July 26, 2022
Money laundering and the financing of terrorist organisations has been a source of worry for policymakers and business executives.
According to Section 18(2) of the Money Laundering (Prevention and Prohibition) Act 2022, money laundering includes concealment, disguise, conversion, transfer or control of any fund or property intentionally with the knowledge that such fund or property is or forms part of the proceeds of an unlawful act. On the other hand, terrorist financing means providing funding to terrorists and their networks to enable them carry out acts of terrorism.
Money laundering funds are from an illegal source. However, in terrorist financing, funds may originate from either legal or illegal sources. The objective of terrorist financing is not necessarily to conceal the source of the funds but to conceal the activity funded.
The ability of a business or professional to correctly identify, assess, and comprehend the money laundering and terrorist financing (ML/TF) risk elements present in its business is one of the key success criteria of any anti-money laundering and counter-funding of terrorism (AML/ CFT) framework.
The Financial Action Task Force (FATF) was a task force established in July 1989 by a Group of Seven (G-7) Summit in Paris, initially to examine and develop measures to combat money laundering. FATF’s aim is to develop standards and promote the successful implementation of legal, regulatory, and operational measures to combat money laundering and terrorism. The 40 recommendations by the FATF form the basis for developing an effective AML/CFT framework.
Before 2022, AML/CFT in Nigeria was regulated through the:
These acts were supported by several other regulations such as the Federal Ministry of Industry, Trade, and Investment (Designation of Non-Financial Institutions and Other Matters) Regulations, 2016 and Terrorism Prevention (Freezing of International Terrorists Funds and Other Related Measures) Regulations, 2013.
However, President Muhammadu Buhari, enacted the following three laws with an effective date of 12 May 2022 to implement the FATF recommendations on AML/CFT and address the deficiencies found in Nigeria’s 2nd round of Mutual Evaluation. As assessed by the Inter-Governmental Action Group against Money Laundering in West Africa on compliance with the FATF global standards
The enactment of MLA 2022 provides a comprehensive legal and institutional framework for the prevention and prohibition of money laundering in Nigeria. The TPPA 2022 provides for a unified and comprehensive framework for the detection, prevention, prohibition, and prosecution of acts of terrorism, terrorism financing, proliferation, and financing the proliferation of weapons of mass destruction in Nigeria. Furthermore, the Proceeds of Crime Act 2022 mandates the creation of dedicated accounts for the proceeds of crime.
Some of the noteworthy modifications introduced by the MLA 2022 are as follows:
The MLA 2022 now provides statutory backing for the independent existence and operation of SCUML as a department under the Economic and Financial Crimes Commission (EFCC) and charges it with the responsibility of supervising the relevant institutions in their compliance with the Act, relevant laws and applicable regulations. SCUML was initially a unit under the Federal Ministry of Industry, Trade, and Investment.
The MLA 2022 has changed the line of reporting for financial transactions over the threshold of ₦5,000,000 (five million naira) for individuals and ₦10,000,000 (ten million naira) for corporate bodies.
While Designated Non-Financial Business and Professions (DNFBP) are required to disclose such
obligations to SCUML, Financial Institutions (FI) are required to report such transactions to the Nigerian
Financial Intelligence Unit (NFIU). This is the new line of reporting, notwithstanding anything to the contrary in any other law or regulation. Additionally, individuals may voluntarily give any information on transactions exceeding the threshold of ₦1,000,000 or its equivalent for an individual or ₦5,000,000 or its equivalent for a corporate body.
The MLA 2022 expands the types of firms that qualify and changes the designation of DNFI to DNFBP.
DNFBPs now include dealers in precious metals and precious stones, high-value dealers, trust and public service providers, legal practitioners, and notaries.