By Osaze Omoragbon
The growing adoption and use of cryptocurrencies present challenges to government anti-corruption war, says Professor Itsey Sagay, Chairman of the Presidential Advisory Council Against Corruption (PACAC). Sagay stated this at a one day virtual interactive dialogue on the risks and opportunities of cryptocurrencies. According to Sagay, the secrecy associated with cryptocurrencies transactions, make them amenable to both legitimate and illegitimate use. He wondered why society is tolerating the adoption of an unregulated, secret and abstract currency that is susceptible to criminal activities. “Cryptocurrencies are notional and exist in the mind. They have been used in crimes such as tax evasion, money laundering and terrorist financing” he says. A key challenge posed by cryptocurrencies for the war against corruption in Nigeria, according to Sagay, is that they will limit government sanctioning powers, such that government agencies including the Central Bank of Nigeria (CBN) and the Economic and Financial Crimes Commission (EFCC) will not have the means to trail or recover laundered funds.
In his submission, Mr Dein Whyte, the Head of Cyber Crime Unit at the EFCC said cryptocurrencies present a unique opportunity for criminals to engage in money laundering. He admitted that cryptocurrencies itself is not a bad idea but it is the intention behind its use that determines if it is bad or good. He said criminals love it because cryptocurrencies transactions are unrecoverable and irrevocable just as it is not subject to strict regulatory burdens even when transactions cross borders. The anonymity of transactions and low charges, according to Whyte is what is responsible for the growing adoption of cryptocurrencies. A lot of fraudulent investment schemes such as ‘pump and dump’ ponzi investments, he says, is partly responsible for the widespread adoption of the alternative currencies. These ponzi schemes run by fraudsters, Whyte asserts, lure unsuspecting Nigerians into cryptocurrencies by trumpeting the gains of these investments through aggressive marketing and public relations, only to pull out, leaving their investors stranded.
Delivering a goodwill message on behalf of the National Assembly, Mr Ashley Emenike representative of Senator Suleiman Abdu Kwari, Chairman Senate Committee on Anti-Corruption and Financial crimes, called for a national framework on use of cryptocurrencies as well as legislation that will empower the anti-corruption agencies towards enforcing anti-money laundering regulations involving cryptocurrencies. He welcomed the move by the CBN which banned banks facilitating transactions in cryptocurrencies or dealing with crypto exchanges.
The virtual seminar which was well attended attracted participants from regulators including Securities and Exchange Commission (SEC), CBN, Ministry of Finance, Ministry of Justice, EFCC, ICPC and private sector participants including cryptocurrencies operators among others.