Thousands of Inactive Nigerian Companies Still Operating Bank Accounts Despite Transparency Reforms
Nigeria’s progress in financial transparency and anti-money laundering reforms is facing fresh concerns as thousands of inactive companies registered with the Corporate Affairs Commission continue to operate unrestricted bank accounts across the country.
Investigations revealed that many of these inactive entities remain active within the financial system despite failing to meet key regulatory requirements, raising fears that shell companies could be used for corruption, procurement fraud, terrorism financing and illicit financial flows.
Official data obtained from the CAC as of April 14 showed that Nigeria currently has over 7 million registered entities. Out of the figure, only about 3.2 million are classified as active, while more than 3.6 million companies are listed as inactive.
Under CAC regulations, a company becomes inactive when it fails to file annual returns, disclose beneficial ownership details, or update records relating to directors, addresses and operational objectives.
Despite this classification, many of the companies reportedly still maintain functioning bank accounts and continue carrying out transactions without restrictions.
Registrar-General of the CAC, Ishaq Magaji, said several companies deliberately chose inactive status to avoid complying with beneficial ownership disclosure requirements introduced as part of Nigeria’s anti-money laundering reforms.
“They preferred to remain inactive rather than disclose their real owners,” Magaji said.
He warned that the situation poses a major risk to Nigeria’s financial system, particularly because banks have not imposed strict restrictions on such entities.
According to officials of the commission, banks had earlier been advised to treat inactive companies as red flags and subject them to enhanced scrutiny, but many financial institutions allegedly failed to fully enforce the recommendations.
The spokesperson for the commission, Rasheed Mahe, stated that blocking inactive companies from accessing financial services should be treated as a critical compliance issue by banks and their legal departments.
Although the Central Bank of Nigeria did not officially comment on the issue, a senior official of the apex bank reportedly said regulators were aware of the concerns and were working with relevant agencies to strengthen Know Your Customer procedures, customer due diligence and account monitoring systems.
The official added that banks already have obligations under existing regulations to periodically update customer records and ensure corporate account holders remain compliant with applicable laws.
Meanwhile, transparency advocates have warned that inactive companies are frequently used to secure government contracts while hiding politically exposed persons and ultimate beneficiaries.
Executive Director of the Centre for Fiscal Transparency and Public Integrity, Umar Yakubu, said many of the companies exist largely on paper and often fail to provide updated records about ownership, directors and financial activities.
According to him, the lack of transparency creates opportunities for procurement fraud, diversion of public funds and contract abuse.
“In some cases, such entities are used as front companies to pursue contracts while obscuring beneficial ownership and accountability,” he explained.
Yakubu referenced previous investigations involving the Federal Ministry of Humanitarian Affairs and the Niger Delta Development Commission, where billions of naira were allegedly linked to shell companies with little or no verifiable operations.
He also alleged that some dormant companies quickly regularise their CAC status only after securing public contracts in order to satisfy banking and tax requirements needed to receive mobilisation payments.
The concerns come less than a year after Nigeria was removed from the grey list of the Financial Action Task Force in October 2025.
Nigeria had been placed on the list in 2023 following concerns over weaknesses in anti-money laundering enforcement, transparency and regulatory coordination.
The removal from the list was celebrated by the Federal Government as a major achievement expected to improve foreign investment and restore confidence in Nigeria’s financial system.
However, experts now warn that allowing inactive companies to continue operating freely within the banking system could undermine those reforms and expose the country to renewed international scrutiny.
Stakeholders are calling for urgent reforms, including stronger collaboration between the CAC, CBN, EFCC and other regulatory agencies, as well as real-time integration between corporate registration databases and banking systems.
Transparency advocates insist that unless the loopholes are closed, inactive companies may continue to serve as major channels for financial opacity and abuse within the country’s financial system.
