CAC Warns Banks Against Enabling Inactive Companies to Evade Regulations

Nigeria’s Corporate Affairs Commission (CAC) has raised concerns that some banks and financial institutions are enabling corrupt practices by allowing companies flagged as inactive and non‑compliant to continue operating and accessing financial services.

In a speech delivered in Abuja during a panel discussion marking the CAC’s 35th anniversary, the Registrar‑General, Hussaini Magaji (SAN), said the commission has identified a serious weakness in the national compliance system. He warned that banks permitting inactive companies — those that have failed to disclose key ownership information required by law — to open accounts and carry out transactions are undermining efforts to strengthen Nigeria’s regulatory framework.

Magaji explained that firms that do not submit full details on their persons with significant control (PSC) are classified as inactive and should not enjoy the legal privileges of active business entities. However, he said this rule is being ignored by some financial institutions, weakening transparency and compliance.

He also disclosed internal reforms at the CAC, including reporting 248 fraudulent company registrations to the Economic and Financial Crimes Commission and referring three staff members to the Independent Corrupt Practices and Other Related Offences Commission over alleged misconduct.

Magaji urged stronger collaboration across agencies and uniform enforcement of compliance standards, emphasising the need for a harmonised national register of beneficial ownership to close loopholes exploited for illicit financial activities.