Money laundering and terrorist financing are major threats to national and global security, and Nigeria is no exception. Under Section 18(2) of the Money Laundering (Prevention and Prohibition) Act, 2022 (MLPPA), money laundering is defined as the act of concealing, disguising, converting, transferring, or controlling funds or property, knowing they are proceeds of an unlawful act. Terrorist financing on the other hand, refers to the provision of funds or financial support to individuals or groups to enable them commit acts of terrorism.

Financial institutions have long been the primary focus of anti-money laundering and counter-terrorism financing (AML/CFT) efforts by governments, it is however now widely recognized that several other sectors are also at risk of being exploited by illicit financial actors. These sectors include professionals, business support services and businesses that are not primarily engaged in financial services but are vulnerable to being used as channels for illicit financial flows. These businesses and professions, often referred to as Designated Non-Financial Businesses and Professions (DNFBPs), include lawyers, real estate agents, accountants, casinos, non-governmental organizations (NGOs), among others. Section 30 of the MLPPA defines DNFBPs as dealers in jewellery, cars and luxury goods, precious stones and metals, chartered accountants, audit firms, tax consultants, clearing and settlement companies, legal practitioners, hotels, casinos, supermarkets, dealers in real estate, audit firms, etc. and such other businesses as the Federal Ministry of Industry, Trade and Investment or appropriate regulatory authorities may from time to time designate.

To ensure effective regulation and oversight of these sectors, the Nigerian Special Control Unit on Money Laundering (SCUML) was established. SCUML operates as a unit under the Nigerian Economic and Financial Crimes Commission (EFCC) and is responsible for registering, monitoring, and supervising DNFBPs in accordance with the MLPPA, the Terrorism (Prevention and Prohibition) Act 2022, and relevant SCUML Regulations.

Legal and Regulatory Framework for AML/CFT in Designated Non-Financial Institutions

In line with international standards and global best practices, Nigeria has established a comprehensive legal and regulatory framework to address money laundering and terrorist financing within DNFBPs. This framework is designed to guide, regulate, and enforce compliance among DNFBPs. Key laws and regulations governing AML/CFT compliance in DNFBPs include:

The Money Laundering (Prevention and Prohibition) Act, 2022 (MLPPA): The MLPPA repealed the Money Laundering (Prohibition) Act, 2011 and introduced a more robust legal and institutional framework for combating money laundering and related offences in Nigeria. The Act establishes the SCUML as the regulatory authority responsible for supervising DNFBPs and ensuring their compliance with AML/CFT obligations. The Act mandates DNFBPs to implement internal controls, procedures, and policies to mitigate money laundering and terrorism financing risks, particularly in relation to new products or emerging technologies.

The Terrorism (Prevention and Prohibition) Act, 2022 (TPPA): This Act repealed the Terrorism (Prevention) Act, 2011. It provides for a unified and comprehensive framework for the detection, prevention, prohibition, and prosecution of acts of terrorism, terrorism financing, proliferation, and financing the proliferation of weapons of mass destruction in Nigeria. It complements the MLPPA and emphasizes customer due diligence and the reporting of suspicious transactions related to terrorism financing. The TPPA incorporated the Nigeria Sanctions Committee (NSC), tasked with identifying and publishing the names of individuals and entities linked to terrorism and proliferation financing in Nigeria. It mandates all DNFBPs to among other things, identify and freeze all funds, assets, and other economic resources belonging to listed individuals or entities, report such actions to the NSC, and file Suspicious Transaction Reports with the Nigerian Financial Intelligence Unit (NFIU) for further investigation. To support compliance, the NSC launched the Nigeria Sanctions List Alert System (NigSac), which provides real-time alerts to DNFBPs on designated persons and entities. Subscription to this alert system is considered a critical obligation under the TPPA for all DNFBPs.

Nigerian Financial Intelligence Unit Act, 2018: This Act established The Nigerian Financial Intelligence Unit (NFIU) as the central national agency responsible for receiving and analysing disclosures from reporting organizations, to produce financial intelligence to other agencies combating money laundering, terrorism financing, and other financial crimes. The NFIU is empowered to request financial information from a broad range of institutions and to issue guidance and directives to these institutions and to conduct on-site inspections to ensure compliance with anti-money laundering and counter-terrorist financing regulations.

The Economic and Financial Crimes Commission (Establishment) Act, 2004: This Act establishes the Economic and Financial Crimes Commission (EFCC) as Nigeria’s principal agency for investigating and prosecuting financial crimes, including money laundering. The EFCC works in collaboration with the NFIU and other regulatory bodies to enforce anti-money laundering, and prosecute offenders.

Economic and Financial Crimes Commission (Anti-Money Laundering, Combating the Financing of Terrorism and Countering the Proliferation Financing of Weapons of Mass Destruction for Designated Non-Financial Businesses and Professions and Other Related Matters) Regulations, 2024: These Regulations cover the relevant provisions of the MLPPA, TPPA and any other relevant laws or regulations that provides for AML/CFT and Countering Proliferation Financing of Weapons of Mass Destruction (CPF), the conduct of Customer Due Diligence, monitoring and filing of suspicious transactions reports to the NFIU, etc. The Regulations designate the SCUML as the body responsible for the registration, monitoring and supervision of DNFBPs’ compliance with AML/CFT/CPF obligations. The Regulations mandate DNFBPs to implement risk-based AML/CFT/CPF programs proportionate to their business operations and ensure clients and customers are integrated into these systems., amongst other obligations.

