The Financial Action Task Force (FATF), the international body responsible for effective anti-money laundering measures has listed Nigeria among countries with weak anti-money laundering (AML) controls.

In a report released on June 25, addressed to ministers of finance of FATF member countries, the body raises concern about adherence to its 40 recommendations for combating money laundering and also terrorist financing. Nigeria was first taken off the list of Non-Cooperative Countries or Territories" (NCCTs) in 2006 following the renewed effort by the country to tackle the menace of money laundering and other financial crimes. But as the anti-corruption efforts nose-dived under late president Umaru Yar'Adua, FATF is getting worried as necessary laws remain in limbo while government officials continue to pay lip service to the war on corruption.

The report is a follow up to its plenary in February which decided to raise the profile of anti-corruption work among countries, particularly in the financial sector. "The FATF will give more priority to its ongoing work on customer due diligence, beneficial ownership and transparency," it said.

The body said it was in the process of listing countries that are failing to meet the FATF standards that were reinitiated in February in order to encourage countries to take action. "Nuhu Ribadu, the former Nigerian anti-corruption chief, frequently talks about how Nigeria's place on the previous non-compliant list was essential in galvanising his then government to put in place a more effective AML regime," the report posted on its website noted. While Nigeria got commendation for high level political commitment to work with FATF and the Inter Governmental Action Group against Money Laundering in West Africa (GIABA), it however frowned at certain strategic AML deficiencies still prevalent in the system.

Deficiencies

According to the report, Nigeria should continue to work on implementing its action plan to address these deficiencies, by adequately criminalising money laundering and terrorist financing, in line with the first recommendation. The report indicted Nigeria in implementation of adequate procedures to identify and freeze terrorists' assets. "Nigeria need to work at ensuring that relevant laws or regulations address deficiencies in customer due diligence requirements and that they apply to all financial institutions." However, in the new prudential guidelines issued by the Central Bank in May, banks and other financial institutions were directed to comply with the principles and procedures of Know Your Customer (KYC) and to comply with the Anti-money Laundering Act 2004 and relevant circulars as issued by the Bank from time to time.

The report also said that Nigeria has shown a poor demonstration that AML/CFT supervision is undertaken effectively across the financial sector, unlike the recommendation that countries should ensure that financial institutions are subject to adequate regulation and supervision and are effectively implementing the FATF Recommendations. "Competent authorities should take the necessary legal or regulatory measures to prevent criminals or their associates from holding or being the beneficial owner of a significant or controlling interest or holding a management function in a financial institution." The report therefore encouraged Nigeria to address its deficiencies and continue the process of implementing its action plan.