Financial Crime World

Nigeria’s Money Laundering Landscape: An Overview of New Legislation and Stricter Measures

Authors: Ifeoma Ezeribe and Tolulope Oguntade

Title: Nigeria’s Battle Against Money Laundering with the New Money Laundering Act of 2022

Nigeria has strengthened its anti-money laundering framework with the enactment of the Nigerian Money Laundering (Prevention and Prohibition) Act of 2022. This article explores the innovative features of the new legislation and their implications.

Key Points:

  • Extended money laundering offenses
  • New compliance requirements
  • Enhanced due diligence for Politically Exposed Persons (PEPs)
  • Reporting suspicious transactions
  • Record-keeping and internal procedures
  • Risk assessment and penalties

Money Laundering Offenses: Expanding the Scope

The Money Laundering Act doesn’t only cover the processing of illegally obtained funds but also extends to concealing their origin, conversion, transfer, or removal from the jurisdiction. Offenses include:

  1. Failure to report suspicious transactions
  2. Unlawful destruction or removal of records

New Compliance Requirements

The Money Laundering Act introduces stricter controls:

  • **Limitation on cash transactions:**Prevents illicit transactions exceeding five million Naira for individuals and ten million Naira for corporate bodies from being conducted in cash.
  • Reporting international transfers: Financial institutions and designated non-financial businesses and professions (DNFPs) must report international transfers over US$10,000 within 24 hours to the Nigerian Financial Intelligence Unit (NFIU) and the Securities and Exchange Commission (SEC).

Politically Exposed Persons: Enhanced Due Diligence

Financial institutions and DNFPs must provide higher due diligence for PEPs:

  1. Establishing the source of wealth and funds
  2. Conducting ongoing monitoring

Reporting Suspicious Transactions

Financial institutions and DNFPs must report suspicious transactions to the NFIU within 24 hours. The NFIU can request additional information or place a stop order on the transaction (up to 72 hours).

Record-Keeping and Internal Procedures

The Money Laundering Act mandates financial institutions and DNFPs to maintain records and establish internal procedures and controls to prevent money laundering. Non-compliance may result in penalties.

Risk Assessment and Penalties

Financial institutions and DNFPs are required to assess risks for new products, business practices, and technologies:

  1. Fines
  2. Imprisonment
  3. Corporate license revocation for money laundering offenses

Conclusion

The Nigerian Money Laundering (Prevention and Prohibition) Act of 2022 significantly strengthens Nigeria’s defenses against money laundering. Its expanded scope, stricter controls, and enhanced due diligence measures aim to curb illicit financial activities effectively. Adhering to these regulations is crucial in preventing financial crimes and avoiding penalties.