Thousands of Inactive Nigerian Companies Operate Bank Accounts, Threatening Financial Transparency

Inactive Nigerian companies are still operating bank accounts, posing a significant threat to the country's financial transparency. According to the Corporate Affairs Commission (CAC), there are 7,039,099 registered entities in Nigeria, with only 3,202,042 classified as active. The remaining 3,688,101 are inactive, yet many still maintain fully operational bank accounts. This doesn't mean they're complying with regulations, though - they're not.

The CAC classifies a company as inactive when it fails to meet statutory obligations. These obligations include filing annual returns, disclosing beneficial ownership, or updating records relating to directors, addresses, or business objectives. Many inactive companies don't do these things. Despite this, many inactive companies continue to conduct transactions without apparent restrictions. CAC Registrar-General Ishaq Magaji warned that these companies prefer to remain inactive rather than disclose their real owners.

“They preferred to remain inactive rather than disclose their real owners," CAC Registrar-General Ishaq Magaji told PREMIUM TIMES. He didn't mince words”

— they're hiding something.

CAC spokesperson Rasheed Mahe stated that the commission had repeatedly alerted banks to the risks posed by inactive companies. The CAC advised banks to treat inactive companies as red flags and subject them to enhanced scrutiny. Many financial institutions, however, have continued to treat these advisories with levity, according to CAC insiders. They don't seem to take the warnings seriously.

The Central Bank of Nigeria (CBN) is aware of the issues and is working with relevant agencies to strengthen Know Your Customer (KYC), Customer Due Diligence (CDD), and account monitoring systems. The CBN has issued several guidelines relating to anti-money laundering (AML), counter-terrorism financing (CFT), beneficial ownership transparency, and risk-based supervision. Financial institutions found to be in breach of these regulatory requirements are subject to supervisory and regulatory sanctions. They won't get off scot-free if they don't comply.

Umar Yakubu, Executive Director of the Centre for Fiscal Transparency and Public Integrity (CeFTPI), warned that inactive companies are often used as fronts to secure public contracts. They conceal politically exposed persons and ultimate beneficiaries. These entities may exist largely on paper, failing to file annual returns, which can limit visibility into their financial position, changes in directorship, or Persons with Significant Control (PSC). It's hard to keep track of what they're doing.

The transparency and compliance concerns come less than a year after Nigeria was removed from the grey list of the Financial Action Task Force (FATF) in October 2025. The development was widely celebrated by government officials and financial regulators as a major boost for foreign investment, remittances, and international confidence in Nigeria's financial system. It's a big deal - they don't want to lose that progress.

The use of inactive companies to secure public contracts and conceal beneficial ownership poses a significant risk to Nigeria's financial system. It also undermines the country's efforts to combat money laundering and terrorism financing. The CBN and other regulatory agencies must take decisive action to address this issue. They need to ensure that all companies operating in Nigeria are transparent and compliant with regulatory requirements. It's crucial - they can't afford to fail.

The CAC has a crucial role to play in ensuring that all registered entities are compliant with statutory obligations. The commission must work closely with banks and other financial institutions to identify and restrict inactive companies that are still operating bank accounts. This will help to prevent the misuse of these accounts for illicit activities and protect the integrity of Nigeria's financial system. They're responsible for making sure it happens.

The operation of bank accounts by inactive Nigerian companies poses a significant threat to the country's financial transparency and its efforts to combat money laundering. The CBN, CAC, and other regulatory agencies must work together to address this issue. They must ensure that all companies operating in Nigeria are transparent and compliant with regulatory requirements. They won't tolerate anything less - it's time for action. Nigeria's financial system depends on it.