EU, British Council urge CSOs on money laundering, taxation, others

The European Union Agents for Citizens-driven Transformation (EU-ACT) and the British Council have stressed the need for Civil Society Organisations (CSOs) to comply with regulatory frameworks to avoid unlawful practices.

This was disclosed at a two-day training for Civil Society Organisations (CSOs) on civil society regulatory frameworks and compliance to improve CSOs’ awareness of important regulations (CAMA, taxation, anti-terrorism and money laundering and pension), and how they affect their operations.

Lead faculty of Jury Trust, Prof. Adedeji Adekunle, hinted that Nigeria’s Anti-Money Laundering and Combatting Financing of Terrorism (AML/CFT) laws impose certain regulatory compliance obligations on national and international NGOs operating in the country, to check illicit financial flows and terrorism financing in Nigeria.

He added that the identification of NGOs as Designated Non-Financial Institutions (DFNIs) vulnerable to money laundering and terrorism financing risks was brought to light in 2016 by the National Risk Assessment Report, thus, causing the quasi-regulation and monitoring of NGOs’ financial activities to ensure compliance with relevant AML/CFT laws.

He said it was important for NGOs to take adequate steps to protect themselves from being used as money laundering and/or terrorism financing channels.

The don noted that DNFIs are prohibited from establishing business relationships with anonymous or fictitious persons; hence, they are required to adopt Customer Due Diligence/Know-Your-Customer (CDD/KYC) policies, which reveal the identities and risk profiles of their beneficiaries/donors.

“The CDD is a once-only exercise that should be carried out when establishing a new business relationship, or carrying out transactions above $1,000 or suspicious transactions; or when in doubt about the validity of previously obtained information.”

He added that CDD measures require NGOs to identify donors/beneficiaries/partners using valid Identification documents; verify the identity of donors/beneficiaries from reliable independent sources; identify and verify the identity of the beneficial owner if applicable and ensure that the donor, beneficiary or other party is not included in the Consolidated or Nigeria List referred to under the reg 28 of the Terrorism Prevention (Freezing of International Terrorist Fund and Other Related Measures) Regulations 2011.

He added that it was important for NGOs to identify and verify the identity of the person on whose behalf a donor/beneficiary is acting where applicable; and identify the structure and natural ownership composition of a donor/beneficiary, which is a legal person.

“Beyond identifying donors/beneficiaries, NGOs are required to determine their risk exposure in a given transaction by conducting risk-based assessments.

“Some Countries have been identified as high-risk countries by regulatory and advisory bodies such as the Financial Action Task Force (FATF), the Office of Foreign Assets Control (OFAC) and the United Nations given their level of stability, corruption rate, lack of adequate AML/CTF systems, existing sanctions, rate of terrorism support and criminal activities such as narcotics/arms dealing, human trafficking, illicit diamond trading, etc.”

He added that where a transaction appears suspicious; NGOs are mandated to file Suspicious Transaction Reports (STRs) to the NFIU, without tipping off or informing the client/donor.

“The NGO is also required to perform Enhanced Due Diligence (EDD), except where a performance of the same would tip off the customer, and carry out an immediate internal investigation, which would also form part of the report regardless of the stage of the Internal Investigation.”

Component 2 Manager of the EU-ACT), Idem Udoekong stated that the issue of poor compliance of CSOs on the regulatory framework was attributable to a lack of the requisite knowledge and information on regulations.

On his part, Assistant Director, Office of Registrar General, Corporate Affairs Commission (CAC) Tolulope Sonaike stated that the issue of poor compliance of CSOs to existing civil society regulations can be attributed to so many factors including CSOs’ lack of the requisite knowledge and information about these regulations and how to go about such compliance.