For flouting regulations, nine financial institutions paid N678m fines in 2023, according to The PUNCH analysis of their annual reports.

Last year, the financial groups were more regulatory compliant, as the fine they paid during this period was 89.25 per cent lower than the N6.31bn penalties they paid in 2022.

The firms whose financials were analysed included FBN Holdings, Access Holdings, Guaranty Trust Holding Company, Zenith Bank Plc, United Bank for Africa Plc, Fidelity Bank, Wema Bank, Stanbic IBTC Holdings and FCMB Group.

The regulators that sanctioned the affected financial groups were the Central Bank of Nigeria, the Securities and Exchange Commission, the National Insurance Commission, the NGX Regulation Limited, FMDQ and the National Pension Commission.

Zenith Bank, which did not have any penalties in 2022, paid N21m penalties last year.

In 2021, the banking group had paid N4m sustaining its low level of infractions over the years.  In 2023, the apex bank fined the bank N5m for late rendition of CBN returns, N10m for the employment of prospective employees without CBN approval, N2m for outstanding auditor’s recommendation and N4m for spot checks on compliance on politically exposed persons.

FBN Holdings during the period ended December 31, 2023, paid N17.26m to regulators which was lower than the N26m it paid in the previous year. The company reported that it paid N9.60m and N4.55m to NGX RegCO and SEC, respectively for late submission of 2022FY audited financial statements and Q1 2023 unaudited financial statements.  The banking group is already on the X-Compliance Report published by NGX RegCo for failing to submit its 2023 regulatory report within the stipulated timeframe.

A subsidiary of the group, FBNQuest Merchant Bank, also paid a penalty of N3m to the SEC for breach of transaction rules and N0.11m to FMDQ for late filing of deferral requests on behalf of its client.

Access Holdings was one of the banking groups that significantly reduced the value of penalties that they paid in the year 2024. From paying about N604m as penalties in 2022, Access Holdings paid N81.60m in the past year.

In all, AccessCorp was fined nine times by different regulators including the CBN, PenCom, and NGX RegCo.

PenCom fined AccessCorp N2m for the use of unauthorised advert material, N0.2m for violation of the revised guidelines for retirement savings account registration and N39.4m for data recapture sanction.

NGX RegCo penalised Access Holdings for late filing of 2022 Audited Financial Statements to the tune of N2m.

The banking group got the highest penalties from the CBN;  N10m in respect of employment of prospective employees without CBN approval, N2m penalty for delayed (response) to customers as directed by the apex bank, N5m IRO anti-money laundering, combating the financing of terrorism & countering proliferation financing (aml/cft/cpf) risk-based examination for the period May 1, 2021, to April 30, 2022,  N15m IRO of penalties for the late rendition of monthly, quarterly and semi-annual returns for June 2023  and N6m IRO risk-based examination as at June 30, 2022.

GTCO also recorded lower fines in 2023, which dropped to N73.98m from N4.21bn in the previous year, which was paid across some of the countries where it operates.

In Nigeria, it paid penalties in respect of the 2020 Risk Assets Examination (N12m), 2023 consumer protection exercise (N2m), 2023 bank returns rendition (N11m) and 2021-2022 AML/CFT Examination on the bank (N30m).

Its Pension subsidiary, GT Pension Manager, paid N250 as a penalty for the resumption of a top management staff without PenCom’s approval, the GT Fund Manager was fined N1.38m for noncompliance with the custody rules for Vantage Investment Note, N9.40m for underpaying its regulatory fees on Vantage Investment Note and N1m for the publication of advertisement material without SEC’s approval.

The company was fined N2m for an infraction related to the inadequacy of its minimum paid-up capital.

Outside the shores of Nigeria, GT Gambia was fined N919,384 for late submission of fit and proper person’s test and GT Rwanda paid about N4m for a breach of AML reporting, EDWH Reporting and appraise of Head of Syscon and treasury delayed FX transactions report.

As of December 31, 2023, GTCO had eight International banking subsidiaries and two sub-subsidiaries.

The United Bank for Africa also significantly reduced the value of infractions in the year under review as it reduced from N1.14bn to N110m. Like the preceding year, the bank said it did not incur any penalty from the CBN.

In the annual report, the UBA Group said that it maintains zero tolerance for Compliance & regulatory infractions.

“To this end, the focus of the Compliance function as entrenched by the Board is to instil a Compliance culture within the Group by ensuring that Compliance is integrated into the Group’s business practices and processes. The regulatory Compliance department within the Risk management structure ensures adherence to the requirements of the law, regulation, industry organizational codes, principles of good governance and ethical standards in the conduct of the bank’s business.  The essence is geared towards combating Money Laundering, Terrorist Financing, and proliferation of equipment for mass destruction,” the bank said.

