Nigeria Banks Permit Inactive Companies to Maintain Accounts

A central bank official said the institution is working with relevant agencies to strengthen Know Your Customer and Customer Due Diligence systems across the banking sector. The official stated that banks must periodically update customer records and ensure corporate account holders remain registered and compliant with applicable laws.

The same official added that the central bank has issued guidelines on anti-money laundering, counter-terrorism financing, beneficial ownership transparency, and risk-based supervision. Financial institutions found in breach of these requirements are subject to supervisory and regulatory sanctions, the official said.

The central bank is also engaging stakeholders to improve data-sharing mechanisms and deepen inter-agency collaboration.

Yakubu, Executive Director of the Centre for Fiscal Transparency and Public Integrity, warned that inactive companies are often used as fronts to secure public contracts while concealing politically exposed persons and ultimate beneficiaries. "These are entities that may exist largely on paper," Mr Yakubu told PREMIUM TIMES.

" Such opacity creates fertile ground for abuse of public procurement systems, diversion of public funds, and contract fraud, he said. He cited investigations into the Federal Ministry of Humanitarian Affairs, Disaster Management and Social Development in 2024, during which the Economic and Financial Crimes Commission reportedly uncovered billions of naira funneled through corporate accounts linked to officials and their associates.

Mr Yakubu also referenced the forensic audit of the Niger Delta Development Commission, which uncovered thousands of ghost contracts allegedly awarded to shell or inactive companies lacking visible Persons with Significant Control and proper filing histories.

"Billions of naira were paid out to shell companies that vanished immediately after receiving mobilisation fees, leaving behind abandoned infrastructure projects across the Niger Delta region," he said.

Yakubu warned that inactive companies often have wider statutory compliance failures extending beyond filings with the corporate registry. He argued that awarding contracts to such companies exposes the government to financial losses, reduced tax revenue, and weaker accountability mechanisms.

He pointed to procurement irregularities during the COVID-19 emergency spending period, when contracts for medical supplies and palliatives were allegedly awarded to newly created or non-compliant entities. A subsequent audit showed that many of these companies had never paid corporate income tax or filed annual returns, he said.

Nigeria was removed from the grey list of the Financial Action Task Force in October 2025, less than a year before the current concerns were raised.