Financial Crime World

New Money Laundering Law in Nigeria: Tougher Measures Against Politically Exposed Persons and Expanded Jurisdiction

By Jamila Abdulkadir

The Money Laundering (Prevention and Prohibition) Act 2022, signed into law by President Muhammadu Buhari in January 2022, introduces robust regulations and expanded jurisdiction to Nigeria’s fight against money laundering.

A New Institutional Framework

The Act, consisting of 31 sections and divided into five parts, sets up the Special Control unit (SCUML) under the Economic and Financial Crimes Commission (EFCC) to effectively implement provisions related to designated non-financial businesses and professions (DNFPs).

Strengthened Measures Against Politically Exposed Persons (PEPs)

The new legislation introduces stricter regulations for foreign and domestic PEPs engaging in high-risk business relationships:

  • Approval from senior management is required.
  • Source of wealth and funds must be established.
  • Enhanced ongoing monitoring is needed.

Expanded Definition of Funds

The Act’s definition of ‘funds’ is expanded to include ‘virtual assets,’ addressing the need for digital currency regulation.

Limited Confidentiality Between Lawyers and their Clients

The new legislation imposes restrictions on lawyer-client privilege in scenarios like purchasing/selling property, real estate businesses, and managing client money.

Wider Reach for the Regulatory Framework

The Money Laundering (Prevention and Prohibition) Act 2022 extends its jurisdiction to cover:

  • Businesses involved in the hospitality industry.
  • High-value dealers.
  • Mortgage brokers.
  • Pool betting.
  • Trust and company service providers.
  • Dealers in mechanized farming equipment, farming equipment, and machinery.
  • Dealers in precious metals and precious stones.
  • Practitioners of mechanized farming.
  • Notaries.
  • Dealers in real estate, estate developers, estate agents, and brokers.

Regulation of Internet and Ship-based Casinos

The new Act specifically regulates internet and ship-based casinos.

Mandatory Disclosure to Nigerian Financial Intelligence Unit and SCUML

Financial institutions and designated non-financial businesses and professions must now submit their transactions to the Nigerian Financial Intelligence Unit for financial thresholds above N5,000,000 for individuals or N10,000,000 for corporate bodies. Simultaneously, their reports to SCUML are required for other types of transactions.

Assessment of New Business Practices and Products

Financial institutions and designated non-financial businesses and professions must identify and assess money laundering and terrorist financing risks that arise in developing new products and new business practices.

Jurisdiction and Expansion of Jurisdiction Over Persons

The 2022 Act grants the Federal High Court jurisdiction over matters under the Act. Its jurisdiction expansion includes:

  • Offenses committed on a ship, vessel, or aircraft registered in Nigeria by a Nigerian citizen or non-citizen.
  • Persons whose conduct would also constitute an offense under the law of the country where the offense was committed and outside Nigeria.

Increased Penalties for Money Laundering Offenses

Individuals convicted of money laundering face imprisonment for a term of not less than four years but not more than fourteen years or a fine not less than five times the value of the proceeds of the crime. Corporations face fines of not less than five times the value of the funds or properties acquired as a result of the offense committed.

The Money Laundering (Prevention and Prohibition) Act 2022 presents a robust framework to address evolving trends in Nigeria’s economy and the global fight against money laundering and terrorist financing. Effective implementation could significantly reduce money laundering and enhance the Nigerian economy.

Key Points:

  • New institutional framework: Set up the Special Control unit (SCUML) under the Economic and Financial Crimes Commission (EFCC).
  • Stricter regulations for PEPs: Approval, source of wealth and funds, and enhanced monitoring.
  • Expanded definition of funds: Include virtual assets.
  • Limited confidentiality: Apply to some scenarios like property transactions.
  • Wider reach: Cover various industries and business types.
  • Regulation of casinos: Include internet and ship-based casinos.
  • Mandatory disclosure: To Nigerian Financial Intelligence Unit and SCUML.
  • Assessment of new practices: Developing new products and business practices.
  • Increased penalties for money laundering offenses: Hefty fines for individuals and corporations.
  • Effective implementation: Significantly reduce money laundering and enhance the Nigerian economy.