Reports by The Guardian newspaper claim that the United States (U.S.) Justice Department has put some Nigerian banks under the searchlight in order to investigate if they have links to funding of the various terror cells across the continent, particularly Boko Haram.
The development was sequel to BNP Paribas’ guilty plea and agreement to pay nearly $9 billion for violating U.S. sanctions, which has now triggered fresh enthusiasm on the U.S. Justice Department to also extend its investigations to Africa, especially among big banks on the continent with strong international links.
Two other major French banks- Credit Agricole and Societe Generale, Germany’s Deutsche Bank AG, and Citigroup Inc’s Banamex unit in Mexico are among those being investigated for possible money laundering or sanctions violations, according to reliable industry sources.
The Justice Department and other U.S. authorities, including the Manhattan District Attorney, are probing Credit Agricole and Societe Generale for potentially violating U.S. economic sanctions imposed against Iran, Cuba and Sudan, one of the sources said.
Specifically, in the case of Nigeria, there had been widespread suspicion that a few banks in the country may have compromised in helping to move funds for members of the Boko Haram sect.
There were fears recently that Nigeria may be blacklisted by international anti-money laundering watchdogs based in the U.S., over its inability to track the source of funds of the Boko Haram sect and curb terrorism financing in general.
Signals from Financial Action Task Force (FATF), the global standard setter for measures to combat money laundering, terrorist and proliferation financing, indicated that despite the earlier warnings to Nigeria on its non-compliance level, the country is yet to take any concrete step to stem the rising spate of financial crimes including terrorism financing, money laundering and corruption.
In its recent report, dated February 11, 2014, the FATF listed Nigeria among the countries that have not made significant progress in addressing the lacunas in their Anti-Money Laundering and Combating Terrorism Financing (AML/CFT) regimes. The agency advised the international financial community on the potential risks in the country.
Recent events, especially the activities of Boko Haram and startling revelations from various probes by the National Assembly, are putting Nigeria under global focus and scrutiny.
It will be recalled that on June 23, 2006, FATF decided to remove Nigeria from its list of Non-Cooperative Countries and Territories (NCCTs). Since July 2001, Nigeria has been on this shame list. The cost to the economy is incalculable: inflow/outflow of transactions to Nigeria has around it a cautionary flag to the rest of the world and numerous Nigerians operating outside the country have had their financial dealings cancelled/ monitored.
Similarly, Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), in its 2011 yearly report, clearly showed that the sources of money laundering, corruption, tax fraud, narcotics, trafficking and capital market related crimes were identified as the major challenges facing Nigeria.
The data from GIABA, an institution of the Economic Community of West African States (ECOWAS) responsible for facilitating the adoption and implementation of AML/CFT in West Africa, stated that the National Drug Law Enforcement Agency (NDLEA) seized 195, 283, 917 kilogrammes of various types of illicit drugs, mostly cannabis valued at over N140 million. The country also generated 8,725, 213 Currency Transaction Reports (CTRs), 2,031 Suspicious Transaction Reports (STRs) and 83 confirmed cases of money laundering in the reviewed period.
Director-General, GIABA, Dr Abdullahi Shehu, expressed regret that despite the support of GIABA, Nigeria still engages in predicate offences that assist the growth of money laundering. “There are still gaps in the AML/CFT regimes that require priority attention. While arrests and prosecutions for money laundering offences have been increasing, they have not led to commensurate increase in conviction and deterring punishment,” he said.
The GIABA boss listed counter-measures to include development of a National AML/CFT strategy and action plan 2011-2015; passage of money laundering prohibition Act (MLPA) 2011; AML/CFT compliance examination/inspection; registration of DNFLs; gazetting of AML/CFT guidelines for the Securities and Exchange Commission (SEC) and the National Insurance Commission (NAICOM), and development of AML/CFT risk-based supervision framework.
Meanwhile, the implications of FATF delisting would be devastating for the already comatose Nigerian economy. It means Nigeria’s business environment is risky for foreign investment, an indication that the nation’s financial sector is no longer safe.
Furthermore, it will be difficult for Nigerians living overseas to open accounts, especially in branches of multinational financial institutions.
The financial offences watchdog recommends that financial institutions should give special attention to business relations and transactions with persons, including companies and financial institutions, from the “non-cooperative countries and territories.”
Nigeria lost an estimated $25 billion in the four years that it was on the delisted list.
The loss refers to cash quantification of what would have accrued to the country’s treasury through direct foreign investments.