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On the fight against money laundering

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When the Central Bank of Nigeria (CBN) unveiled a tougher regime of sanctions against money laundering and for combating the finance of terrorism (AML/CFT) through a circular titled, “CBN Anti-Money Laundering and Combating the Financing of Terrorism (administrative sanctions) regulations 2018,” no one was left in doubt that Nigeria is serious about cutting the financial lifeline to terrorism and putting an end to sundry financial crimes.

Forty eight additional infractions were identified and sanctions prescribed to directly target bank directors and other key officials in addition to the existing penalties that targeted only the financial institutions.

The CBN in rolling out the new sanctions explained that this was to ensure Nigeria’s compliance with Financial Action Task Force (FATF) recommendation 35 which says that “countries should ensure that there is a range of effective, proportionate and dissuasive sanctions, whether criminal, civil or administrative, available to deal with natural or legal persons that fail to comply with AML/CFT requirements.”

The CBN deserves commendation for these new administrative steps as the fight against AML/CFT is one that demands constant vigilance and closing of loopholes. Indeed this is timely and necessary as the recent 2017 CBN half-year Economic Report revealed that the AML systems in place in the majority of commercial banks have failed to meet a significant number of compliance requirements.

Given that the Money Laundering Prohibition Act, 2003, 2004 and 2011, the AML/CFT Regulations, 2013 and FATF recommendations were already in place, the CBN report points to a wider systemic failure of implementation and compliance enforcement.

Money laundering by definition is a serious challenge as it is a nefarious practice that is mainly committed by individuals and institutions that include the elite and politically connected members of the society. The average Nigerian does not have access to the kind of illegally acquired funds that require laundering and the scale of the challenge can only be fathomed when it is realised that the AML violators are in the main from the same circle as the regulators and political leadership. AML regulations are uniquely susceptible to politicisation and it is worrisome that this is what has occurred in Nigeria.

Nigeria has most of the necessary institutions, laws and regulations required but continually fall short in sincere and faithful implementation. Selective enforcement, collaboration with vested interests, political posturing, regulatory capture and enforcement agencies working at cross-purposes have all contributed to eroding public trust in this critical area for the nation’s economic security and well-being.

The curious case of the National Financial Intelligence Unit (NFIU) and the current threat of expulsion faced by Nigeria from the Egmont Group of International Financial Units are cases that illustrate how political in-fighting can imperil a nation’s ability to remain a reliable international partner in the fight against AML/CFT. If only the EFCC would expend as much diligence and doggedness in prosecuting its primary responsibilities as it has done in attempting to retain the NFIU when the Egmont Group rules require a stand-alone Unit, things would probably have been better.

As things stand today, the laws, regulations and institutions that have been put together have yielded disappointing results. If anything, there appears to be even more intrigues and selective enforcement of the rules. It is no longer a hidden fact that as long as you have the right political affiliations the odds of being swept up by AML enforcement actions are minimal. This is now an issue of critical significance as it undermines the integrity of the sacred relationship between the state and its citizens and without the consent of the citizen to be governed, the result is the recourse to self-help and the looming anarchy that Nigeria is now witnessing.

Nigeria’s institutions must be allowed to work without interference and should never be used to achieve political objectives. It is readily apparent that probably the biggest driver of the erosion of credibility of the Federal Government of Nigeria is the crystallisation in the hearts and minds of the citizenry that the war on corruption via AML/CFT has been corrupted through its flawed and politically biased implementation.

AML/CFT is a vital tool for law enforcement and instructively appears to be the most significant aspect to date of the Mueller investigation into Russian meddling in the 2016 U.S. election. The potency of diligent high profile investigation and prosecution must never be lost on those saddled with the responsibility of enforcing the laws and the misapplication of AML/CFT must be avoided at all cost.

Painting a dark picture is always disheartening but it offers the opportunity to forcefully take corrective actions. Nigeria and Nigerians have arrived at the stage where the government and ruling elite must realise that they are no longer acting even in their own self-interest. Social order and cohesion can only be achieved in an atmosphere of transparency, fairness, truthful leadership and equal dispensation of justice.

The near-absence of these elements has contributed in no small measure to the rapid deterioration of order, the near anarchic state of Nigeria and the distrust of those in power.


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