Financial Crime World

FATF Grey Listing: Nigerian Financial System Faces Scrutiny Amidst Ongoing Money Laundering Concerns

Nigeria: A Global Hotspot for Money Laundering and Cybercrimes

  • Africa’s most populous nation continues to battle a worldwide reputation for money laundering and cybercrimes despite legislative efforts and international scrutiny
  • Home to notorious scams like “Four-One-Nine” or Advance Fee Fraud
  • Widespread nature of the criminal enterprise implicates Nigerian citizens and foreigners
  • Victims report financial losses, kidnapping, and homicide amid expanding schemes
  • Efforts from the Economic and Financial Crimes Commission (EFCC) to address 419-related cybercrimes have had minimal success

Key Nigerian Anti-Money Laundering (AML) Laws and Regulations

  1. Money Laundering Act. 2012
  2. Terrorism Prevention Act (as amended)
  3. Regulations on Terrorism Prevention (Freezing of International Terrorist Funds and Other Matters), 2013
  4. Economic and Financial Crime Commission (Establishment) Act of 2004
  5. Banks and Other Financial Institutions Act (BOFIA) of 1991
  6. AML/CFT Regulations of the Central Bank of Nigeria (CBN), 2013
  7. CBN Act of 2017
  8. CBN Risk-Based Supervision Framework for AML/CFT, 2011
  9. Various CBN circulars and regulatory messages
  10. Nigerian Drug Enforcement Administration’s National Drug Law Enforcement Act (1990)

Nigeria’s Response to FATF Recommendations (2002)

  • Added to Financial Action Task Force’s (FATF) Non-Cooperative Countries and Territories List (NCCT)
  • Passed three anti-money laundering laws in response to FATF’s recommendations
    1. Broadened the scope of the 1995 Money Laundering Act
    2. Extended reach of BOFI Act of 1991 to cover stock brokerage businesses and foreign currency exchange services
    3. Established the Economic and Financial Crimes Commission Act (EFCC)

FATF Grey Listing: Consequences and Strides

  • Added to FATF grey list on February 24, 2023
  • Warned international community of potential money laundering and terrorist financing risks
  • Resulted in decline in the value of the Rand and a near 3% loss for the Johannesburg Stock Exchange
  • Nigeria presented a 15-point action plan to address noted deficiencies and strengthen AML/CFT framework

Criminal Activities and Illicit Flows

  • Corruption and corrupt practices permeating industries and public institutions
  • Extensive money laundering landscape includes cybercrime, drug trafficking, arms trafficking, kidnapping, and more
  • Proceeds often laundered both within Nigeria and overseas

Sanction Scanner Solutions: Anti-Money Laundering Compliance in Nigeria’s Complex Landscape

  • Addressing challenges of AML compliance in Nigeria
  • Provides advanced features and solutions to help financial institutions navigate complex legal landscape
  • Remains informed about changing AML regulations and evolving threats
  • Contact Sanction Scanner for a demonstration to learn more