Financial Crime World

Nigeria’s Money Laundering Conundrum: A Deep Dive into the Country’s Compliance Level

Nigeria, a country rich in natural resources, has been grappling with the issue of money laundering for years. The Financial Action Task Force (FATF) recently released its Mutual Evaluation Report 2021, which assessed Nigeria’s level of compliance with the global standard on combating money laundering and terrorist financing.

Assessment Highlights

  • Nigeria ranks highest in assessing risk and applying a risk-based approach (R.1), indicating significant progress in this area.
  • However, the country falls short in other critical areas, such as national cooperation and coordination (R.2), where it is only partially compliant.

Offense Compliance

  • Money Laundering: Nigeria’s money laundering offense (R.3) is deemed compliant.
  • Terrorist Financing: The country’s terrorist financing offense (R.5) is considered compliant, while its targeted financial sanctions related to terrorism and terrorist financing (R.6) are only partially compliant.

Areas for Improvement

  • Non-Profit Organizations: Nigeria’s non-profit organizations (R.8) and financial institution secrecy laws (R.9) are not in line with international standards.
  • Customer Due Diligence: The country’s customer due diligence (R.10), record keeping (R.11), and correspondent banking (R.13) practices require attention.

Reliance on Third Parties

  • Nigeria’s reliance on third parties (R.17) and internal controls and foreign branches and subsidiaries (R.18) are deemed largely compliant, but its reporting of suspicious transactions (R.20) is only partially compliant.

Strengthening Authorities

  • Powers of Supervisors: Nigeria’s powers of supervisors (R.27) require strengthening.
  • Law Enforcement and Investigative Authorities: The country’s law enforcement and investigative authorities (R.30) need to be strengthened.
  • Cash Couriers: Nigeria’s cash couriers (R.32) require stricter regulations.

Conclusion

Nigeria has made significant progress in implementing the technical requirements of the FATF Recommendations, but there are still areas that require improvement to ensure effective combat against money laundering and terrorist financing. The country’s financial intelligence unit, law enforcement agencies, and supervisory bodies must work together to address these gaps and strengthen its anti-money laundering regime.

Recommendations for Improvement

  • Prioritize the implementation of recommendations.
  • Increase cooperation with international partners.
  • Enhance public awareness about the dangers of money laundering.

Only then can Nigeria effectively combat financial crimes and maintain a stable financial system.