The global fight against money laundering
It is very comforting that global concern over Money Laundering and Terrorism Financing (ML/TF) reverberated the other day in Valencia, Spain, where the Managing Director of the International Monetary Fund (IMF), Christine Lagarde, used the occasion of the plenary meeting of the Financial Action Task Force (FATF) to appropriately situate ML/TF as global challenges in need of collaboration of all nations of the world.
She correctly underscored the capability of ML/TF to threaten, not only a country’s economic and financial stability, but also its ability to deliver sustainable and inclusive growth. In addition to these, ML/TF brings about degeneration in values and practices as well as distortions of economic and financial systems. The deadly combination of money laundering and terrorism financing also leads to rising cases of violent crimes, economic inequality and concentration of wealth in a few hands in the face of untold mass poverty. So it is a scourge that must be fought by all the nations of the world.
Some of ML/TF motivating as well as aggravating factors include wide-spread corruption, greed, existence of ready havens across the globe for warehousing looted funds, thereby requiring global integration of financial systems via information and communication technology. There are also issues like weak legal, regulatory and institutional frameworks as well as lack of sincere collaboration/cooperation among countries.
Watching or allowing ML/TF to fester is, of course, highly dangerous. Countries can neglect or disregard to fight them at their own peril. Thus, responsible and responsive governments and their citizens all over the world are making efforts to combat the challenge. But there is hardly any doubt that ML/TF as at present, and most likely for a long time to come, will remain a global phenomena that no country can single-handedly deal with.
IMF is, in fact, so concerned about Money Laundering and Financing of Terrorism that it has, for several years, joined forces with FATF in supporting member-countries to build defenses, through internationally established standards on Anti-Money Laundering/Combating Financing Terrorism (AML/CTF), against the challenge.
In Nigeria, the need to check-mate this challenge was recognised many years ago and as a result, Money Laundering Prohibition Acts (2003, 2004 and 2011) were emplaced, with each succeeding one made more encompassing than the preceding ones. Through these laws, the government prohibited money laundering, created institutions to combat the illegal, harmful and dangerous acts, assigned responsibilities to banks and other financial institutions as well as designated non-financial institutions and provided for sanctions against non-compliant persons.
Under the law, the Economic and Financial Crimes Commission (EFCC) is charged with the responsibility of enforcing all economic and financial crime laws. It is the responsibility of the banks, other financial institutions and designated non-financial institutions (such as hotels, accounting, estate, legal firms as well as supermarkets, importers, clearing and settlement companies) to ensure their platforms are not used for illicit financial transactions and flows. They are also to report suspicious financial transactions. There are other institutions given other responsibilities under the law to make sure that money-laundering attempts are prevented, controlled, detected, investigated and ultimately prosecuted and penalised. Such institutions include the Nigeria Customs Service (NCS), Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), Federal Ministry of Industry, Trade and Investment, National Insurance Commission (NAICOM), Federal Ministry of Culture and Tourism, Nigeria Financial Intelligence Unit (NFIU) and the Federal High Courts that have exclusive jurisdiction to try offences under the law.
Apart from the law, in the financial sector, the CBN, SEC and NAICOM have produced practical implementation guidelines to assist institutions under their respective regulatory and supervisory purviews.
From the foregoing, this nation has put in place legal, regulatory and institutional frameworks aimed at effectively combating the crimes, in the interest of the national economy and the people. But, given the incessant reports of huge financial corruption being unearthed by the President Muhammadu Buhari administration and unquantifiable damages being inflicted on the nation by the Boko Haram terrorist group, it is not in doubt that the country has been anything comfortably effective in the war against ML/TF.
Therefore, to successfully combat ML/TF, it has become necessary that acceptable answers are provided for a number of germane questions.
First, what factors made it possible for the financial system to have successfully received, kept or transferred to foreign banks the staggering amounts of money reported to have been illicitly acquired by various persons despite the subsisting money laundering laws, regulations and institutions in the country? Second, through what channel did corrupt persons pay for the many landed properties, private jets and exotic luxury cars reportedly seized from them? Third, did financial institutions and others report, as required by the laws, suspicious financial transactions to the authorities? If not, why? Fourth, what use, if any, did the authorities make of the reports made to them? What kind of surveillance, if any, was conducted by the responsible government organisations? And through what channels has the Boko Haram group, for example, been receiving money from its international sponsors or paying for its weapons?
When these and other relevant questions are answered honestly and sincerely, at least two things will clearly emerge: one, that some of the institutions set up against ML/TF may not have played their roles diligently; and, two, that the country needs more capacity building, more diligent implementation of the laws and regulations as well as sensitisation or mobilisation of all stakeholders to successfully fight and win the war.
As things stand today, the laws, regulations and institutions that have been put together have yielded disappointing results. How to reform or turn them around in manners that will achieve intended objectives must be sought, found and followed.
Like other countries facing ML/TF challenges, Nigeria also needs to approach the war patriotically, pragmatically and strategically. Thus, while self-evaluation is advised to discover why much desirable progress has not been made, the need to extend the search for solutions beyond Nigeria’s shores is an imperative. And this is where the country must leverage on the anti-corruption treaties it signed the other day with a group of foreign countries.
The war against corruption, simply, must be won by Nigeria.