THE Central Bank of Nigeria’s recent lamentations about the rising incidence of financial crimes, especially money laundering, provide sufficient reasons for concern because of the serious security and economic implications of such a trend. In drawing attention to the growing trend in the country, however, the CBN Acting Governor, Sarah Alade, was only scratching the surface when she described it as a danger to the integrity of the financial system.
At a recent workshop, she said, “Banks are used knowingly and unknowingly to further the act of money laundering and, in most cases, to retain the proceeds of such crime. Over 80 per cent of the proceeds of money laundering are associated with banks one way or the other all over the world.”
Money laundering, the world over, is considered a very serious crime that should necessarily be tackled within a strong financial regulatory framework with very stiff penalties for offenders. It is the process through which large amounts of money obtained illegally are given the appearance of legitimacy. Such funds are usually proceeds of criminal activities such as drug trafficking, terrorism, kidnapping, illegal trade in mineral resources, stolen money from corrupt politicians and civil servants, among other serious crimes. They are passed through banks or businesses or individuals until they can no longer be traced to their original illegal sources.
The danger in allowing criminals to get away with laundered money is that it gives them successful cover over the illegitimately acquired wealth which could be used against the interest of the larger society. For instance, a drug baron who has made a lot of money could launder the money through politics by using it to contest and win elections. He could also use it to install his hirelings in power, while he remains in the background as “the power behind the throne.” In the case of Nigeria, laundered money, in addition, could easily provide the source of funding for the Islamist Boko Haram terrorists that are currently visiting mayhem on the country.
Discovering and blocking the source of money for Boko Haram will go a long way in cutting off the lifeblood of the demented criminals who have killed close to 13,000 people since they started venting their sanguinary fury on the country five years ago. When Osama bin Laden’s al-Qaeda was becoming very strong and influential, the United States of America took the vital step of strengthening its money laundering laws in collaboration with other countries to ensure that easy money was not readily available for use by terrorists.
What is to be done? While Alade has done well to raise the alarm about money laundering, it is however wrong for her to sound so helpless as if the problem is insurmountable. The CBN has the power of supervision over the banks; assisted by Anti-Money Laundering Act. Under the Act, through automation, banks alert the Economic and Financial Crimes Commission on transactions that fall within “suspicious threshold.” The Act, amended in 2011, forbids individual transactions that exceeds N5 million, and N10 million for corporate bodies. Unfortunately, nothing has been done to bring errant banks to book.
The former CBN Governor, Lamido Sanusi, once said, “We have an Exchange Control Act today that says you can take out any amount of dollars from Nigeria as long as you declare at the ports. People walk out of airports with $3 million after declaring it. That is the law; it allows them as long as they declare it and we cannot stop them.” It should not be so.
What Nigerians and indeed the international community are interested in is how many banks have been prosecuted or sanctioned for their involvement in financial crimes. Within the context of the extant law, the CBN should be thinking of how to collaborate with agencies such as the Nigerian Customs Service, the Financial Intelligence Unit and other security agencies to fight money laundering.
There is no doubt that money laundering is a worldwide phenomenon. The United Nations Office on Drugs and Crime puts the amount of money laundered each year at between two and five per cent of global Gross Domestic Product. It amounts to between $800 billion and $2 trillion. Out of these amounts, an estimated $300 billion is reportedly laundered annually in the United States. In the US, however, as with other Western countries, people are caught and made to face the full weight of the law, just to serve as deterrent to others.
The CBN must strengthen its oversight functions. Financial institutions that fail to meet their anti-laundering obligations must be exposed and penalised. We have had enough of endless platitudes on money laundering. The Federal Government should review its anti-money laundering laws and seek to make them work.
