USA Africa Dialogue Series - EU Delists Nigeria: A Necessary Milestone, Not a Declaration of Innocence

EU Delists Nigeria: A Necessary Milestone, Not a Declaration of Innocence

Why Europe's decision signals progress in compliance, but leaves Nigeria's deeper governance and financial integrity questions unresolved.

By John Onyeukwu | Lawyer, Governance and Social Impact Practitioner | Published in The Accountable Reform WhatsApp Channel | Jan 16, 2026

 "The credibility of a financial system is not measured by the absence of scrutiny, but by the consistency of enforcement." - Financial Action Task Force (FATF), interpretive guidance on risk-based supervision.

Nigeria's removal from the European Union's list of high-risk jurisdictions for money laundering and terrorist financing is, on its face, good news. It promises to ease transaction frictions, reduce compliance costs for Nigerian banks and businesses, and marginally improve the optics of Nigeria–EU trade and investment relations (European Commission, 2026). In a global financial system where perception often travels faster than facts, such signals matter.

But they must be read carefully.

There is a persistent national tendency to confuse procedural progress with structural reform. Delisting is an important milestone, but it is not a moral acquittal, nor is it an endorsement of Nigeria's political economy.

The EU's decision, taken in line with assessments by the Financial Action Task Force (FATF), confirms that Nigeria has addressed what regulators describe as strategic deficiencies in its anti-money laundering and counter-terrorism financing (AML/CFT) framework (FATF Recommendations, 2012; revised 2023). This reflects years of legislative amendments, expanded suspicious transaction reporting, tighter supervision by the Central Bank of Nigeria, and improved coordination among agencies such as the Nigerian Financial Intelligence Unit and law-enforcement bodies.

That achievement should not be dismissed. Compliance reform is difficult, often expensive, and politically inconvenient.

Yet delisting is not the same as trust. It is closer to conditional re-entry into a system that never fully relaxes its guard.

What the EU has effectively said is that Nigeria no longer fails the technical compliance tests under its current risk-assessment framework (EU Delegated Regulation on High-Risk Third Countries). What it has not said is that Nigeria has resolved the deeper governance conditions that generate illicit financial flows, elite impunity, and regulatory arbitrage. One is a box-ticking exercise; the other is a question of political will.

From a legal and institutional standpoint, this distinction matters.

Nigeria's AML/CFT reforms over the past decade have been largely reactive, responses to FATF mutual evaluations, grey-listing risks, and correspondent banking pressures, rather than the product of a coherent, domestically driven integrity architecture. Laws are enacted, agencies empowered, thresholds adjusted. But enforcement remains uneven. Financial intelligence is produced, yet prosecutions stall. Asset recovery is announced, but transparency thins once recovered funds enter public use (Transparency International Nigeria).

From a public finance perspective, the harder question is whether Nigeria has altered the incentive structures that allow financial misconduct to thrive. The budget process remains weakly traceable end-to-end. Public procurement continues to rank as a high-risk channel under OECD and World Bank diagnostics. Politically exposed persons operate within a culture of informal immunity. Subnational public finance, particularly at the local government level, remains opaque, cash-heavy, and weakly supervised despite constitutional safeguards.

These are not peripheral defects. They are systemic conduits.

It is also important to understand what this delisting is not. It is not a certification that Nigeria is now a low-risk jurisdiction in practice. European correspondent banks will still apply enhanced due diligence under the EU AML Package. Multinationals will continue to price Nigerian risk into their operations. Investors will still look beyond regulatory statements to signals of judicial independence, regulatory consistency, and enforcement credibility.

The private market does not move at the pace of press releases.

This is why official celebration, though understandable, should be restrained. Investor confidence does not rise on announcements alone; it rises when reforms become routine, when compliance is boring, enforcement predictable, and consequences unavoidable. Nigeria has not yet reached that point.

The real test begins after the applause.

Will regulators sustain vigilance when international scrutiny softens? Will politically connected actors face the same AML standards as ordinary citizens and small businesses? Will recovered assets be transparently accounted for through lawful budgetary processes? Will financial crime enforcement remain insulated from electoral cycles?

This moment also presents an opportunity, if Nigeria chooses to use it wisely. Delisting should serve as a baseline, not a finish line. It should be leveraged to deepen procurement reform, strengthen fiscal transparency, reinforce judicial independence, and bring subnational finance into the integrity conversation.

If Nigeria treats this development as closure, it will find itself back on a watchlist soon enough. If it treats it as a minimum standard, it may finally begin to address the structural conditions that made such listing inevitable in the first place.

The EU has removed Nigeria from a list. Nigeria must now decide whether it is ready to remove itself from the habits that put it there.

That decision cannot be outsourced.

End.

The Accountable Reform: https://whatsapp.com/channel/0029Va6de2U7oQhkR1uYDA1S

John Onyeukwu
http://www.policy.hu/onyeukwu/

 http://about.me/onyeukwu
"Let us move forward to fight poverty, to establish equity, and assure peace for the next generation."
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