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Sanctions against banks over illicit funds transfer



Acting President Yemi Osinbajo must have addressed various relevant issues of interest at the opening ceremony of the Conference on Promoting International Co-operation in Combating Illicit Financial Flows and Enhancing Asset Recovery to Foster Sustainable Development, held in Abuja the other day. There is no doubt that what resonated most in the media and across the country was his reported call for the prosecution of banks and other financial institutions involved in what was described as illicit transfer of funds, illicit flow of financial assets from the country, and aiding corruption by hiding looted funds. He was also reported to have called for two additional things: criminalization of financial institutions that receive stolen funds from corrupt persons and delegitimising or criminalising international financial institutions that connive with their counterparts in the country to receive and keep funds that are proceeds of corruption.

From the numerous media reports, comments and opinions that have trailed Osinbajo’s statements at the conference, it is apparent he spoke the minds of many stakeholders in the Nigerian economy. In other words, many might have observed the unprofessional and illegal practice of banks in Nigeria in receiving, keeping and transferring funds that could easily have been suspected to be proceeds from crime (corruption, money laundering, etc). Government had, over the years, turned a blind eye to the malaise. Now that the Acting President has expressed a cause of desirable action, there is expectedly and commendably, overwhelming support for it by well-meaning stakeholders. An immediate commencement of investigation and prosecution of institutions and individuals suspected to have committed the financial and economic crimes is therefore desirable and those found guilty should be severely punished.


However, it is something to worry about that despite the enormous challenges the country has, for several years, faced in respect of corruption, money laundering and illicit transfer of funds outside the country, it was only Prof. Osinbajo’s recent statement that seemed to have woken Nigerians up to the reality of the roles financial institutions have played in aiding and abetting illicit financial deals, without consequences. Even, the statements credited to the Acting President suggest that the government just came to the realization that financial institutions in the country could be prosecuted for being the main drivers of illicit financial flow from the country. But laws of the land have provided for the investigation and prosecution of such financial institutions! The Acting President should, indeed, simply have announced that investigations and prosecutions of such institutions were on the way. That would have immediately sent to task the various government ministries, departments and agencies responsible for such duties.

It should not be in doubt to anyone that the day Nigeria should wake up to seriously and sincerely question what the banks have done or failed to do with respect to illicit financial deals, a greater percentage of the sources of the country’s economic woes. Also, appropriate remedial actions must be taken in the interest and benefit of the country and her citizens. Banking today can very well be said to have ceased to be an honourable service. It has degenerated into an unholy business. From the operators’ penchant for disobeying laws and regulations to other crimes, the wounds banks have inflicted on the Nigerian economy are very deep. It is important to emphasize that sanctions will succeed as deterrent if the outcome of such sanctions outweighs the benefits derivable from non-compliance with the laws.

Towards ensuring that banks stop illicit financial deals, strict implementation of the Money Laundering (Prohibition) Act 2011 (MLPA) and the Economic and Financial Crimes (Prohibition) Act 2004 is a sine qua non. Although the sanctions provided may need to be reviewed upwards, these two laws have extensive provisions that, if they had been properly and sincerely implemented, Nigeria should have been better.

As the nation awaits commencement of investigations and prosecutions, not only of financial institutions but also their directors and employees suspected to be involved in illicit financial deals, it is important to note that banks, by their nature, are very sensitive and special organizations in the economy. Thus, in dealing with them, government and its agencies need to be cautious not to bring ‘showmanship’ into the fray. If wrongly handled, run may ensue which may lead to unintended bank distress or even failure, with negative impact on the economy. The government must therefore, avoid solving one problem by creating another that may even be more serious.


On the canvassed de-legitimization and criminalization of international financial institutions to which illicit funds are transferred by banks in Nigeria, a veritable proverb is that it takes the information and connivance of the rat in the house for the one in the bush to know there is fish in the kitchen. If the informant rat in the house is dealt with, the bush rat will pose little problem. Government’s focus should, therefore, primarily be to deal a fatal blow on the criminals within.

It is also imperative that as Nigeria seeks to bring to book banks that connive with or support money launderers, corrupt public and private organizations and individuals in their illicit businesses, it must not be forgotten that there are government institutions such as the Central Bank of Nigeria, Economic and Financial Crimes Commission, Nigeria Financial Intelligence Unit, Nigeria Police, and others that have the responsibilities of ensuring that financial institutions operate within subsisting laws and regulations. Questions must be asked and answers received on how creditably such institutions and their employees carry out their mandates. So, government’s searchlights should also be directed out such institutions that are meant to provide effective regulatory and supervisory oversight. Where there are proven cases of abdication or neglect of responsibilities, poor or abusive performance, the law should be invoked to visit the culprits with severe punishment.

Finally, it is the responsibility of every Nigerian to safe-guard the common wealth. The recent government initiated whistle-blowing arrangement should be exploited to report to appropriate authorities, in good faith and without witch-hunting, cases of corruption, money laundering, illicit financial deals and others.


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