Anti-Money Laundering Governance and Compliance Effectiveness in Nigerian Commercial Banks: A Risk-Based Assessment

This study investigates anti-money laundering governance structures and their contribution to compliance effectiveness in Nigerian commercial banks, adopting a risk-based assessment approach. Nigeria's placement on the Financial Action Task Force's grey list in recent years has elevated the urgency of robust AML governance, placing compliance quality at the centre of bank governance debates. AML governance encompasses board oversight of compliance risk, internal AML policy design, know-your-customer systems, suspicious transaction reporting mechanisms, and staff training adequacy. Drawing on compliance governance theory and the FATF's risk-based approach guidelines, this study evaluates the design and effectiveness of AML governance structures in twelve commercial banks through a mixed-method design. A governance quality assessment framework is applied to document analysis of AML policy statements, board risk committee charters, and CBN inspection reports, supplemented by interviews with twenty compliance officers. Compliance effectiveness is measured using suspicious transaction report filing rates, number of AML violations recorded by regulators, and compliance officer assessments. The study addresses a gap in the Nigerian banking governance literature by connecting board-level AML governance design to on-the-ground compliance outcomes. Findings will assist the Central Bank of Nigeria, the Nigerian Financial Intelligence Unit, and bank compliance departments in strengthening risk-based AML governance frameworks. Keywords: anti-money laundering, compliance governance, commercial banks, risk-based approach, financial crime.