Fidelity Bank recorded a dip in the amount paid as penalties in 2023. The bank went from about N100.71m in 2022 to N42.96m as of December 2023. A breakdown of the penalties showed that the bank had been fined for NEMSF infractions, late returns and AML/CFT/CPT  infractions by the CBN and fined N2.7m in respect of report filing by the NGX.

In 2023, Wema Bank paid penalties to the tune of N61.35m higher than the N2m that it paid in the previous year. Most of the fines were paid to the CBN for cybersecurity framework contravention (N2m), contravention of CBN circulars on KYC (N17.45m), contravention of Section 19(3A) of BOFIA, 2020 (N20m), penalty for late rendition of final returns (N10m), penalties on RBS breaches (N8m) and regulatory breach on CBN clearance (N2m). It also paid N1.9m to the NGX for late filing of 2022 Audited Financial Statements.

Stanbic IBTC Holdings saw its penalties and fines drop to N124m from N159m in 2022 marking a 22.01 per cent decline.

Across the group, the SEC imposed a fine of N6.78m on Stanbic IBTC Asset Management) for failure to obtain SEC approval for an investment product; a privately managed portfolio.

PenCom imposed a fine of N77.65mon Stanbic IBTC Pension Managers Limited, “being administrative sanction for alleged each funded RSA yet to be recaptured as of 31 May 2023,” and N600,000 for administrative sanction for violation of RSA registration.

The CBN imposed a fine of N5m on Stanbic IBTC Bank Limited for alleged failure to obtain prior approval before staff employment and a fine of N35m for failure to file STR/SAR (suspicious transactions/activity) with the Nigerian Financial Intelligence Unit.

However, the FCMB Group was one of the banking groups that saw its penalties and fines go up. FCMB penalties rose to N145.10m from N70.30m in 2022.

The nature of these contraventions include non-compliance with board policy on remuneration of executive management (N30m), granting unsecured advances, loans or unsecured insider-related credit facilities of an aggregate amount over N1,000,000 (N62m),  ATM complaints were not resolved within 72 hours (N4m), supervisory review process on the board approval of the bank’s ICAAP document not followed, (2m), improper linkage of Alin Yar Yaya General Enterprises account to the BVN belonging to FCMB customer Mr. Salisu Shehu Nagari (N2m) and late rendition of September 2022 returns at N5m.

To PenCom, the banking group’s subsidiary, FCMB Pensions Limited paid N39.50m and N600,000 for failure to meet the deadline for the recapture of all funded accounts as directed by PENCOM  and a double registration error.

Analysts react

Commenting on the trend, an economist and Business Strategist, Marcel Okeke, opined that good corporate governance had helped the banking groups to achieve the reduction.

Okeke, who was a former Chief Economist at Zenith Bank Plc, said, “First, it is evidence of good corporate governance practices and strict observance of prudential guidelines by the banks. Secondly, it is a testament to good risk management practices by the affected banks. Thirdly, improved ethics and professionalism are also implied.”

A professor of Economics at Babcock University, Segun Ajibola, said, “In the banking industry, there is so much emphasis now on corporate governance practices unlike before when it was more or less anything goes when banks could manoeuvre their ways into compliance with some basic rules and regulations. It is becoming tighter and tighter for all those rules and regulations to be flouted now.

“From the regulatory down to the operating banks, the emphasis on good corporate governance has continued to grow.”

The former president/chairman of the council of the Chartered Institute of Bankers of Nigeria, also pointed out that the CIBN now runs a compulsory ethics programme for bankers.

“Then, the Chartered Institute of Bankers of Nigeria is also doing a lot in the area of ethics and professionalism. CIBN runs an ethics programme now that is compulsory for all bank employees.  It is also to strengthen ethical practices among banks.

“So you see gradually, in terms of volume and number, cases of infractions are going down. More and more bankers are also imbibing the culture of ethics and professionalism. Most bankers now know that if they commit any infraction within the banking system, there is no shortcut, that if you are caught, you will be blackmailed and thus hinder your career growth in the industry.”

On the continued instances of anti-money laundering infractions, Ajibola said, “You know in any sector and gathering of humans, you will see one person or the other with the tendency to run afoul of the rules and in banking, the article of trade is money, which can be tempting. That is why many fall into the category of coming infractions. The important thing is that in terms of volume and value, it is going down. That is when you can say you are achieving progress.”

However, for the immediate past National Coordinator of the Independent Shareholders Association of Nigeria, Dr Anthony Omojola, the sum of N678m paid as fines by these banking groups was still a lot of money and called for a review of the regulatory frameworks.

“N678m is still a sizeable loss for the shareholders of these organisations. Regulations are meant to guide and not punitive but our regulators have turned themselves to commercial entities using power and coercion instead of entreating those they regulate for compliance.

“The reduction is a welcome development and I wish it will go around all of them like FRCN,  NPA, Customs and the like for Ease of Doing Business in Nigeria. You will be amazed by the huge turnout we will witness in Nigeria. Regulators should collaborate with operators for the development of our economy and the country at large,” he said.