SEC orders Nigerian capital market firms to cut North Korea, Iran ties

The Securities and Exchange Commission (SEC) has ordered all capital market regulated entities in Nigeria to terminate correspondent banking relationships and restrict business dealings involving North Korea and Iran, as part of sweeping anti-money laundering and counter-terrorism financing measures that take immediate effect. 

The directive was disclosed in a circular to all capital market regulated entities released on August 14, but dated June 19, 2026.

The circular implements updated statements issued by the Financial Action Task Force (FATF) during its February 2026 plenary session, which identified jurisdictions posing significant risks related to money laundering, terrorist financing, and proliferation financing. 

The SEC said the directive was issued pursuant to the Investments and Securities Act, 2025, and the SEC AML/CFT Rules and Regulations, requiring all capital market regulated entities (CMREs) to immediately implement enhanced restrictions and monitoring measures for transactions linked to designated high-risk jurisdictions. 

What the SEC is saying 

For the Democratic People’s Republic of Korea (DPRK), the Commission directed all CMREs to completely sever financial relationships with DPRK-linked institutions. 

The circular instructed firms to terminate all correspondent banking relationships with financial institutions incorporated in, owned, or controlled by persons or entities in North Korea.   

The commission ordered CMREs to do the following;  

• “Terminate all correspondent banking relationships with financial institutions incorporated in, owned, or controlled by persons or entities in the DPRK. 

• Ensure that no subsidiaries, branches, or representative offices of DPRK financial institutions are established or maintained within their operations; and 

• Restrict or, where appropriate, refuse business relationships and transactions involving DPRK nationals, entities, government bodies, or persons acting on their behalf.” 

In practical terms, the directive effectively cuts off formal banking and capital market channels connected to North Korean institutions within Nigeria’s regulated capital market. 

For Iran, the SEC ordered capital market firms to refuse transactions involving Iranian financial institutions. 

• “Refuse to process or facilitate transactions with Iranian financial institutions and decline to establish or maintain subsidiaries, branches, or representative offices of such institutions in Nigeria,” the statement reads in part.  

The Commission also directed firms to refrain from establishing or operating branches, subsidiaries, or representative offices in Iran where deficiencies in the country’s anti-money laundering, counter-terrorism financing, and counter-proliferation financing framework may compromise compliance obligations. 

The instruction means Nigerian capital market operators are expected to avoid institutional financial relationships with Iranian financial institutions and prevent operational exposure that could create regulatory compliance risks. 

• Myanmar was treated differently from North Korea and Iran. Rather than imposing an outright restriction, the SEC ordered firms to apply enhanced due diligence measures for Myanmar-related business. 

SEC places 20 jurisdictions under enhanced monitoring 

Beyond the restrictions on North Korea and Iran, the SEC also directed Nigerian capital market operators to strengthen compliance controls for transactions involving jurisdictions placed under increased monitoring by the FATF. 

• The affected jurisdictions include Algeria, Angola, Bolivia, the British Virgin Islands, Bulgaria, Cameroon, Côte d’Ivoire, the Democratic Republic of the Congo, Haiti, Kenya, Lao PDR, Lebanon, Monaco, Namibia, Nepal, South Sudan, Syria, Venezuela, Vietnam, and Yemen. 

The FATF places jurisdictions under increased monitoring when they have committed to addressing strategic deficiencies in their anti-money laundering and counter-terrorism financing frameworks but remain subject to enhanced international scrutiny. 

The Commission warned that any unusual or suspicious transactions must be promptly reported to the Nigerian Financial Intelligence Unit (NFIU). 

It added that the circular takes immediate effect and that failure to comply would constitute a violation of the Investments and Securities Act, 2025, and the SEC AML/CFT Rules and Regulations, attracting sanctions including fines, suspension of operations, or revocation of registration. 

Get up to speed 

Nairametrics recently reported that the SEC issued an urgent directive requiring all capital market regulated entities to immediately subscribe to the Nigeria Sanctions (NigSac) Alerts systemfollowing fresh terrorism financing designations by Nigerian authorities. 

• The Commission directed operators to identify and freeze assets linked to designated individuals and entities, report suspicious transactions to the NFIU, and prohibit dealings with sanctioned persons. 

The regulator also warned that non-compliance with the sanctions directives could result in fines, suspension of operations, or revocation of registration under the Investments and Securities Act, 2025. 

What you should know 

The latest directive requiring capital market firms to cut ties with North Korea and Iran comes amid Nigeria’s broader effort to strengthen its anti-money laundering and counter-terrorism financing framework. 

• Recent sanctions designations by the Nigeria Sanctions Committee identified individuals and Bureau de Change operators accused of facilitating terrorist financing linked to the Islamic State West Africa Province (ISWAP). 

The designations were later echoed by the U.S. Treasury, which sanctioned several Nigerian BDC operators and individuals for alleged ISIS-related financial facilitation. 

The SEC’s latest circular extends that broader compliance push by requiring capital market firms to align with FATF risk classifications and strengthen controls over transactions involving high-risk jurisdictions and entities that could expose Nigeria’s financial system to money laundering or terrorist financing risks. (Nairametrics)