SCUML Regulations 2013 (as amended by SCUML Regulations 2016): This is also known as the Federal Ministry of Industry, Trade and Investment (Designation of Non-Financial Institutions and Other Related Matters) Regulations, 2013. It was issued pursuant to the Money Laundering (Prohibition) Act, 2011. Despite the repeal of the enabling Act, the Regulations remain in force as subsidiary legislation. The Regulations designate specific businesses and professions as Non-Financial Institutions (NFIs) and impose key AML/CFT obligations, including customer due diligence, the establishment of internal compliance programs, and reporting requirements. The Regulations also established SCUML as the body responsible for registering, supervising, and monitoring DNFBPs. It should be noted that under this regulation, the SCUML was initially established as a department under the Federal Ministry of Industry, Trade and Investment. SCUML has now been re-established under the EFCC by the MLPPA, reflecting a more enforcement-driven approach.

Additionally, Nigeria actively collaborates with international bodies such as the Financial Action Task Force (FATF), the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), and the Egmont Group of Financial Intelligence Units to enhance and align its AML/CTF framework with global standards.

Statutory Obligations of Designated Non-Financial Businesses and Professions Under the AML/CFT Framework

Under Nigeria’s AML regime, DNFBPs are legally required to comply with several statutory obligations aimed at preventing money laundering, terrorist financing, and proliferation financing. DNFPBs are enjoined to comply with these obligations to avoid regulatory sanctions, including fines, penalties, or business closure. The key obligations imposed on DNFBPs include:

1. Registration: To register with the SCUML under the relevant category and be issued with registration certificate.
2. Customer Due Diligence: DNFBPs must implement risk-based customer due diligence measures. This involves verifying customers’ identities, identifying beneficial owners, and assessing risks associated with each customer.
3. Reporting Suspicious Transactions: DNFBPs are required to submit Suspicious Transaction Reports (STRs) to the NFIU when they detect transactions that may be linked to money laundering, terrorism financing, or other financial crimes within 24 hours after the said transaction.
4. Reporting International Transfer of Funds and Cash: DNFBPs are required to report in writing a transfer to or from a foreign country of funds or securities by a person or body corporate including a money service business of a sum exceeding US$10,000 or its equivalent to the NFIU within one day from the date of the transaction.
5. Record Keeping: DNFBPs must maintain records of transactions, customer identification data, and supporting documents for at least five years after the completion of the transaction. These records must be accessible for regulatory review.
6. Internal Procedures, Policies and Controls Compliance Programs: DNFBPs must establish internal AML/CFT compliance programs, including the development of policies, procedures, and controls to prevent financial crimes. Regular staff training and independent audits are also encouraged as they are essential to ensure ongoing compliance.
7. Risk Assessment: DNFBPs are mandated to undertake risk assessments for new products, business practices and technologies before launching them to identify and manage money laundering risks. DNFBPs must then take appropriate measures to manage and mitigate any identified risks.
8. Politically Exposed Persons (PEPs): DNFBPs must conduct Enhanced Due Diligence (EDD) on PEPs, requiring additional scrutiny of transactions, ongoing monitoring, and obtaining senior management approval before establishing or maintaining a business relationship.
9. Currency Transactions Reports (CTRs): DNFBPs are mandated to make Currency Transactions Reports to SCUML of any single transaction, lodgement or transfer of funds in excess of N5,000,000 or its equivalent in the case of an individual or N10,000,000 in the of body corporate within 7 days from the date of transaction.
10. Cash Based Transactions Reports (CBTRs): DNFBPs are required to make Cash Based Transactions Reports to SCUML on any single transaction in excess of $1,000 or its equivalent within 7 days from the date of transaction.

Conclusion

Designated Non-Financial Businesses and Professions (DNFBPs) play a critical role in Nigeria’s fight against money laundering and terrorism financing. Their statutory obligations under AML/CFT regulations include registration, record-keeping, reporting suspicious activities, conducting customer due diligence, amongst others. Non-compliance can result in various sanctions, including fines, suspension, revocation or withdrawal of operating license by the appropriate licensing authority. As DNFBPs in Nigeria continue to grow and engage with global markets, it is it is imperative they remain up to date with regulatory developments and adopt effective compliance practices. By doing so, they can mitigate legal and reputational risks, prevent financial crimes, and contribute to the country’s broader efforts to combat financial crimes.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

On 26^th June 2025, the President of the Federal Republic of Nigeria signed four landmark tax reform bills into law, marking a significant shift in the nation’s tax landscape. The laws are the Nigeria Tax Act (Ease of Doing Business), the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act. Once operational, these laws are expected to simplify tax administration, improve compliance, enhance revenue generation, and foster a more business-friendly environment. The implementation of the newly signed four tax fiscal reform laws will commence by 1^st January 2026.

