In a public statement issued at the end of its recent plenary meeting held in Paris, France from the 14th to 18th of October, 2013, the FATF removed Nigeria from the list of jurisdictions with significant deficiencies in their Anti-money laundering & Counter Financial Terrorism (AML/CFT) regimes. The decision followed the on-site visit of the FATF International Cooperation Review Group (ICRG) in September, 2013 which visit revealed that Nigeria has substantially completed the technical terms of the Action plan developed to address the deficiencies and that there was political will as well as institutional capacity for continuous implementation of reforms. The import of this decision is that Nigeria will no longer be subject to the on-going global compliance monitoring process by the FATF. Nigeria will however need to continue working with the Intergovernmental Action Group against Money Laundering in West Africa (GIABA) to address all the issues identified in the Mutual Evaluation Report.
The FATF is an inter-governmental body established in 1989 by the G-7 member countries in response to concerns over money laundering and in recognition of the threat it posed to the international financial system. The body now has thirty-six member states, South-Africa being the only African member country. The objectives of the body are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
Nigeria and The Financial Action Task Force
Nigeria has shown a strong commitment to combat money laundering as the country has improved its status with the FATF over the years. In 2001, Nigeria was included in the list of Non-Cooperative Countries and Territories (NCCT) which featured countries with poor AML/CFT regimes. This ‘blacklist’ was accompanied with a word of caution to the international community to deal cautiously with any country on that list and this had negative impact on the economies of countries listed thereon at the material time. Concerted efforts were made by the Government of Nigeria to improve the image of the country in that regard and this led to the enactment of the Money Laundering (Prohibition) Act of 2004. Nigeria was de-listed from the blacklist in June, 2006.
Since 2006, Nigeria has made efforts to improve the AML/CFT regime in the country by bringing same to the standard expected by the FATF. During this period, the country has been under the monitoring process of FATF/GIABA. In 2010 the FATF identified the key areas of deficiency outlined in the action plan above and by June 2013, the FATF decided to conduct an on-site visit to the country having noted the improvements made with regards to the highlighted deficiencies.
The Action plan which formed the basis of the judgement to de-list Nigeria from jurisdictions with deficiencies included the following specific actions to be undertaken by Nigeria:
1. Criminalize terrorist financing in accordance with FAFT standards and relevant conventions.
2. Implement the United Nations Security Council Regulations (UNSCR) 1267 & 1373 (both resolutions border around measures to effectively combat terrorism) through law, regulations and other necessary measures and ensure that there are appropriate procedures to freeze, seize and confiscate terrorist funds.
3. Establish whether the current money laundering legislation captures all required predicate offences and make any necessary amendments to Anti-money Laundering (AML) legislation or the underlying criminal code.
4. Ensure that relevant laws or regulations address deficiencies in customer due diligence requirements.
5. Clarify the AML/CFT responsibilities of the Nigerian Financial Intelligence Unit (NFIU) and the three financial services supervisory bodies – Central Bank of Nigeria (CBN), Securities & exchange Commission (SEC) and National Insurance Commission (NAICOM) and demonstrate that they are undertaking effective supervision across the financial sector.
Most of the issues in the action plan focused on addressing the lapses in the legal/regulatory regime regarding the effective prohibition of money laundering and terrorist financing. The Terrorism (Prevention) Amendment Act, 2013 and the Money Laundering (Prohibition) Amendment Act of 2011 were enacted to address these lapses and provide for a more comprehensive AML/CFT regime. With regards to implementation, the CBN has demonstrated a strong commitment to fight money laundering and has been at the frontline in the crusade with various policies and directives such as the cashless policy and the mandatory provision for a compliance officer for all financial institutions. Other regulatory bodies including NAICOM, SEC and NFIU need to adopt equally pragmatic steps to enhance supervision and monitoring of their various industries.
The fact that Nigeria has been removed from the list of high-risk jurisdictions spells an improved image for the country on the international arena. This should be well guarded by strengthening the AML/CFT regime through implementation of regulations and policies as Nigeria remains subject to continuous monitoring by GIABA. A lot remains to be done in terms of implementation especially in line with the new AML/CFT laws and this is should be the new focus of the Government in order for the AML/CFT regime to take its full course. Law enforcement agents and the judiciary need to be adequately equipped to investigate and prosecute cases to logical conclusions with the requisite provisions for asset seizure and forfeiture properly executed in order to make the offence of money laundering and terrorist financing unattractive. These are some of the finer details that need to be addressed in the Mutual Evaluation Report. It is hoped that this achievement will be a stepping stone for a better AML/CFT regime in Nigeria.