Financial Crime World

Money Laundering Persists: An Overview of the Issue in Nigeria, Now on FATF’s Grey List

Nigeria, the most populous country in Africa, continues to grapple with money laundering and cybercrimes, despite the government’s efforts to enhance its Anti-Money Laundering (AML) framework. Here’s an overview of the issue:

Prevalence of Money Laundering and Cybercrimes in Nigeria

  • 419 fraud or “advance fee fraud”: Initiated by Nigerian natives but with reach extending to various African countries and beyond.
  • Economic and Financial Crimes Commission (EFCC)’s efforts: Addressing cybercrimes but with limited achievements due to criminals’ evasion techniques using the internet.
  • Impact on victims: Financial losses, kidnappings, and even murders due to the lure of quick riches.

Key Regulations in Nigeria

Over the years, Nigeria has introduced several regulations to combat money laundering and terrorism financing:

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

Nigeria’s Legislative Reforms in Response to FATF Recommendations (2002)

  • Reforms to:
    • The 1995 Money Laundering Act
    • The Banking and Other Financial Institutions Act (BOFI) of 1991
    • The Economic and Financial Crimes Commission Act

FATF’s Interaction with Nigeria (2023)

  • Addition to grey list: Following FATF’s interaction, Nigeria and South Africa were added to the grey list on February 24, 2023.
  • Impact on Nigerian economy: Financial markets experienced losses due to the international attention to potential risks.
  • Nigeria’s Financial Intelligence Unit’s progress: Nigeria’s Financial Intelligence Unit made considerable progress, leading to the FATF’s endorsement of a list of 15 actions as part of Nigeria’s action plan to address deficiencies.

Ongoing Challenges in Nigeria’s Fight Against Financial Crimes

  1. Corruption: Nigeria’s endemic corruption significantly undermines industries and facilitates other illicit activities.
  2. Robust anti-corruption laws: Despite having laws in place, enforcing them remains challenging.
  3. Nigeria as a drug transit hub and financial crime center: The ongoing fight against financial crimes includes tackling corruption and addressing issues within the enforcement framework.

Predicate Crimes Contributing to Money Laundering in Nigeria

  • Primary predicate crimes contributing to money laundering involve a range of criminal activities, including corruption, fraud, drug trafficking, maritime offenses, armed robbery, arms trafficking, kidnapping, oil bunkering, and human trafficking.
  • Corruption as a significant concern, particularly in Nigeria’s oil industry, presents both a standalone threat and serves as a facilitator for other illicit activities.

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