This article outlines some notable highlights of the Acts that individuals and businesses should be aware of.

Key Highlights of Nigeria’s Newly Signed Tax Reform Acts

Some of the highlights of the newly signed Tax Reform Acts include:

1. Personal Income Tax Relief: Low-income earners earning NGN800,000 or less per annum are completely exempted from personal income tax under the Nigeria Tax Act (NTA). 25% personal income tax applies only to individuals earning above N50 million annually. The Act also increases the tax exemption threshold for compensation for loss of employment or injury from NGN10million to NGN50million.
2. VAT Exemptions on Essential Goods and Services: Essential goods and services including food items, medical equipment and services, pharmaceuticals, tuition fees, electricity, educational books and materials, exports (excluding oil and gas exports) etc., are exempted from VAT. The impact of this is that businesses selling these goods and services can recover their VAT costs, despite the zero rate.
3. Establishment of Nigeria Revenue Service (NRS): The Federal Inland Revenue Service (FIRS), the agency established to regulate the collection of tax in Nigeria has now become Nigeria Revenue Service (NRS). The Nigeria Revenue Service (Establishment) Act repeals the current Federal Inland Revenue Service Act and defines the NRS’ expanded mandate, including non-tax revenue collection of other agencies such as the Nigeria Customs Service, Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Nigeria Ports Authority (NPA), among others. The Bill also lays out transparency, accountability, and efficiency mechanisms. The Acts also provide that State Internal Revenue Services (SIRS) will be autonomous in the running of their affairs.
4. Increase in Tax Exemption Threshold for Small Companies: Prior to the assent of the Acts, only small companies with an annual gross turnover of less than N25m were exempted from tax. Under the new Acts, there is an increase in the tax exemption threshold for small companies from annual gross turnover of N25m to N100m. Thus, small companies with gross turnover of N100m and below and total fixed assets not exceeding NGN250million are now exempt from Companies Income Tax (CIT), Capital Gains Tax (CGT) and the newly introduced Development levy.
5. Increased Capital Gains Tax (CGT) rate – The NTA increases the CGT rate from 10% to 30% for companies, aligning the CGT and CIT. For individuals, capital gains will be taxed at the applicable income tax rate based on the progressive tax band of the individual.
6. Introduction of Development Levy – Nigerian companies except small companies will pay a “Development Levy” at 4% of their assessable profits. The Development Levy consolidates the Tertiary Education Tax (TET), Information Technology Levy (IT), the National Agency for Science and Engineering Infrastructure (NASENI) levy and the Police Trust Fund (PTF) levy.
7. Introduction of Economic Development Incentive – The Acts replace the “pioneer” tax holiday with a new Economic Development Incentive (EDI), offering a 5% annual tax credit for 5 years on qualifying capital expenses made by eligible companies within 5 years from production start. Unused credits can be carried forward for another 5 years, after which they expire.
8. Minimum Effective Tax Rate (ETR) – Nigerian companies who are members of a multinational group with aggregate group turnover of EUR750million and above or have an annual turnover of NGN50billion and above, will now be subject to ETR of 15% of their “Net Income”. This rule does not apply to Free Zone companies on their exports out of Nigeria, provided that such companies are not part of multinational groups.
9. Introduction of the Office of Tax Ombuds: Under the new Acts, an Office of Tax Ombud has been introduced to protect taxpayers against arbitrary tax assessments. The Tax Ombuds office will liaise with the tax authorities on behalf of taxpayers and serve as an independent arbiter to review and resolve complaints relating to taxes, levies, duties or similar regulatory charges.
10. Increased penalties for non-compliance: There has been a significant increase in non-compliance penalties and the introduction of new penalties. Some of the updates include increase in the penalty for failure to file returns to NGN100,000 in the first month, and NGN50,000 for every month the failure continues, introduction of new penalties such as penalty of NGN5million for awarding contracts to individuals or entities that are not registered for tax, penalties for failure to grant access for deployment of technology, inducing a tax officer, etc.
11. Powers for AGF to Deduct Taxes: The new laws grant the Attorney General of the Federation (AGF) powers to deduct unremitted taxes by a government or MDA and pay to the beneficiary government.
12. VAT and CIT Rates Remain the Same: Under the new laws, Value Added Tax (VAT) remains at 7.5% and Company Income Tax (CIT) for large companies remains at 30%, without any increment. However, the 30% rate can be reduced to 25% effective from a date as may be determined in an Order issued by the President on the advice of the National Economic Council.
13. Tax Incentives for Agricultural Companies: Income generated by companies engaged in agricultural businesses, including crop production, livestock, aquaculture, forestry, dairy, cocoa processing and manufacturing of animal feeds will be exempt from income tax for the first five (5) years from commencement of business.

Other notable reforms introduced by the new Acts include; transfer of income from Electronic Money Transfer levy exclusively to states as part of stamp duties, ceding of 5% of VAT revenue to states by the federal government, tax break or incentives for employers to hire more people, tax exemption on personal effects not exceeding N5m, VAT exemption on purchase of real estate, amongst others.

