Shun North Korean, Iranian banks, SEC tells operators

THE Securities and Exchange Commission (SEC) has directed capital market operators to restrict dealings with financial institutions in North Korea and Iran, while imposing enhanced due diligence requirements on transactions linked to Myanmar.

The directive was contained in a circular issued to all capital market regulated entities (CMREs), following the Financial Action Task Force’s (FATF) identification of jurisdictions posing significant money laundering, terrorism financing and proliferation financing risks.

The circular, published on Friday and dated June 19, was issued under the Investments and Securities Act (ISA) 2025 and the SEC’s rules on anti-money laundering, countering the financing of terrorism and countering proliferation financing.

For North Korea, the SEC ordered operators to terminate correspondent banking relationships with financial institutions incorporated in, owned or controlled by individuals or entities in the country.

The commission also directed CMREs not to establish or maintain subsidiaries, branches or representative offices of North Korean financial institutions within their operations.

Operators were further told to restrict or, where necessary, reject business relationships and transactions involving North Korean nationals, entities, government bodies or persons acting on their behalf.

For Iran, the SEC instructed capital market operators to refuse to process or facilitate transactions involving Iranian financial institutions.

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The regulator also directed them not to establish or maintain subsidiaries, branches or representative offices of Iranian financial institutions in Nigeria.

It further prohibited CMREs from establishing or operating branches, subsidiaries or representative offices in Iran where weaknesses in the country’s AML/CFT/CPF framework could compromise their compliance obligations.

For Myanmar, the commission directed operators to apply enhanced due diligence measures proportionate to the risks associated with the country.

The measures include increasing the frequency, scope and intensity of monitoring of customers, transactions and business relationships connected to Myanmar.

SEC identifies 20 jurisdictions under increased monitoring

The SEC also drew operators’ attention to 20 jurisdictions currently under FATF increased monitoring.

They 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.

CMREs were directed to apply appropriate risk-based measures to dealings involving the listed jurisdictions.

The SEC also ordered capital market operators that have not subscribed to Nigeria’s Sanctions (NigSac) alerts system to do so immediately.

The commission said subscription is mandatory to ensure operators have timely access to terrorist financing and proliferation financing designations and can effectively implement Targeted Financial Sanctions.

It further reminded CMREs that all unusual or suspicious transactions must be promptly reported to the Nigerian Financial Intelligence Unit (NFIU).

The SEC said the circular takes immediate effect, warning that failure to comply would constitute a violation of the Investments and Securities Act 2025 and its AML/CFT rules.

Violations, it added, could attract regulatory sanctions, including fines, suspension of operations or revocation of registration.