SEC Directs Capital Market Operators to Terminate Business, Banking Ties with Iran, North Korea

• Monitors Lebanon, Monaco, Others

Kayode Tokede

The Securities and Exchange Commission (SEC) has directed all capital market regulated entities to terminate correspondent banking relationships and restrict business dealings involving the Democratic People’s Republic of Korea (DPRK) and Iran.

The directive was contained in a circular to all capital market regulated entities posted on the SEC’s website and dated August 14, 2026.

The circular implements updated statements issued by the Financial Action Task Force (FATF) at its February 2026 plenary session, which identified jurisdictions posing significant risks relating to money laundering, terrorist financing and proliferation financing.

The commission said the directive was issued pursuant to the Investments and Securities Act, 2025, and the SEC AML/CFT Rules and Regulations, requiring all capital market regulated entities (CMREs) to immediately implement enhanced restrictions and monitoring measures for transactions linked to designated high-risk jurisdictions.

For the DPRK, the commission directed all CMREs to sever financial relationships with institutions linked to the country.

The circular instructed firms to terminate all correspondent banking relationships with financial institutions incorporated in, owned or controlled by persons or entities in North Korea.

The commission directed CMREs to: “Terminate all correspondent banking relationships with financial institutions incorporated in, owned or controlled by persons or entities in the DPRK.

“Ensure that no subsidiaries, branches or representative offices of DPRK financial institutions are established or maintained within their operations; and restrict or, where appropriate, refuse business relationships and transactions involving DPRK nationals, entities, government bodies or persons acting on their behalf.”

In effect, the directive cuts off formal banking and capital market channels connected to North Korean institutions within Nigeria’s regulated capital market.

For Iran, the SEC directed capital market firms to refuse transactions involving Iranian financial institutions.

“Refuse to process or facilitate transactions with Iranian financial institutions and decline to establish or maintain subsidiaries, branches or representative offices of such institutions in Nigeria,” the statement read in part.

The commission also directed firms to refrain from establishing or operating branches, subsidiaries or representative offices in Iran where deficiencies in the country’s anti-money laundering, counter-terrorism financing and counter-proliferation financing framework could compromise compliance obligations.

The directive means Nigerian capital market operators are expected to avoid institutional financial relationships with Iranian financial institutions and prevent operational exposure that could create regulatory compliance risks.

Myanmar was treated differently from North Korea and Iran. Rather than impose an outright restriction, the SEC directed firms to apply enhanced due diligence measures to Myanmar-related businesses and transactions.

According to the circular, jurisdictions currently under increased FATF monitoring include Algeria, Angola, Bolivia, the British Virgin Islands, Bulgaria, Cameroon, Côte d’Ivoire, the Democratic Republic of the Congo, Haiti, Kenya, Lao PDR, Lebanon, Monaco, Namibia, Nepal, South Sudan, Syria, Venezuela, Vietnam and Yemen.

The SEC also directed all capital market regulated entities that have yet to subscribe to Nigeria’s Sanctions (NigSac) Alerts system to do so immediately.

“Subscription is mandatory to ensure timely access to terrorist financing and proliferation financing designations and to support the effective implementation of Targeted Financial Sanctions (TFS).

“Take note that at all times, any unusual or suspicious transactions shall be promptly reported to the Nigerian Financial Intelligence Unit (NFIU).

“This circular takes immediate effect and failure to comply with these directives shall constitute a violation of the Investments and Securities Act, 2025, and the SEC AML/CFT Rules and Regulations and would attract appropriate regulatory sanctions, including fines, suspension of in operations or revocation of registration.”

Meanwhile, the United States Government has listed a Nigerian citizen and three Nigerian companies among individuals and businesses newly sanctioned for allegedly facilitating financial transactions linked to the Islamic State of Iraq and Syria (ISIS) and ISIS-West Africa.

Those designated are Mukhtar Adamu Muhammad, also known as Mukhtar Adamu and Muhammad Mukhtar; Generation Currency Bureau De Change Limited; Manhattan Bureau De Change Limited; and Nine to Nine Exchange Bureau De Change Limited.

In a separate circular issued on August 14, 2026, the SEC directed market operators to immediately identify and freeze, without prior notice, all funds, assets and other economic resources belonging to the designated individual and entities in their possession, and report such actions to the Secretariat of the Nigeria Sanctions Committee.

The commission also mandated operators to report to the Secretariat of the Nigeria Sanctions Committee any assets frozen or actions taken in compliance with the designation, including attempted transactions