Conclusion

The signing of the four landmark tax reform Acts in Nigeria marks a significant transformation in Nigeria’s tax regime. The reforms introduced by these Acts are expected to reduce the tax burden on vulnerable groups, encourage MSME growth, and stimulate foreign and local investments. Businesses are advised to reassess their compliance strategy and consult with legal or tax professionals to understand how the new laws affect their operations.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com or contact:

In October 2022, Nigerian president at the time, signed the Start-up Act, which aimed to enhance the development and growth of the Nigerian Startup sector and encourage innovation and entrepreneurship for startups.

As a result of this Act, there has no doubt been a lot of regulatory attention on Start-ups, with regulatory compliance becoming an important factor for new companies to consider.

A start-up can be referred to as a company that is in the early or initial stages of business or development. According to the Nigerian Startup Act, 2022, a start-up is a company which has been in existence for a period not more than 10 years.

Generally, all companies, whether start-ups or not, must satisfy certain regulatory requirements in order to remain operational and avoid sanctions by regulators. It is therefore necessary for Start-ups to stay informed of the compliance requirements relevant to them and to comply with those requirements.

Below are some of the regulatory requirements Start-ups should watch out for

1. Incorporation of Company

It is a mandatory requirement that all businesses in Nigeria must be incorporated with the Corporate Affairs Commission (CAC) in accordance with the Companies and Allied Matters Act (CAMA), 2020. Incorporation grants your company legal identity and is mandatory before an organization commences business. For official information and updates on company incorporation and compliance, visit the Corporate Affairs Commission’s Public Notes 

2. Regulatory Compliance for Tax Registration and Filings

Start-ups must register with the Federal Inland Revenue Service (FIRS) and State Inland Revenue Service for remittance of Company Income Tax (CIT), Value Added Tax (VAT), Personal Income Tax and Withholding tax (WHT) where applicable.

Upon registration with the FIRS, a company is issued a Tax Identification Number (TIN), which serves as the company’s identification number for all dealings with the federal tax authorities. Failure to register for tax will attract sanctions from the FIRS.

The first CIT must be filed within 18 months of incorporation, and subsequently within six months of their financial year-end. Companies are also required to file and remit VAT on or before the 21^st day of the month following that which the transaction was made.

Remittance of Personal Income Tax or PAYE (Pay As You Earn) on behalf of local employees are to be filed monthly to the state government where the worker resides on or before the 10^th day of the month following the month of deduction.

Additionally, employers are required to file annual PAYE returns not later than 31^st January in respect of all employees in its employment in the preceding year.

WHT returns are to be filed monthly within 30 days from the date the amount was deducted or the time the duty to deduct arose. Failure to file the relevant tax returns result in penalties and tax liabilities.

3. Post incorporation filings

Any changes in any company’s structure, such as directorship, shareholding, registered address, etc. must be filed with and approved by the CAC. Annual returns (Statement of Affairs if the company has not commenced business) must also be filed to maintain active status with the CAC. For start-ups, the first annual returns must be filed within 18 months of incorporation of the company and subsequently on an annual basis. Failure to file annual returns could result in the company being declared inactive and ultimately deregistered. Also, late filing of annual returns attracts a penalty for each year of default.

4. Industry-Specific Licenses and Permits

Depending on the sector in which you operate, specific licenses or permits from regulatory bodies may be required. For example, sports betting companies require licenses from the state lottery boards and financial services companies require licenses from the Central Bank of Nigeria, Securities and Exchange Commission etc. For a company with foreign participation, it is required to obtain a business permit from the Federal Ministry of Interior which allows the company to commence business operations in Nigeria.

5. Mandatory Meetings for Regulatory Compliance

Companies are mandated to hold Annual General Meetings (AGM) and board meetings. Companies may hold extraordinary general meetings as they deem fit. For a start-up company, the first AGM must occur not later than 18 months of incorporation, with subsequent AGMs held no later than 15 months after the last AGM. Regarding board of directors’ meeting, the first board meeting should take place within six months of incorporation. Subsequently, the Directors may have meetings from time to time as they deem necessary.

6. NSITF Contribution and Pension

Employers must contribute 1% of their employee monthly payroll to Nigerian Social Insurance Trust Fund (NSITF) every year and remit monthly pension contribution of 8% for the employee and 10% for the employer with an approved Pension Funds Administrator (PFA) not later than 7 days of payment of salary every month. Start-ups must make their first NSITF contribution within two years of commencing operations. Companies that fail to make the required contribution to NSITF, shall pay a fine of at least 2% of the amount due to be remitted, in addition to the amount to be paid.

7. Nigerian Data Protection Commission Registration and Data Audit

Companies controlling or processing personal data must register with the Nigerian Data Protection Commission (NDPC) and file annual data audit reports. These companies are referred to as data controllers and data processors of major importance. Start-ups that control and process data are mandated to register with the NDPC upon incorporation failure to do so or late registration incurs penalties.

