At a time the Nigerian economy is facing daunting challenges, it is disturbing that the European Union (EU) has placed Nigeria in its blacklist for money laundering and terrorist-financing risks. Two other countries join Nigeria in this infamous list, Saudi Arabia and Panama, which in the estimation of the EU are viewed as posing a financial threat because of their lax controls on terrorism-financing and money laundering.
The EU Justice Commissioner, Vera Jourova, who proposed these new additions to the old list a fortnight ago, said in a news conference she was confident EU member states would approve the list. She had been under pressure to release the list quickly because, she said, risks spread like wildfire in the banking sector. “We have to make sure that dirty money doesn’t find its way to our financial system. Dirty money is the life blood of organized crime and terrorism.” She counseled affected countries to remedy their deficiencies swiftly.
The overall list includes 23 countries which the EU says have “strategic deficiencies” in their anti-money laundering and counter-terrorism financing frameworks. They include Botswana, Ghana, Libya, a number of Pacific and Caribbean Island states like Guam, Samoa, The Bahamas and the US Virgin Islands. The rest are those countries which have for years been associated with threats of terrorism like Afghanistan, North Korea, Ethiopia, Iran, Iraq, Pakistan, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen.
The criteria used to blacklist countries include weak sanctions against money laundering and terrorism-financing, insufficient cooperation with the EU on such issues and lack of transparency about owners of suspect companies and trusts. A little controversy that trailed the new list has been that it did not emanate from the Paris-based Financial Action Task Force (FATF), which is the international clearing house for money laundering and terrorism-financing. But the EU insists that it took into account the work of the FATF, and recalled that in September 2018, FATF warned the Saudis about its failing to effectively investigate and prosecute individuals involved in large money-laundering scams, failing to co-operate with other countries to go after the proceeds of crime and ignoring terrorist fundraising by groups active outside the kingdom.
A spot on the list not only jeopardises the reputation of the country but it also complicates financial relationships with the EU whose banks would have to carry out additional checks on every transaction. EU members have up to one or two months to endorse the list. They could also reject it. This is where the persuasive influence of various countries comes into play because they can lobby to be deleted from the list as some countries–Bosnia, Guyana, Laos, Uganda and Vanuatu–have done in the past. Indeed, the UK is said to be pushing back against the inclusion of Saudi Arabia since the Saudis are a major importer of their goods and weapons. Several top British banks do roaring business in the country. The Royal Bank of Scotland is the European bank with the largest turnover in Saudi Arabia. The Spanish government is said to be pushing to remove Panama. It is not clear if Nigeria has an advocate.
Being blacklisted by the EU is a setback and the Federal Government must treat the issue with the seriousness it deserves. It should be ready with the facts and the figures and be as transparent as possible with the accounts books and offer its own initiatives in the fight against money laundering and terrorism-financing. It is always considered one of the major failings of the war against Boko Haram that after 10 years, Nigeria has been unable to unmask any or some of the financiers of the sect. Nigeria ranks third in the Global Index of Terrorism, after Afghanistan and Iran. It is, therefore, not a surprise that the country would come under suspicion that there must be significant local collaboration and sponsorship.
We believe the Federal Government should seek external help to track sources of terrorism funding. The existence and activities of the Inter-governmental Action Group against Money Laundering in West Africa (GIABA) has apparently been insufficient to allay the fears of the EU.
The government should go ahead to demonstrate its own independent efforts such as the creation of anti-corruption offices in the 44 local government areas in Kano State, for instance, with special attention to money laundering and terrorist-financing. Indeed the Nigerian co-ordinator of GIABA journalists’ network, Odan Agbese, and the Program Advisor Muhammed Nurudeen, noted that “this painstaking effort despite its political implication is a good development for the fight against money laundering and terrorist financing in Nigeria.”