Developing an Effective Anti-Money Laundering Strategy for Nigeria

By

Ahmed R. Makele

ahmed.makele@uk.fid-intl.com

 

 

 

As at May 2005, Nigeria remains on the Financial Action’s Task Force (FATF) list of Non-Cooperative Countries and territories (NCCT). FATF is an international body whose secretariat is based at the OECD, with member countries including the United States, United Kingdom, France etc. FATF is engaged in a major initiative to identify NCCTs in the fight against money laundering. The fact that Nigeria is on the list of non cooperative countries does untold damage to her image abroad and amongst the international community. It means that efforts to get debt relief for example are likely to be hampered. It also means that attempts to woo foreign investors to Nigeria are unlikely to be a complete success until Nigeria is seen as a country which takes the fight against money laundering seriously.

 

Since the coming into power of the civilian led Obasanjo administration in 1999, good strides have been made to deal with the problem. These include the passing of the Money Laundering Act of 2003 which resulted in the creation of the Economic and Financial Crimes Commission (EFCC). The EFCC (under the leadership of Nuhu Ribadu) has made a good start which is reflected in the fact that on a daily basis in the Nigerian media there is mention of the EFCC either arresting persons or having persons under investigation.   

 

However, much remains to be done if Nigeria is to be delisted from the list of NCCTs. The following are current weaknesses which Nigeria has to address. The first area of weakness is that there are still loopholes in financial regulations in Nigeria. There are inadequate regulations and supervision of financial institutions. There are inadequate rules for the licensing and creation of financial institutions including assessing the backgrounds of their managers and beneficial owners. There are inadequate customer identification requirements for financial institutions. There is a lack of efficient suspicious transaction reporting system. The second area of weakness is the impediments set by other regulatory requirements. These include inadequate commercial law requirements for registration of business and legal entities and a lack of identification of the beneficial owner of legal and business entities. A third area of weakness is the obstacles to international cooperation at both the administrative and judicial levels. Finally, there are inadequate resources for preventing, detecting and repressing money laundering activities. There is a lack of resources in the public and private sector devoted to the fight against money laundering. There is also an absence of a financial intelligence unit or of an equivalent mechanism.

 

It is recommended that Nigeria address the following areas specifically: the issuance of secondary legislation and regulatory guidance; inspection of financial institutions; suspicious transaction reporting systems; a process for the conduct of money laundering investigations and prosecutions; the question of the adequacy of resources devoted to the issue; the compliance culture in all of our financial institutions and finally, it is recommended that all financial institutions appoint a money laundering reporting officer, who has direct reporting powers to the EFCC.

 

Ahmed R. Makele is a Solicitor and has an LLM from Trinity Hall, University of Cambridge. He is a Director of Nikron Associates, a risk management and compliance consultancy.