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As the build up to the 2015 general elections approaches with the anticipated liquidity in the system and capital flight, the Central Bank of Nigeria adopts measures to curb money laundering, writes Osaze Omoragbon.

 

Illegal transfer of money especially hard currencies outside the shores of the country is not new to Nigeria. Like every other developing country, Nigeria suffers from money laundering on a large scale; which retards the development of the country. Indeed, money meant for development purposes are illegally siphoned and transferred out of the country. What worries most observers, is that, despite several efforts by the regulators to check money laundering, little has been achieved in that regard even as the country earned the ire of the international finance community. This is worsened by the obvious negative image of Nigeria as the global capital of advanced fee fraud.

Though the Financial Action Task Force, the global anti-money laundering body, has delisted Nigeria from its list of uncooperative countries, there are fears that the country may be suspended if it fails to implement outstanding recommendations on instituting a proper framework for combating money laundering. “What this means is that Nigeria can neither receive nor share financial intelligence with other 139 member-countries of the Egmont Group on money laundering, terrorism and proliferation of weapons of mass destruction,” says Steve Oronsaye, Chairman of the Presidential Committee on Financial Action Task Force.

However, the Central Bank of Nigeria (CBN) has moved to check the activities of corrupt politicians, unscrupulous public servants and their accomplices in some banks. Towards this end, the apex bank has developed a framework to guide international money transfer services in Nigeria. The exposure draft of the guideline was released early June to enable stakeholders to make inputs.

The objectives, according to the Director of Banking Supervision Department, Dipo Fatokun is to, among other things; provide minimum standards and requirements for international money transfer services operations in Nigeria, specify delivery channels for offering international money transfer services in Nigeria in a cost effective manner and provide broad guidelines for implementation of process and flows of international money transfer services, from initiation to completion. “The guideline is not new. The CBN is trying to have a compendium on anti-money laundering guidelines which are isolated in several circulars,” says a banker who declined to be named.

Some industry watchers say the CBN may have been prompted by the build-up to the 2015 general elections. During campaigns, a lot of money move around, prompting the apex bank to be proactive. “As soon as INEC gives the green light, we will see a lot of liquidity in the system and capital flight,” says Bola Adejumo, a management consultant. The CBN is said to have reviewed the reporting line in banks mandating Chief Compliance Officers of banks to report directly to the Chief Executive Officers (CEOs). Prior to the review, reports have it that bank CEOs were ill-informed about money laundering breaches as Chief Compliant Officers reported to General Managers or Executive Directors; who might keep such information from the boss.

The money transfer services envisaged by the apex bank are on a person-to-person basis to guard against corporate customers who might want to structure their transfers into smaller amounts to circumvent the statutory reporting threshold. The new guideline will forbid split money transfer transactions and all inbound transfers will be disbursed through bank accounts. Outbound transfer limit has been pegged at $1000 per annum per person.

Some analysts, however, doubt the apex bank’s ability to effectively tighten the screw on money laundering activities as several small illegal money transfer services exist. Though a large chunk of international money transfer services are handled by banks, numerous informal outlets subsist and are not captured by the regulation. These outlets, it is claimed, operate through proxies who send money to and from abroad using Bureau de Change operators. The way out, according to experts, is to order Bureau de Change to submit a regulated money transfer list vetted by the CBN for transaction details such as purpose of remittance, travelling documentation such as travelling ticket and international passport of clients and type of business transacted. With all these, the CBN will ascertain the use of the foreign currencies purchased by the Bureau de Change.

Improvement in electronic payment system has dealt a blow to money launderers who are afraid of leaving behind, paper trails and have, therefore, resorted to informal means to get their money in and out of the country.  Experts predict a drastic reduction in money laundering as cashless policy takes off. The apex bank is urged to be vigilant as criminals are always devising means to beat the system.

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