Fed Govt extends money laundering law to casinos, bans shell accounts

…inbound, outbound travellers to forfeit undeclared funds

The Federal Government has introduced stricter regulations in the operation of casinos in Nigeria, as part of its fresh move against money laundering.

This is just as a new law recently passed by the National Assembly prohibits ownership and operation of shell accounts in the country.

President Muhammadu Buhari had, on Thursday, assented to the Money Laundering (Prevention and Prohibition) Bill, 2022, the Terrorism (Prevention and Prohibition) Bill, 2022, and the Proceeds of Crime (Recovery and Management) Bill, 2022.

The Money Laundering (Prevention and Prohibition) Act, a copy of which was obtained by our correspondent on Monday, established a Special Control Unit Against Money Laundering under the Economic and Financial Crimes Commission, which is to monitor financial transactions within and outside Nigeria.

With the newly-signed law, an individual citizen or foreigner can no longer make or accept cash payment of a sum exceeding N5 million or its equivalent while a corporate entity can no longer make or pay the sum of N10 million or its equivalent.

The piece of legislation further forbids an individual to conduct two or more transactions separately with one or more financial institutions or designated non-financial businesses and professions with intent to: avoid the duty to report a transaction which should be reported under this Act; breach the duty to disclose information under the act by any other means.

As encapsulated in Section 1(a-e), the objectives of the Act include: provision for an “effective and comprehensive legal and institutional framework for the prevention, prohibition, detection, prosecution and punishment of money laundering and other related offences in Nigeria; strengthen the existing system for combating money laundering and related offences; make adequate provisions to prohibit money laundering; expand the scope of money laundering offences and provide appropriate penalties.

Section 1(e) of the Act also seeks to establish the Special Control Unit against Money Laundering under the Economic and Financial Crimes Commission for effective implementation of the Money laundering provisions of the Act in relation to the Designated Non-Financial Businesses and Professions.

Section 2(1) of the bill which stipulates the limit of cash payments to make or accept cash payment, provides that: No person or body corporate shall, except in a transaction through a financial institution, make or accept cash payment of a sum exceeding- N5,000,000 or its equivalent, in the case of an individual; or N10,000,000 or its equivalent, in the case of a body corporate.

Section 3(2-5) further stipulates that: “A report made under subsection (1) of this section shall indicate the nature and amount of the transfer, the names and addresses of the sender and the receiver of the funds or securities.

“Transportation of cash or negotiable instruments in excess of US$10,000 or its equivalent by individuals in or out of Nigeria shall be declared to the Nigerian Customs Service. The Nigerian Customs Service shall report any declaration made pursuant to subsection (3) of this section to the Central Bank and the Unit.

“Any person who falsely declares or fails to make a declaration to the Nigerian Customs Service pursuant to section 12 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, Cap. F34, LFN, 2004 commits an offence and is liable on conviction to forfeit the undeclared funds or negotiable instrument or to imprisonment to a term of not less than 2 years or to both.”

Section 4(1a-d) of the Act makes it mandatory for the Financial Institution and a Designated Non-Financial Business and Profession, to: identify a customer, whether permanent or occasional, natural or legal person or any other form of legal arrangements, using identification documents as may be prescribed in any relevant regulation; verify the identity of that customer using reliable, independent source documents, data or information; identify the beneficial owner using relevant information or data obtained from a reliable source such that the Financial Institution or the Designated Non­ Financial Business and Profession is satisfied that it knows who the beneficial owner is; and take reasonable measures to verify that any person purporting to act on behalf of the customer is so authorised, identified and verify the identity of that person.

Section 4(2a-d) also mandates the Financial Institutions and Designated Non-Financial Businesses and Professions shall undertake customer due diligence measures when – establishing business relationships; carrying out occasional transactions above the applicable designated threshold prescribed by relevant regulations, including transactions carried out in a single operation or in several operations that appear to be linked; carrying out occasional transactions that are wire transfers; there is a suspicion of money laundering or terrorist financing, regardless of any exemptions or thresholds; or the Financial Institution or Designated Non-Financial Business and Profession has doubts about the veracity or adequacy of previously obtained customer identification data.

According to the legislation, “The opening or maintaining of numbered or anonymous accounts by any person, Financial Institution or body corporate is prohibited. A person shall not establish or operate a shell bank in Nigeria.”

Section 12(4a-b)(ii) however provides that: “Any person, Financial Institution or body corporate that contravenes the provisions of subsections (1), (2) and (3) of this section, commits an offence and is liable on conviction to- in the case of an individual, a term of imprisonment of not less than 2 years but not more than 5 years; or in the case of a financial institution or body corporate, a fine of not less than N10 million but not more than N50 million, in addition to – the prosecution of the principal officers of the body corporate, and the winding up and prohibition of its constitution or incorporation under any form or guise.”

As encapsulated in the Act, unlawful shall constitute: participation in an organized criminal group; racketeering, terrorism, terrorist financing; trafficking in persons, smuggling of migrants, sexual exploitation, sexual exploitation of children; illicit trafficking in narcotic drugs and psychotropic substances; illicit arms trafficking, illicit trafficking in stolen goods; corruption, bribery, fraud, currency counterfeiting; counterfeiting and piracy of products, environmental crimes; murder, grievous bodily injury; kidnapping, hostage taking, robbery or theft; smuggling (including in relation to customs and excise duties and taxes), tax crimes (related to direct taxes and indirect taxes); extortion, forgery, piracy; insider trading and market manipulation; and any other criminal act specified in this Act or any other law in Nigeria including any act, wherever committed in so far as such act would be an unlawful act if committed in Nigeria.

Section 5 of the Act sets conditions for casino operators and gamers.

The section read in part, “(1) A casino shall verify the identity of any of its customers carrying out financial transactions by requiring its customer to present a valid original document bearing his name and address; record all transactions under this section in chronological order including the nature and amount involved in each transaction; and each customer’s surname, forenames and address, in a register forwarded to the Special Control Unit against Money Laundering for that purpose.

“(2) A register kept under Subsection (1)(b) of this section shall be forwarded to the Unit and preserved for at least five years after the last transaction recorded in the register. (3) In this section, the casino includes Internet casinos and ship-based casinos.”

Section 12 also prohibits numbered or anonymous accounts in fictitious names and shell banks.

It read in part, “(1) The opening or maintaining of numbered or anonymous accounts by any person, financial institution or body corporate is prohibited. (2) A person shall not establish or operate a shell bank in Nigeria. (3) A financial institution shall (a) not enter into or continue correspondent banking relationships with shell banks; and (b) satisfy itself that a respondent financial institution in a foreign country does not permit its accounts to be used by shell banks.” – Punch, Tribune.

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