consumer spending.

Think more market bustle in Kano or school fees in Enugu. The World Bank, in a July 2025 note, projects FDI rebounding to $4-5 billion by 2026, drawn by eased banking scrutiny and a “cleaner” risk profile.

Sectors like fintech and agribusiness stand to gain. Startups like Flutterwave, already licenced across 30+ jurisdictions, could slash cross-border settlement times from days to hours, fostering e-commerce growth.

Yet, realism tempers optimism. Inflation at 25% and insecurity persist.

Delisting won’t conjure jobs overnight. “It’s a foundation, not a fix,” cautions Lauren van Biljon of Allspring Global Investments, who pegs sustainable gains at 5-7% GDP uplift over three years if reforms stick.

For the average Nigerian, including the Lagos mechanic awaiting diaspora kin’s wire or the Abuja exporter battling forex queues, it means marginally lighter pockets and a whisper of stability. If sustained, it could narrow Africa’s $100 billion FDI gap, positioning Nigeria as a credible gateway.

Industry players speak

President Tinubu, in a State House statement, framed it starkly: “This is not just a technical accomplishment; it is a strategic victory for our economy and a renewed vote of confidence in Nigeria’s financial governance.” He singled out Bakari: “Without their dedication and sacrifice, today’s success could not have been achieved.”

FATF’s Madrazo, addressing the plenary, lauded the “political measures put in place,” adding, “Nigeria has demonstrated a stronger capacity to investigate and prosecute… helping focus resources to fight crimes that harm its community the most, such as drug trafficking and terrorist financing.” Her words echoed Edun’s closing remarks: “We will continue to work towards a safer and more secure Nigeria.”

On X, fintech titan Olugbenga “GB” Agboola, Flutterwave’s CEO, cut to the chase: “This delisting restores confidence, lowers remittance & x-border costs, and unlocks faster, cheaper payments… A strong signal that Nigeria is back on the path of trust.”

Paga founder Tayo Oviosu chimed in: “The best news today… will boost FDI and Western engagement.”

Analyst Akíntúndé Babátúndé reflected relatably: “It certainly will not change food prices… But it restores a bit of confidence.”

Skeptics like @Seyi__ questioned the fanfare: “APC folks celebrating… since Nigeria was added in 2023 when APC was governing.”

Yet, the chorus affirmed: this is progress earned in the shadows, a foothold for the long haul.