8. Brand Protection

Although not mandatorily required, Start-ups and existing companies are advised to protect their intellectual property or intangible assets by registering trademarks, patents, and copyrights with the Federal Ministry of Industry, Trade, and Investment. This prevents competitors from unlawfully copying, counterfeiting and registering your brand.

9. Corporate Governance

In Nigeria, companies are required to adhere to corporate governance best practices to ensure proper management. Companies in some specific industries are also required to set up sub-committees to effectively undertake the business of the companies. For example, some corporate governance requirements can be found under CAMA 2020, the Nigerian Code of Corporate Governance (NCCG), 2018, the Code of Corporate Governance for Public Companies (CCGPC) 2011; Code of Corporate Governance for Banks and Discount Houses in Nigeria 2014, amongst others. Start-ups are required to comply with the codes relevant to their industries.

9. Nigerian Investment Promotion Commission (NIPC) Registration

The Nigerian Investment Promotion Commission (NIPC) is a government agency established to encourage, promote and coordinate investments in Nigeria. Whether wholly or jointly owned by foreigners, start-ups intending to operate in Nigeria must register with the NIPC before the commencement of business operations.

10. National Office for Technology Acquisition and Promotion (NOTAP) Registration

Nigerian companies seeking to enter into contracts or agreements with a foreigner for the transfer of foreign technology to Nigerians are expected to register the contracts with NOTAP. Failure to register the contract will however not affect the validity of the contract but will prevent the Nigerian entity from making payments from Nigeria through any licensed bank in Nigeria to any person outside Nigeria.

11. Special Control Unit Against Money Laundering (SCUML) Registrations

Designated Non-Financial Institutions (DNFIs) which include construction, consulting, financial services, tax companies, etc. must register with the Special Control Unit Against Money Laundering (SCUML) of the Economic and Financial Crimes Commission (EFCC) and obtain a registration certificate. DNFIs are also expected to submit their cash-based transaction reports and Currency Transaction Reports to SCUML for onward forwarding to the Nigeria Financial Intelligence Unit (NFIU).

Conclusion

Almost three years after The Start-up Act, was signed into law, the jury is still out as to whether or not it has made any difference at enhancing the development and growth of the Nigerian Startup sector and encourage innovation and entrepreneurship for startups. There are numerous and enormous mandatory regulatory requirements which Start-ups (and existing companies) must comply with in Nigeria. Navigating regulatory landmines in Nigeria is vital for the success and sustainability of any business. Regulatory compliance keeps companies legally protected, helps them  identify and mitigate risks and enhances operational efficiency.

Please note that the contents of this article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

2022 has been an incredibly busy and exciting year in the Nigerian legal and regulatory environment. There were major and far-reaching changes ushered in by the regulatory authorities particularly the Central Bank of Nigeria (CBN). There were also major developments relating to Banking and Finance, Competition and Consumer Protection, Startups, Capital Markets, Insolvency, etc. In this article, we have highlighted some of the major legal, regulatory, and judicial changes that occurred in 2022. This article is divided into four parts representing four quarters of the year. In each quarter, we deal with all the major legal changes that occurred therein.

1^st Quarter (January – March 2022)

A remarkable feature of the first quarter was the issuance of regulations/guidelines by the CBN. Within this period, the Electoral Act 2022 was also signed into law by the President. The new Electoral Act introduced important changes to the conduct of elections Nigeria. Below are some of the highlights of the 1^st quarter:

• The Central Bank of Nigeria (CBN) Guidelines on the Introduction of E-evaluator, e-invoicing for Import and Export in Nigeria. Although the Guidelines were issued in January, it became operative on 1 February 2022 and requires the submission of an electronic invoice authenticated by the Authorised Dealer Bank for all import and export operations. The electronic invoice replaces the usual hardcopy final invoice.
• On 11 January 2022, President Muhammadu Buhari approved the establishment of the Nigerian Diaspora Investment Trust Fund, a private sector investment window for Nigerians in the diaspora to support direct investments in the country.
• On 18 January 2022, the Lagos State Government introduced the Consolidated Informal Transport Sector Levy to harmonize the taxes paid by transporters to the state government.
• On 26 January 2022, the Federal High Court in the case of Attorney General of Rivers State v. Attorney General of Federation and 3 Others, invalidated deductions by the Federal Government from the Federation Account for funding the Nigeria Police Trust Fund.
• The Central Bank of Nigeria Operating Guidelines for RT200 Non-Oil Export Proceeds Repatriation Rebate Scheme. This is a programme designed and introduced by the CBN to incentivize exporters in the non-oil export sector with the goal of raising $200 billion in FX over the course of the next three years.
• The Central Bank of Nigeria Guidelines for Regulation and Supervision of Credit Guarantee Companies in Nigeria. The Guidelines seeks to ensure a conducive environment for Micro, Small and Medium Enterprises (MSMEs) to be able to access credit at low interest rates from banks and financial institutions. The requirements for obtaining a license and also the activities which are permitted and not permitted by the license are contained in the Guidelines.
• On 7 February 2022, the Lagos State Governor signed the Lagos State Real Estate Regulatory Authority Bill into Law. The law introduced significant changes to the real estate landscape in Lagos State by mandating the registration of real estate practitioners.
• Electoral Act (Amendment) Act 2022 (the Electoral Act). The new Electoral Act was signed into law on 25 February 2022 by President Muhammadu Buhari. The Electoral Act empowers the Independent National Electoral Commission (INEC) to transmit election results electronically. Section 84 (12) of the Act, prohibits appointees of government, government officials from holding office while vying or contesting at party primaries.
• On 4 March 2022, the CAC stated in a circular that schools and other institutions would no longer be registrable as business names. This means they can now only be registered as a company pursuant to the Companies and Allied Markets Act 2020.
• On 23 March 2022, the Nigerian Communications Commission (NCC) issued the License Framework for the Establishment of Mobile Virtual Network Operators in Nigeria.

