FTAF AND CYCLICAL REPRIEVES

The country’s exit from the FATF grey list is commendable

That Nigeria has successful exited from the Financial Action Task Force (FATF) Grey List and the proposed move by the European Union (EU) on the list of high-risk third countries are good news. But we urge the federal government to do more in combating illicit financial activities in the country. “Nigeria’s exit from the FATF Grey List and the European Union’s high-risk third country list reflects the strength of our collective resolve and the effectiveness of sustained, coordinated reforms,” said the NFIU Chief Executive Officer, Hafsat Abubakar Bakari. While we commend the NFIU whose mandate includes collecting currency transaction reports (CTRs), suspicious transactions reports (STRs) and other information relevant to money laundering and terrorist financing activities, it is important to avoid these cyclical suspensions.

The Egmont Group, the highest inter-governmental association of intelligence agencies in the world with membership by 152 countries, provides a platform for sharing criminal intelligence and financial information bordering on money laundering, terrorism financing, proliferation of arms, corruption, financial crimes, economic crimes, etc. Nigeria was fully admitted into the coveted body in 2007, after operational admittance in 2005, in what was considered one of the biggest achievements of the Olusegun Obasanjo administration. Some of the agencies that benefit from the activities of the group include the Central Bank of Nigeria (CBN), Nigerian Customs Service, Independent Corrupt Practices and Related Offences Commission (ICPC), the Economic and Financial Crimes Commission (EFCC), Nigeria Immigration Service (NIS), Federal Inland Revenue Service (FIRS), and the Securities and Exchange Commission (SEC), among other relevant governmental agencies.

The country’s membership paved the path for the removal of Nigerian banks from the blacklist of international finance. The blacklisting had prevented the banks from engaging in correspondent banking with foreign institutions and denied Nigerians access to foreign credit cards. It also affected the international ratings of Nigerian financial institutions, restricting their access to some big-ticket international transactions. The FATF maintains “grey” and “black” lists for countries it has identified as not meeting its standards. It considers grey list countries to be those with “strategic deficiencies” in their anti-money laundering regimes, but which are nonetheless working with the organisation to address them. FATF President Elisa de Anda Madrazo called the removal of Nigeria and the three other countries “a positive story for the continent of Africa”.

In July 2017 Nigeria was suspended from the Egmont group, following failure to grant operational autonomy to the NFIU. With that, Nigeria was denied access to some foreign sources of funds in addition to grants and aids. With Nigeria categorised as a non-cooperative territory, efforts were made to redress the situation. The enactment of the NFIU Act, 2018 signed into law by the late President Muhammadu Buhari was helpful. The law establishes a legal framework for a national center that will be responsible for the receipt and analysis of information from financial institutions and designated non-financial institutions, for the purpose of generating and disseminating intelligence to all law enforcement agencies and other competent persons.

Although the absence of a legal framework for FIU Nigeria and lack of operational and financial autonomy, among others were problems in the past, the situation has been redressed with the law. Despite that, Nigeria was in 2023 placed “under increased monitoring” due to strategic deficiencies in its anti-money laundering and counter-terrorism financing (AML/CFT) framework. Even when that has now been resolved, the biggest challenge to the anti-money laundering legislations is the lack of political will and the laissez-faire approach from relevant government agencies. While we commend the efforts that led to the removal of Nigeria from the list of non-cooperation countries and territories (NCCTs), the current administration must work to strengthen institutions that are charged with combating money laundering and other illicit financial activities in the country.