Although Nigeria has taken a number of initiatives to enhance its Anti-Money Laundering (AML) Framework, money laundering remains a major issue in the country. Advance fee fraud was first made famous by Nigerian criminals; but, in recent years, natives of several African countries, as well as others from all around the globe, have begun to commit advance fee fraud. Internationally, this kind of fraud is known as "Four-One-Nine" fraud (419 refers to the Nigerian criminal code's fraud section). While there are numerous variants, the fundamental purpose of 419 fraud is to deceive victims into paying an advance charge by convincing them that they would get a substantial advantage if they do so. Some victims have lost money, been kidnapped, or been murdered as a result of these "get rich quick" scams. 419 scammers have attacked businesses and individuals all around the world via the Internet, and they continue to do so. The Economic and Financial Crimes Commission (EFCC) has attempted to prevent 419-related cyber crimes, although only a few achievements have been reported as a consequence of its efforts.
Nigeria implemented three pieces of legislation in December 2002, after being placed on the NCCT list and facing a FATF recommendation for countermeasures, which are:
- a reformation to the 1995 Money Laundering Act that broadens the law's application to include all consequences of crime;
- a modification to the Banking and Other Financial Institutions (BOFI) Act of 1991 that extends the law's scope to stock brokerage businesses and foreign currency exchange services
The Economic and Financial Crimes Commission (Establishment) Act, which establishes the EFCC and coordinates anti-money laundering (AML) prosecutions and sharing of information, gives the Central Bank of Nigeria (CBN) wider power to deny bank licenses and enables the CBN to freeze suspicious accounts.
AML Regulations in Nigeria
The key Nigerian AML law and regulations are as follows:
- The Money Laundering Act.
- 2012 Terrorism Prevention Act (as amended).
- Regulations on Terrorism Prevention (Freezing of International Terrorist Funds and Other Matters), 2013.
- The Economic and Financial Crime Commission (Establishment) Act of 2004 establishes the Economic and Financial Crime Commission.
- The Banks and Other Financial Institutions Act (BOFIA) of 1991 regulate financial institutions.
- AML/CFT Regulations of the CBN, 2013.
- The CBN Act of 2017
- CBN Risk-Based Supervision Framework for AML/CFT, 2011.
- CBN Circulars and other regulatory messages
- The Drug Enforcement Administration's National Drug Law Enforcement Act (1990).
AML Requirements in Nigeria
Certain financial institutions and authorized businesses are required to have compliance programs under the Money Laundering Act. The following are the AML requirements:
- Appointment of an AML chief compliance officer at the executive level
- Identification of AML legislation and offenses
- Identifying the nature of money laundering
- Reporting money laundering "red flags" and suspicious transactions
- Meeting reporting requirements
- Conducting customer due diligence
- Comply with a risk-based approach to AML
- Record-keeping and adherence to a retention policy
FATF Status and The Latest FATF Statement
Nigeria is no longer on the FATF's list of nations with strategic anti-money laundering weaknesses. The FATF praises Nigeria's significant progress in improving its anti-money laundering and counter-terrorist financing regime, noting that the country has put the legal and regulatory framework in place to fulfill its obligations in its Action Plan to address the strategic flaws identified by the FATF in February 2010. As a result, Nigeria is no longer monitored by the FATF as part of its ongoing worldwide AML/CFT compliance process. Nigeria will continue to cooperate with GIABA to address the entire spectrum of AML/CFT problems outlined in its Mutual Evaluation Report.
Compliance with FATF Recommendations
The Financial Action Task Force (FATF) concluded its last Mutual Evaluation Report on Nigeria's compliance with AML/CFT criteria in 2007. According to the investigation, Nigeria was found to be Compliant for 2 and Largely Compliant for 7 of the FATF's 40 + 9 Recommendations.
Despite the Nigerian government's efforts to combat financial crimes, the country remains a major drug transit hub and a key center for financial and cyber-crime. Nigeria has recently made a concentrated effort to overcome some of its issues in enforcing its anti-money laundering and counter-terrorist financing framework.
Bribery and Corruption
In Nigeria, corruption is a serious hindrance to industry: enterprises are extremely likely to meet bribes and other corrupt acts. Corruption is a concern in all institutions, but it is particularly prevalent in the oil business. The Criminal Code and the Corrupt Practices and Other Related Offenses Act are the primary laws that criminalize corruption. Accepting or donating gifts and facilitation fees is unlawful, and people can face up to seven years in jail. Despite a powerful legal foundation, Nigeria's anti-corruption law is poorly enforced: gifts, bribes, and facilitation payments are widespread.
The Economy of Nigeria
With its rich supply of resources, well-developed financial, legal, communications, and transportation sectors, and the second-largest stock exchange in Africa (the Nigerian Stock Exchange), Nigeria is classed as an emerging economy that is fast nearing middle-income status.
Nigeria is the US's most significant commercial partner in Sub-Saharan Africa, supplying a fifth of the country's oil (11 percent of oil imports). It has the world's seventh-largest trade surplus with the United States. Nigeria is the 50th largest export market for American goods and the 14th largest exporter to the United States. Nigeria's largest foreign client is the United States.
Banking in Nigeria
Nigeria's central bank is the Central Bank of Nigeria. It also functions as the country's regulatory body. Nigeria's external reserves are managed by the central bank, which issues legal money. Thus, it encourages monetary stability and a functioning financial system. The central bank also serves as the federal government's financial counselor.
Organizations that are obliged to comply with AML regulations in Nigeria can easily comply with the regulations, reduce their financial crime risks, and also make compliance programs easy and effective with Sanction Scanner AML Compliance solutions