https://newtelegraphng.com/nigeria-inching-closer-to-exiting-fatfs-grey-list/

The country’s rigorous actions aimed at dismantling the business of money laundering and illicit financial flows are yielding fruits.

Unlike in the past when illicit financial flows, money laundering, and related issues were mildly treated, current officials with mandates to sanitise Nigeria’s financial space and rid it of illicit financial flows are not giving criminal actors in the value chain a breathing space.

Money laundering is a complex process that involves three main stages: placement, layering, and integration. Criminals employ various methods to launder money in Nigeria, such as currency smuggling, shell companies, false invoicing, structuring, and gambling.

Transactions depicting illicit financial flows are large cash deposits made with no justification for where the funds came from.

Such funds are the proceeds of coordinated crimes, laundered funds, and related corruptly transacted funds.

Financial flows

Experts put Nigeria’s losses to illicit financial flows at $18 billion annually. The figure they posit accounts for about 30 per cent of Africa’s loss to the IFFs. The Independent Corrupt Practices and Other Related Offenses Commission (ICPC) pegged the figure at $10 billion.

The funds are proceeds of public sector stolen funds, illicit drug proceeds, and electronic financial frauds. The initial non-repellent actions of established bodies without mincing words enabled culprits and criminal elements of financial illicit flows to carry on unremorseful.

With their nefarious activities, the country was placed on the Financial Action Task Force’s (FATF) “grey list” in February 2023.

War against illicit flows

Nigeria is waging a sustained, unyielding war against illicit financial flows and money laundering transactions.

The Nigeria Financial Intelligence Unit (NIFU) is Federal Government’s agency leading the war against illicit financial flows in collaboration with every agency in the financial value chain.

It involves the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), National Insurance Commission (NAICOM), Economic and Financial Crimes Commission (EFFC), and the ICPC.

The NFIU, in collaboration with these agencies of government, is working assiduously to take Nigeria off the Financial Action Task Force’s grey list. As of last week, Nigeria moved up by three additional grades in her anti-money laundering and counter-terrorism financing quest.

Statutorily, as it stands today, the country is compliant (C) or largely compliant (LC) in 37 out of the 40 recommendations, leaving it with three to scale.

At the summit of the Group Against Money Laundering in West Africa (GIABA) technical commission, which was held last month at Free Town in Sierra Leone, Nigeria moved up in her grading.

Chief Executive Officer of NFIU, Hafsat Abubakar Bakari, who doubles as Nigeria’s National Correspondent (NC) for the ECOWAS (GIABA), led Nigeria’s delegation.

Other membrrs of the delegation included representatives from the Economic and Financial Crimes Commission (EFCC), Special Control Unit against Money Laundering (SCUML), Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), Federal Ministry of Justice (FMOJ), Corporate Affairs Commission, and Nigeria Export Processing Zones Authority (NEPZA).

At the GIABA’s session at Freetown, Nigeria’s third followup report was discussed at plenary, which focused on its progress in addressing technical compliance deficiencies identified in its 2021 AML/ CFT mutual evaluation. The follow-up report highlighted Nigeria’s enhanced measures in an

The government and agencies saddled with the responsibilities to sanitise financial space against illicit financial flows must collaborate and synergise to ensure the country doesn’t slip into FATF’s infamous grey list again

ti-money laundering and counterterrorism financing. The plenary recognised the remarkable improvement in Nigeria’s legal and regulatory framework and upgraded five key recommendations from partially compliant to largely compliant.

The report highlights recommended upgrades to include recommendation 23 on other measures relevant to designated non-financial businesses and professionals, recommendation 24 on transparency and beneficial ownership of legal persons, recommendation 25 on transparency and beneficial ownership of legal arrangements, recommendation 28 on regulation and supervision of DNFBPs, and recommendation 32 on cash couriers.

The country secured its inclusion in the GIABA enhanced followup process in 2021 when it submitted three reports seeking re-rating recommendations in line with a non-compliant/partially compliant rating.

Exit time

Given the country’s concerted efforts towards exiting the grey list, GIABA member states and international partners commended Nigeria’s efforts.

The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, whose institution is a key player in the quest to exit Nigeria from the list, spoke of plans last week in Abuja.

The occasion was the apex bank’s Monetary Policy Committee (MPC) meeting. Cardoso said: “We are collaborating more.

We are ensuring that our anti-money laundering (AML) processes and procedures work effectively and that, where sanctions need to be applied, they are applied, and we will not stop to do that.

We are also enhancing our regulatory frameworks and ensuring that we are going around to see that the relative players are operating the way they are meant to be.

“Of course, we are deepening international cooperation, which is very important, to ensure that we are out there, understanding what the expectations are from FATF and the ancillary bodies, and making sure that we are well-endowed to meet their expectations.

With that all in view, our expectation, quite frankly, is that by the second quarter of 2025, we should exit the FATF gray list.”.

Procedures

Untamed illicit financial flows and money laundering pose a serious economic drawback to the country. It reduces productivity in the economy’s real sector.

It leads to diverting resources and encouraging crime and corruption. It slows economic growth. In addition, unrestrained illicit financial flows have the potential of distorting an economy’s external sector through international trade and capital flows to the detriment of long-term economic development.

With the country set to exit FAFT’s trap, hopefully, in the first quarter of 2025, as predicted by Cardoso, the onus of not returning to the grey list lies on the financial agencies of the government and financial institutions.

Financial institutions must strengthen and prioritise the customer identification program/know your customer (KYC). They must endeavor to report large currency transactions and suspicious activities to the appropriate authorities for sanctions and compliance.

Last line

The government and agencies saddled with the responsibilities to sanitise financial space against illicit financial flows must collaborate and synergise to ensure the country doesn’t slip into FATF’s infamous grey list again.