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AML/CFT and the future of Nigeria’s legal profession 18 May 2026

There is a question that has sat uncomfortably at the intersection of legal ethics and financial crime regulation in Nigeria for more than a decade: Does a lawyer have any duty to inquire into the source of funds paid to him as professional fees?

Nigerian courts have, to a significant extent, adopted a protective stance towards the traditional boundaries of legal practice, particularly regarding Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) obligations. In a notable suit brought by the Nigerian Bar Association (NBA), the Federal High Court (and affirmed by the Court of Appeal) held that legal practitioners are not required to register with the Special Control Unit Against Money Laundering (SCUML) and are not bound by its reporting requirements, on the basis that imposing such obligations would undermine the independence of the legal profession and encroach on lawyer–client privilege. Similarly, in litigation involving Mike Ozekhome, SAN, the court affirmed that a lawyer is not under a duty to investigate or ascertain the source of funds used to pay legal fees, provided there is no actual knowledge or clear indication of illegality. 

Collectively, these decisions underscore a judicial inclination to resist imposing financial regulatory burdens on legal practitioners where such measures risk diluting core professional obligations, even as they leave open the broader policy question of how the profession should engage with evolving global AML/CFT expectations.

The court’s pronouncement that no duty of inquiry exists as a matter of law has, by some members of the profession, been elevated into a judicial endorsement of willful ignorance as an ethical practice. That reading is dangerous. The case dealt with a specific factual situation involving procedurally improper state action against a lawyer’s legitimately earned fees. It did not extend to determining whether lawyers have no professional obligation of diligence at all. The conflation of these two things is intellectually dishonest.

Proponents of the no duty stance have expressed concerns that AML obligations, if improperly framed, could erode the adversarial system itself. Clients may be reluctant to seek legal advice if they fear being scrutinised or reported by their own counsel. This could ultimately weaken access to justice and the right to legal representation. 

They argue that legal professional privilege, which protects communications between a lawyer and client from compelled disclosure, is not merely a procedural technicality but a structural guarantee of the right to legal representation. They argue that if lawyers are conscripted into the role of financial intelligence agents, the confidentiality that makes lawyer-client relationships functional is undermined, thereby affecting access to justice, particularly for unpopular clients and defendants facing state power.

These are serious arguments. They deserve serious engagement. The error, however, lies in treating them as conclusive, as if they settle the matter entirely and leave no room for any professional obligation whatsoever. The right to legal representation does not mean that legal representation must be available without any precondition of professional diligence on the lawyer’s part. Privilege protects the content of legal advice; it does not immunise the commercial transaction by which a lawyer is retained from all scrutiny. And the concern for access to justice, while legitimate, cannot be weaponised to excuse a profession from the baseline responsibilities that every other professional sector is expected to discharge.

The reality is that legal services are often integral to complex financial arrangements, including company formation, property transactions, trust structures, and cross-border investments. These are precisely the channels through which illicit funds are frequently laundered. From this standpoint, exempting lawyers from meaningful AML obligations creates a critical vulnerability in the global financial system. The international community has addressed this issue from this standpoint. 

The Financial Action Task Force (the intergovernmental body that sets global AML/CFT standards) has, since 2003, classified lawyers, notaries, and other independent legal professionals as Designated Non-Financial Businesses and Professions (DNFBPs). Under FATF Recommendation 12, legal professionals are required to apply customer due diligence (CDD) measures, conduct enhanced due diligence for high-risk clients, such as Politically Exposed Persons (PEPs), and report suspicious transactions in defined circumstances. Recommendation 23 specifically identifies lawyers as critical gatekeepers in the financial system, reflecting the empirical reality that legal professionals are routinely exploited by money launderers to provide legitimacy, structure transactions, and launder proceeds through professional accounts.

The FATF’s Guidance for Legal Professionals, adopted in 2008 and refined since, does not require lawyers to become investigators or to betray clients. It requires them to know who they are acting for, to understand the purpose of the transaction, and to report transactions that raise genuine suspicion. 