2^nd Quarter (April – June 2022)

This quarter witnessed a high level of enactment of laws and the issuance of regulations by the regulatory authorities. Importantly, three laws were passed to deal with the issues of corruption and terrorism in Nigeria. One of these laws (Money Laundering [Prevention and Prohibition] Act 2022) prompted the issuance of a guidelines by the CBN to bring its AML/CFT regulations in compliance with the requirements of the new law. The Securities and Exchange Commission (SEC) also issued a guideline to regulate digital and virtual assets. Below are some of the highlights of the 2^nd quarter:

• On 6 April 2022, the President signed Executive Order 11 which mandates government to institutionalize maintenance of public buildings. The National Biotechnology Development Agency Act, 2022 was also signed on the same day. The law provides the legal framework for the established agency to carry out research and create public awareness in biotechnology to encourage private sector participation.
• On 24 April 2022, the Corporate Affairs Commission announced the approval of the Insolvency Regulations 2022 by the Minister of Industry, Trade and Development. The regulations govern insolvency proceedings under the Companies and Allied Matters Act 2020.
• On 12 May 2022, the President signed the Money Laundering (Prevention and Prohibition) Act, 2022, the Proceeds of Crime (Recovery and Management) Act, 2022, and the Terrorism (Prevention and Prohibition) Act, 2022.
• The Central Bank of Nigeria Exposure Draft Guidelines for Open Banking in Nigeria. These Guidelines are aimed at enhancing competition and innovation in the banking system. It established the principles for data sharing across the banking and the payments system and broadened the range of financial products and services available to bank customers.
• The Central Bank of Nigeria Guidelines for the Registration and Operation of Bank Neutral Cash Hubs (BNCH) in Nigeria. The Guidelines are aimed at  reducing the risks and cost borne in the course of cash management and to also enhance cash management efficiency. The registration of a BNCH is to be undertaken in two stages of obtaining CBN Approval-in-Principle and final approval. The BNCH are to be licensed to take deposit and disburse high volume cash on behalf of financial institutions but cannot carry out lending activities, receive or disburse foreign currency or sub-contract their operation.
• Revised Guidelines for the Operation of Non-Interest Financial Institutions’ Instruments by the Central Bank of Nigeria. These Guidelines replaced the 2012 Guidelines and were issued to regulate the issuance of non-interest instruments by Non-Interest Financial Institutions (NIFIs) while also stipulating the requirements and terms of operation for NIFIs.
• The Central Bank of Nigeria (Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction in Financial Institutions) Regulations, 2022. The CBN issued the Regulations to bring its regulations on anti-money laundering and combatting the financing of terrorism to be in compliance with the Money Laundering (Prevention and Prohibition) Act, 2022 and safeguard the financial institutions from being used for financial crimes.
• The Securities and Exchange Commission issued the Rules on the Issuance, Offering Platforms and Custody of Digital Assets. The Rules were issued by SEC on 13 May 2022 and provide for the issuance of digital assets, registration requirements for Digital Assets Offering Platforms (DAOPS) and Digital Assets Custodians (DAC) among others.
• On 25 May 2022, the Federal High Court in the case of Femi Davies v. National Broadcasting Commission, nullified the National Broadcasting Code (6^th Edition) through which the National Broadcasting Commission (NBC) sought to regulate the practice of advertising in Nigeria. The court held that it was beyond the power of the NBC to regulate advertisement.

