2 November 2010

http://allafrica.com/stories/201011020856.html

An economist, Dr. 'Buno E. Nduka, has said that Nigeria will lose the much-needed economic rejuvenation from Foreign Direct Investment (FDI) unless it improves on its present low compliance status on the global Financial Action Task Force's (FATF) anti-money laundering score sheet.

Speaking exclusively to Daily Trust in Freetown, Sierra Leone, Dr. Nduka who is the Head of Programmes and Projects of GIABA, explained that FATF, which is the world standard body set up to protect the international financial system from money laundering and to combat the financing of terrorism, identifies countries that have strategic deficiencies that pose a risk to the global economic system and collaborates with the relevant national/regional bodies to address them.

He listed effects of money laundering to include, increase in crimes and corruption; weakening of financial system; macroeconomic distortions; welfare loss; loss of revenue to government - tax crimes; social cost; and slow economic development, adding that their is the need to checkmate the foregoing "deleterious consequences of money laundering and terrorism financing that led to the counter-measures," including the emergence of the critical support institution, the Financial Intelligence Unit (FIU), which Nigerian equivalent is the EFCC.

He also said that the evaluation of member countries' compliance level was carried out based on the 40 plus 9 recommendations made up of 6 key and 10 core requirements, adding that each country was expected to score a minimum of 10 points but that Nigeria scored only 3, showing low level compliance in the capability to combat the twin evils of money laundering and its affiliate offences. He said that only Senegal raked in 7 points of the 15 member countries of the ECOWAS so far evaluated.

On the implications of the low compliance, he said countries that are not doing well in terms of compliance with international standards shows vulnerability to activities of money laundering and this affects many areas of economic development activities and FDI fight.

The economist added that Nigeria has a big financial sector which is more than USD5 billion and the FATF standard is such that if you score less than 10 as compliance level will be subjected to targeted review to unravel the cause and proffer solution.

Dr. Nduka stressed that the FATF recommendations do not represent binding international conventions, but have been recognized, endorsed or adopted by over 182 countries and jurisdictions that have made a political commitment to combat money laundering and terrorism financing by implementing the standards, explaining that "the standards set out the principles of action by governments and competent authorities, and allow countries a measure of flexibility in implementing these principles according to their unique circumstances and constitutional frameworks."