Globally, leading jurisdictions have translated these standards into enforceable law. The United Kingdom’s Money Laundering, Terrorist Financing and Transfer of Funds Regulations impose CDD obligations on legal practitioners, with criminal penalties for non-compliance. The Solicitors Regulation Authority in England and Wales issues detailed guidance on risk-based client vetting and actively supervises firms for AML compliance failures. 

In the European Union, successive Anti-Money Laundering Directives have progressively strengthened obligations for legal professionals across member states. Even Australia, which for decades resisted extending AML obligations to lawyers in deference to legal professional privilege, enacted the AML/CTF Amendment Act in 2024, bringing legal professionals firmly within scope. The global direction of travel is unmistakable. The question is not whether lawyers will be required to discharge AML obligations, but whether they will do so on their own terms through robust self-regulation, or have that regulation imposed on them from outside.

In Nigeria, the Money Laundering Prohibition Act 2004, as amended in 2011 and 2022, has repeatedly sought to include legal practitioners within the definition of designated non-financial businesses required to register with the SCUML and fulfil reporting obligations. Each time, there has been resistance. The consequences of this sustained resistance are not merely reputational. The perception that Nigerian lawyers can be retained to structure transactions and receive funds without any obligation to exercise diligence or report creates a systemic vulnerability in the country’s financial integrity framework. In a global environment where Nigeria’s inclusion on high-risk jurisdiction lists imposes concrete economic costs on Nigerian businesses and institutions, the legal profession’s insistence on a total exemption carries consequences that the entire country bears.

The legal profession in Nigeria is self-regulated. The NBA sets the ethical standards, the General Council of the Bar makes the Rules of Professional Conduct, and the Legal Practitioners Disciplinary Committee enforces them. This arrangement reflects a long-standing and principled view that professional regulation should be exercised by those who understand the profession; that lawyers are best placed to set and enforce the standards of their own craft. 

Genuine self-regulation, when it functions properly, can be more nuanced, more expert, and ultimately more effective than external regulation imposed by a generalised bureaucracy. But self-regulation is a privilege, not a right. It is a delegation of regulatory authority by the state, which retains the power to withdraw it. The state, by such delegation, implicitly expects the profession to regulate itself and to do so in a manner consistent with broader public interests. A profession that uses its self-regulatory status primarily to insulate its members from obligations that other professions bear is abusing that privilege.

The NBA, to its credit, has begun to move. The Rules of Professional Conduct 2023 contain, for the first time, a comprehensive AML/CFT chapter that imposes risk-based client due diligence obligations; requires risk assessments at firm, client, and transaction levels; mandates the designation of compliance officers; and establishes the NBA Anti-Money Laundering Committee as the self-regulatory body responsible for oversight. The NBA-AMLC has developed protocols, launched a web portal for reporting, and begun training programmes. These are encouraging developments. They reflect a profession beginning to take seriously what global standards have long demanded.

The NBA must actively enforce these provisions and demonstrate that non-compliance carries genuine disciplinary consequences. As lessons are drawn from implementation, the NBA should work proactively with the FATF process and Nigerian regulatory authorities to continue developing a workable, privilege-respecting framework for lawyer AML compliance that is calibrated to genuine risk, protects confidential communications that genuinely attract privilege, and does not convert lawyers into de facto agents of state surveillance. This is achievable. The UK Solicitors Regulation Authority has demonstrated that robust AML supervision of legal professionals is compatible with meaningful protection of legal professional privilege. 

The legal profession occupies a unique position in any society that aspires to the rule of law. Lawyers are not merely service providers; they are officers of the court, custodians of a system that depends on their integrity for its legitimacy. That elevated status carries elevated responsibility. Nigeria cannot afford, economically or reputationally, a legal profession that sits outside the AML/CFT framework while the rest of the world moves decisively in the opposite direction. The NBA has made a meaningful start with the RPC 2023 reforms. This start should be followed by serious, visible, and consistent enforcement to ensure credibility.

Funmilayo Odude is a Partner at Commercial and Energy Law Practice (CANDELP).