Nigerian Government Mandates Banks to Report Large Transactions to Tax Authorities

The federal government has introduced a new directive requiring banks and financial institutions to report monthly financial transactions exceeding ₦25 million for individuals and ₦100 million for corporate entities to tax authorities.

This requirement is part of recent amendments to the Nigerian Tax Act, which now obligates financial institutions to submit quarterly reports to the Federal Inland Revenue Service (FIRS). Beginning in January 2026, the FIRS will be renamed the Nigeria Revenue Service as the new tax framework takes full effect.

According to the Act, any entity responsible for tax deductions must file monthly returns with the appropriate tax authority in accordance with regulatory guidelines.

It further stipulates that banks, insurance companies, stockbroking firms, and other financial institutions must provide quarterly returns, listing names and addresses of both new and existing customers. These reports must detail transactions where, for individuals, the cumulative monthly amount reaches ₦25 million or more, and for corporate bodies, ₦100 million or more.

Prior to this update, institutions were only required to report transactions involving deposits of ₦5 million or above as part of anti-illicit finance measures.

Experts view the new thresholds as part of Nigeria’s broader strategy to improve anti-money laundering measures and financial oversight. In 2023, the Financial Action Task Force (FATF) placed Nigeria on its grey list for shortcomings in its anti-money laundering and counter-terrorism financing frameworks.

In response, Nigeria has taken steps to align with global standards. By November 2024, Hafsat Bakari, head of the Nigerian Financial Intelligence Unit, announced that the country had made significant progress in five key areas recommended by the FATF.