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Nigeria’s money laundering status worrisome


ANOTHER damning report released last week confirms the Nigerian government’s institutional weakness and unfocused response to ‘hot money’, and terrorism, and its funding. In its latest global ranking on money laundering and terror financing risks, the Basel Institute of Governance, an international non-profit, Nigeria ranked 17th out of 128 countries, placing it firmly in the ranks of countries with “high risks of ML/TF” and susceptible to greater risks of environmental crime.  Assailed by diverse terrorist groups across the country, the Federal Government should urgently strengthen and enforce anti-money laundering mechanisms and resolutely crush terrorism.

 It is another rebuke to the President, Major General Muhammadu Buhari (retd.), whose rise to power in 2015 was anchored on promises to destroy terrorism and criminality, and corruption.  Seven years on, his failure is written across the land in rivers of blood, body bags, destruction and misery.

On his watch, terrorism has spread beyond three North-Eastern states – Borno, Yobe and Adamawa — to almost all the 36 states in varying degrees. Underpinning the deterioration are a faulty strategy, lack of a strong political will, corruption, incompetence, and the enthronement of sectionalism and nepotism in the appointment of senior security personnel. Security issues are also politicised.

Failure is compounded by compromise, weak institutional capacity in the area of surveillance, tracking, interdiction and prosecution of terror suspects and financiers, and a dysfunctional centralised policing system that is glaringly inappropriate in a federation.

 Terrorist groups are sustained by a steady flow of money to fund their nefarious enterprise. Intelligence and law enforcement forces around the world therefore place very high priority on combating terrorism financing — disrupting the sources of funding and logistics of terror groups as a lodestone of counter-terrorism strategy. 

The Basel AML Index 2022: 11th Public Edition, did not mince words; it scored Nigeria 6.77 out of 10, identifying it as one of the countries “not doing enough to tackle money laundering and terrorist financing”.  The report noted that in tackling ‘dirty money’, most countries “are taking one step forward and four steps back – and remaining too many steps behind criminals seeking to launder illicit funds”.

 Nigerians are familiar with this malaise. Despite a plethora of anti-money laundering laws, regulations and multiple agencies, the country remains a safe haven for money launderers.  Enforcement is weak and farcical; selective interdiction reigns. Institutions are feeble; the Central Bank of Nigeria’s regulations are routinely flouted.

As it moves to redesign and re-issue some currency notes, the CBN confirmed that 85 percent of the currency in circulation is outside the banking system. This is in spite of limits to physical cash that individuals and corporate bodies can hold, withdraw or deposit. Social media is awash with trending images of billions of naira stashed in homes by hoarders, a reflection of ineffectual law enforcement. 

Worse, the government often fails to surveil, arrest and prosecute financiers of terrorism. Accordingly, bandits, Islamic terrorists and killer/kidnap gangs daily negotiate for and collect millions of as ransom for kidnap victims right under the noses of the law enforcement and financial sector authorities.  Brazenly, banks and bureaux de change flout money laundering rules.

 In 2020, United Arab Emirates authorities convicted six Nigerian BDC operators for funding the Boko Haram terror group. In September 2021, exasperated by Nigeria’s failure to act on intelligence provided and prosecute identified enablers of terrorism, the UAE publicly named another 32 Nigerian terrorism financiers and placed six others on a watch list.

Bowing (reluctantly) to external pressure from foreign countries, the Attorney-General of the Federation, Abubakar Malami, announced in May 2021 that the government had arrested 400 terrorism financiers and would soon prosecute them.  Eighteen months later, despite reminders from civic groups and the media, they have not been publicly arraigned in court.

The regime is simply not serious. Though Nigeria has signed on to several international pacts and groups to combat money laundering, it has never been vigorous in locating and neutralising sources of terrorism laundering or prosecuting suspects. For a country ranked sixth most terrorism impacted globally on the Institute of Economics and Peace’s Global Terrorism Index 2022, this is counter-productive.

Nigerians are paying heavily for their government’s treacherous laxity. About 53,418 persons have been killed by various non-state actors since May 29, 2015 to October 15, 2022, according to the Council on Foreign Relations’ Nigerian Security Tracker. The Global Centre for the Responsibility to Protect reckons that 35,000 persons have been slaughtered in Northern Nigeria by Islamist terrorists since 2009 when Boko Haram launched its insurgency. Terrorists, bandits and Fulani herdsmen/militants are on killing sprees across the country. In the South-East, terrorists group claiming to be fighting for self-determination are spreading death and mayhem in the region.

A 2019 UNDP report on the economic impact of terrorism assessed the cost of terrorism in Africa 2007 – 2016 at a conservative $119 billion; of this, Nigeria accounted for $97 billion, 22,000 times greater than that for Burkina Faso, and 19 times greater than that for war-torn Libya.

Buhari, the security and anti-graft agencies and financial sector regulators need to shift gear to save Nigeria. The country has no shortage of laws and regulations; it is a signatory to several international anti-money laundering and counter-terrorism treaties and organisations. 

As a follow-up to the United Nations Security Council resolutions, the UN Counter-Terrorism Executive Directorate urged all countries to integrate CTF into their counter-terrorism strategy; establish effective mechanisms to prevent funds from reaching terrorists. Among others, it recommended paying close attention to links between organised crime, human trafficking, drug trafficking, and terrorism financing.

 In Nigeria, the problem lies in enforcement. Collusion, corruption, incompetence and sectionalism allow terrorism and its funding to thrive. 

 Malami should immediately prosecute the terror financiers and terror suspects. Buhari should muster the strong political will, shake up the security apparatus; set, and enforce performance targets for them.

Effective intelligence gathering and follow-up action as well as disruption of sources of funding and logistics are central to defeating terrorism. Increasingly, law enforcement is relying heavily and effectively on ICT.  Nigeria should harness these elements quickly and end the country’s nightmare.  

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