3^rd Quarter (July – September 2022)

The regulatory authorities in the banking and finance sector, particularly the CBN, were very active in issuing one form of guidelines or the other. The Federal Competition and Consumer Protection Commission (FCCPC) issued a guideline to regulate the activities of digital money lenders after a series of predatory practices by many digital money lenders. There was also a judgement of the Court of Appeal which re-affirmed the power of the Federal Inland Revenue Service to collect VAT from hoteliers. Below are some of the highlights of the 3^rd quarter:

• The Central Bank of Nigeria Review of the Industry Quick Response (QR) Code Presentment Options. The review was done by the CBN to enhance the flexibility offered by the use of QR codes in payments. The review provides that the implementation of the QR code for payments shall be based on either merchant-presented or consumer-presented modes.
• The Central Bank of Nigeria Exposure Draft on the Digital Financial Services Awareness Guidelines. This was developed to address gaps in consumer knowledge and practices with Digital Financial Services (DFS). The Guidelines provides for a set of principles and expectations for financial service providers to integrate in the provision of DFS to ensure consumer understanding, good treatment and positive outcomes.
• On 1 July 2022, the Court of Appeal set aside the judgement of the Federal High Court in the case of The Registered Trustees of Hotel Owners and Managers Association of Lagos v. Attorney General of Lagos State which invalidated the powers of the Federal Inland Revenue Service (FIRS) to collect Value Added Tax (VAT) from hoteliers and held that the collection of the tax is in the purview of the state government. The Court of Appeal has now held that it is the FIRS that has the authority to collect VAT. See Federal Inland Revenue Service v. The Registered Trustees of Hotel Owners and Managers Association of Lagos.
• Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending 2022. The regulations were issued by the FCCPC on 18 August 2022 to provide the FCCPC’s approach to regulating the digital lending space and makes provisions for the requirements for approval/registration to carry out the business of digital lending in Nigeria. Thus, by this Framework and Guidelines, institutions engaged in digital lending activities are to be registered with the FCCPC.
• The Revised Handbook on Expatriate Quota Administration 2022 (the Revised Handbook). On 31 August 2022, the Federal Ministry of Interior announced the issuance of the Revised Handbook. The Handbook increased the minimum share capital requirement of a company wishing to apply for business permit from N10,000,000 to N100,000,000. It also reduced the lifespan of Expatriate Quotas (EQs) from ten to seven years. However, the provisions of the Handbook are yet to be operational.
• The Advertising Regulatory Council of Nigeria (ARCON) banned the use of foreign voice-over artists and models on any advertisement which targets the Nigerian advertising space. The ban took effect on 1 October 2022.

4^th Quarter (October – December 2022)

The Nigeria Startup Act was enacted during this quarter, and it represents a remarkable achievement towards incentivizing startups in Nigeria through the incentives and programmes dedicated to spur the growth of startups in Nigeria. A sport policy was also developed and approved with the motive to position the sport sector to generate revenue while standardizing it. The CBN was also active with the issuance of several guidelines and regulations to regulate players in the Nigerian financial services sector. Below are some of the highlights of the 4^th quarter:

• Exposure Draft Guidelines for the Regulation of Representative Offices of Foreign Banks in Nigeria. The Guidelines stipulate how a representative office of foreign banks can be licensed in Nigeria. It enumerates the activities they can validly engage in in Nigeria such as marketing the products and services of their foreign parent or affiliate and states that they cannot engage directly in any financial transaction.
• Exposure Draft Guidelines on Contactless Payments in Nigeria. The Guidelines provide the minimum standards and requirements for the operation of contactless payments and specified the roles of stakeholders such as acquirers, issues, payment schemes, merchants, etc.
• Nigeria Startup Act 2022. On 19 October 2022, the Nigeria Startup Act, 2022 was signed into law. The law aims to provide an enabling environment for the establishment, development, and operation of startups in Nigeria and to position Nigeria’s startup ecosystem as the leading digital technology centre in Africa.
• National Sports Industry Policy (NSIP) 2022 – 2026. On 2 November 2022, the Federal Executive Council (FEC) approved the National Sports Industry Policy (NSIP) 2022 – 2026. The policy contains provisions on governance regulations, infrastructure development plans, incentives for private investors, etc. aimed at standardizing the Nigerian sport sector and thereby generating revenue.
• CBN Naira Redesign Policy – Revised Cash Withdrawal Limits. Citing the need to combat fraud, corruption, terrorism and to ensure that most of the money in circulation are within the banking vault, the CBN issued the policy document on 6 December 2022 to reduce the daily and weekly cash withdrawal limit and also to introduce certain requirements for withdrawing across the counter beyond the set limit at the rate of 5% fee for individuals and 10% for corporate organizations. The revision of the cash withdrawal limits was done by the CBN pursuant to the recent redesign of the Nigerian currency i.e. N200, N500 and N1,000 notes. Coming less than three months before the next general elections in Nigeria, this policy has received a lot of resistance from the political class.

Conclusion

2022 has been a remarkable year in the Nigerian legal and regulatory space and saw the enactment of the Start Up Act, the redesign of the Naira and the introduction of far-reaching regulations especially by CBN aimed and tackling corruption, fraud and financial crimes.

We use this opportunity to wish all our clients a very Merry Christmas and best wishes for the New Year 2023. Thank you all for your support.

