Between January and March 2022, the Nigerian Financial Intelligence Unit (NFIU) reportedly flagged suspicious transactions valued at over N150 trillion. In its recent Suspicious Transaction Report/Suspicious Activity Report, the NFIU reportedly noted that the suspicious transactions were reported by banks, insurance companies, assets management companies, brokers and some others. Banks accounted for the largest chunk of the illicit financial flows.
The humongous amount of money recorded this year is worrisome. In the first quarter of 2021, such transactions were said to be N108.5 trillion. When this figure is compared with the N150 trillion recorded in the first quarter of 2022, it means there is 23 per cent increase in suspicious fund transactions between the first quarter of last year and the corresponding period this year. There may be further rise in these transactions considering that there is a general election in 2023. Already, many politicians and their parties have amassed heavy war chest to prosecute their campaigns. This has reportedly prompted the NFIU and its parent body, the Economic and Financial Crimes Commission (EFCC), to intensify surveillance on campaign spending by political parties, their candidates and top chieftains of the parties. The ultimate aim is to check financial inducement of voters, especially during elections.
The major sources of these illicit money flows are the oil and mining sectors. Little wonder, there is an upsurge in oil theft in Nigeria. Virtual assets such as crypto currency are also used for such illicit transactions. Top destination points for illicit financial flows from Nigeria are United Kingdom, United States, United Arab Emirates, Spain, France, Germany and many others. In December 2017, Switzerland returned $322.51 million being part of the loot by the late military ruler, Sani Abacha. There have been some other recoveries of stolen money stashed abroad by Nigerian politicians. Many other politicians have purchased properties worth millions of dollars with stolen money from Nigeria.
Money laundering is rife in the country. It is economic sabotage. In February 2012, a High Level Panel on Illicit Financial Flows from Africa was established. The panel, led by a former South African President, Thabo Mbeki, estimated that at least $50 billion flows out of Africa on annual basis. Nigeria alone accounts for over $10 billion of this amount. This has obviously continued to increase over the years. In September, the Chairman of the Independent Corrupt Practices and other related Offences Commission (ICPC), Professor Bolaji Owasanoye, lamented the increasing trend of illicit financial flow, budget padding and diversion of public funds. He said the ICPC intercepted N181 million from 19 government agencies between January and June 2022. This money, he said, would have been diverted or stolen by corrupt public officials. The ICPC, Owasanoye added, monitored N24 trillion electronic transactions alone among Nigerians within Nigeria between January and June this year. This runs into about N50 trillion yearly. He noted, “If corruption is fought to standstill by all relevant agencies and public officers, it will be discovered that the money to fix Nigeria is in Nigeria and not elsewhere.”
One major danger of these illicit flows is that financing terrorism will not be difficult. Already, Nigeria has serious issue with insecurity as Boko Haram and other terrorist groups unleash terror on innocent citizens. There is also the danger of local entrepreneurs losing their investments. Usually, money launderers, in an attempt to conceal the source of their illicit money, import goods which they sell at cheaper rate to recoup their money. Local entrepreneurs who do legitimate business cannot match them because they have to make profit. This affects their business negatively and consequently, frustration sets in. Invariably, the economy of the country is affected because the revenue that should accrue to government in form of tax does not come. Money launderers do not pay tax. Foreign investment is also affected. Even the image of the country is negatively affected.
Nigeria’s new Money Laundering Prohibition and Prevention Act 2022 makes provisions on how financial and designated non-financial institutions should file suspicious transactions with NFIU. How many financial institutions comply with the law? Are top bankers reporting influential politicians who make huge suspicious transactions? The international financial watchdog, the Financial Action Task Force (FATF), scores Nigeria low in terms of compliance with money laundering and combating the financing of terrorism.
The onus is on the Central Bank of Nigeria (CBN) and the NFIU to track these transactions and do the needful. The CBN should redouble its efforts in combating money laundering or illicit financial flows by strengthening its monitoring capacity. Banks, in particular, should be serious in conducting Know Your Customer (KYC) processes for their customers. This ensures that any illicit transaction is easily traced. Financial institutions should cooperate with regulatory and security agencies by sharing information with them. Above all, the EFCC should apprehend and prosecute those involved in illicit fund transactions.