Digital Transformation and the Future of Anti-Money Laundering Compliance in Nigerian Financial Institutions

Abstract

The increasing complexity of financial crimes has placed growing pressure on financial institutions to strengthen their Anti-Money Laundering (AML) compliance frameworks. This study examines the challenges inherent in traditional AML processes in Nigerian financial institutions and evaluates the potential of digital transformation to improve compliance effectiveness. Drawing on empirical data from 125 AML and compliance officers across banks, microfinance institutions, and mobile payment operators, the study reveals that electronic and online systems significantly outperform manual, paper-based approaches in accuracy, consistency, and data reliability. Fax communication, however, remains unexpectedly strong for outbound AML documentation. Results further indicate no significant relationship between the speed of completing AML documentation and overall compliance effectiveness. The study concludes that accuracy, verification rigor, and process consistency, not speed, are the real drivers of AML compliance quality. The paper recommends institutional digitalization, enhanced training, and standardized AML communication procedures to strengthen Nigeria’s AML ecosystem.