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact:

Grant of Licences and Permits in Midstream and Downstream Petroleum Operations

The Authority publishes the applications for the grant of licence or renewal in respect of which comments or representations may be made.^[1]There is an obligation to comply with the Land Use Act as it relates to compensation for acquisition of land in respect of which a licence or permit has been issued by the Authority for Midstream and Downstream petroleum operations.^[2]

Licences in Midstream and Downstream Gas Operations

The activities that require a licence in the midstream and downstream gas operations include establishing, constructing or operating a facility for the processing and storage, of natural gas, engaging in wholesale gas supply, etc. ^[3] Licences to be obtained under the Midstream and Downstream gas operations include:

1. Gas processing licence – grants the licensee the right to install and operate gas conditioning plants, gas processing plants, gas to liquids plants, liquefied natural gas (LNG) plants and ethane extraction plants.^[4]

2. Bulk gas storage licence – grants the licensee the right to undertake the bulk storage of natural gas either for its own account or on behalf of customers.^[5]

3. Gas transportation pipeline licence – gives the holder the exclusive right to own, construct, operate and maintain a gas transportation pipeline within a route defined in the licence for its own account with third party access or as common carrier.^[6] The holder cannot supply gas to customers on its own account where it is granted on a common carrier basis.^[7] The licence is also required for unprocessed gas that needs to be transported.^[8]

4. Gas transportation network operator licence – authorises the holder to convey natural gas through the gas transportation network, balance the inputs and off takes from the gas transportation network, charge for the use of the gas transportation network, etc.^[9]

5. Wholesale gas supply licence – authorises the holder to purchase natural gas directly from any lessee or third party and sell and deliver wholesale gas to wholesale customers and gas distributors at any location in Nigeria.^[10]

6. Retail gas supply licence – authorises the holder to sell or retail compressed or liquefied marketable natural gas to customers and establish, construct and operate facilities to deliver compressed natural gas and small-scale facilities for LNG.^[11] It also authorises the holder to purchase marketable natural gas directly from a lessee, wholesale gas supplier or third party, and sell and deliver compressed or LNG to customers at any location in Nigeria on a free market basis.^[12]

7. Gas distribution licence – grants the holder the right to establish, construct, and operate a gas distribution system and to distribute and sell its natural gas to consumers in a local distribution zone,^[13] including retail customers.^[14]

8. Domestic gas aggregation licence – the licence is issued for a period of 2 years and renewal in each instance is also for 2 years.^[15] A domestic gas aggregator supports the implementation of the domestic gas delivery obligation in addition to other functions that it is expected to carry out.^[16] The domestic gas aggregator is required to be a company limited by guarantee established under the Companies and Allied Matters Act.^[17]

Midstream and Downstream Petroleum Liquid Operations

The following licences may be granted to qualified applicants in the midstream and downstream liquid sector:

1. Crude oil refining licence – permits the licensee to procure, construct, install and operate facilities to process crude oil on its own account into derivative chemicals and petroleum products and to sell such chemicals and petroleum products.^[18] The licence gives the holder right of access to facilities which include harbours, jetties, petroleum bulk storage, transportation facilities and pumping installations.^[19]
2. Bulk petroleum liquids storage licence – authorises its holder to undertake the bulk storage of petroleum liquids whether for its own account or on behalf of customers.^[20]

3. Petroleum liquids transportation pipeline licence – grants the holder the exclusive right to own, construct, operate and maintain a transportation pipeline for the transportation of petroleum liquids within a defined route.^[21]

4. Petroleum liquids transportation network operator licence – gives the holder the right to:^[22]
5. Convey petroleum liquids through the transportation network;
6. Balance the inputs and off takes from the transportation network;

5. Wholesale petroleum liquids supply licence – authorises the supplier (the holder) to sell and deliver petroleum liquids to bulk customers in Nigeria or for export.^[23] The company that is entitled to this licence is one that is a lessee producing crude oil or condensates or both or a holder of a crude oil refining licence.^[24]

6. Petroleum products distribution licence – authorises the licensee to distribute petroleum products.^[25] The licensee has the duty to carry out its activities in line with the provisions of the Act.

7. Licence to construct and operate a facility for retail supply and distribution of petroleum products – authorises the holder to establish, construct and operate a facility to be employed for retail sale of petroleum products.^[26]

8. Licence to operate a facility for the production of petrochemicals – authorises the holder to establish, construct and operate a facility for the production of petrochemicals and sell the petrochemicals produced.^[27]

Environmental Management

Licensee and lessors in upstream and midstream petroleum operations are to submit an environmental management plan to their respective regulators in respect of projects requiring environmental impact assessment.[28]

The Act seeks to ensure an eco-friendly petroleum operation by making contributions towards remediation of environmental damage by licensees and lessees a condition for the grant of the licence or lease.[29]

Conclusion

Under the PIA, the agency that now has the responsibility for licensing the with the midstream and downstream sectors is the Nigerian Midstream and Downstream Regulatory Authority.  There are now a variety of licenses to be obtained either in the gas or petroleum liquid operations under the midstream or downstream sectors. These include Gas processing licence, Bulk gas storage licence, Gas transportation pipeline licence, Gas transportation network operator licence, crude oil refining licence etc.

Watch out for our next publication on the PIA to be published next week and which shall consider the fiscal and tax regimes under the PIA..

Please note that the contents of this Article are for general guidance on the Subject Matter. It is NOT legal advice.

For further information or to see our other service offerings, please visit www.goldsmithsllp.com  or contact us: