Countries/Jurisdictions of Primary Concern - Nigeria
Nigeria is a major drug transshipment point and a significant center for criminal financial activity. Corrupt officials and businessmen, criminal and terrorist organizations, and internet fraudsters take advantage of the country’s location, porous borders, weak laws, endemic corruption, inadequate enforcement, and poor socioeconomic conditions to launder the proceeds of crime. Criminal proceeds laundered in Nigeria derive largely from foreign drug trafficking and criminal activity rather than domestic activities. Drug traffickers reportedly use Nigerian financial institutions to conduct currency transactions involving U.S. dollars derived from the sale of illicit drugs.
Proceeds from illegal oil bunkering; bribery and embezzlement; contraband smuggling; theft, including bank robberies; and financial crimes, such as bank fraud, real estate fraud, and identity theft, also constitute major sources of illicit proceeds in Nigeria. International advance fee fraud, also known as “419 fraud” in reference to the fraud section in Nigeria’s criminal code, remains a lucrative financial crime that generates hundreds of millions of illicit dollars annually.
Money laundering in Nigeria takes many forms, including investment in real estate; wire transfers to offshore banks; political party and campaign financing; deposits into foreign bank accounts; abuse of professional services, such as lawyers, accountants, and investment advisers; reselling imported goods, such as luxury or used cars, textiles, and consumer electronics purchased with illicit funds; and bulk cash smuggling. Cybercriminals increasingly use more sophisticated techniques, such as e-mail hacking, intrusions, and the use of social media. There also have been a number of cases in which subjects located in Nigeria have owned and operated botnets through which they have conducted denial of service attacks. Nigerian criminal enterprises are often adept at evading detection and subverting international and domestic law enforcement efforts.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: YES
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: List approach
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks, investment and securities broker/dealers, and discount houses; insurance institutions; debt factorization and conversion firms, money exchanges, and finance companies; money brokerage firms whose principal business includes factoring, project financing, equipment leasing, debt administration, fund management, private ledger service, investment management, local purchase order financing, export finance, project and financial consultancy, or pension funds management; dealers in jewelry, cars, and luxury goods; chartered accountants, audit firms, and tax consultants; clearing and settlement companies and legal practitioners; hotels, casinos, and supermarkets
Number of STRs received and time frame: 1,468: January 1 – September 30, 2015
Number of CTRs received and time frame: 1,451,046: January 1 – September 30, 2015
STR covered entities: Banks, investment and securities broker/dealers, and discount houses; insurance institutions; debt factorization and conversion firms, money exchanges, and finance companies; money brokerage firms whose principal business includes factoring, project financing, equipment leasing, debt administration, fund management, private ledger service, investment management, local purchase order financing, export finance, project and financial consultancy, or pension funds management; dealers in jewelry, cars, and luxury goods; chartered accountants, audit firms, and tax consultants; clearing and settlement companies and legal practitioners; hotels, casinos, and supermarkets
money laundering criminal Prosecutions/convictions:
Prosecutions: 33: January 1 – September 30, 2015
Convictions: 2: January 1 – September 30, 2015
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Nigeria is a member of the Inter Governmental Action Group against Money Laundering in West Africa (GIABA), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.giaba.org/reports/mutual-evaluation/Nigeria.html
Enforcement and implementation issues and comments:
The current administration, specifically the Economic and Financial Crimes Commission, (EFCC), has made progress in recent months in the fight against Nigeria’s pervasive corruption. In 2015, Nigeria also made limited progress towards the passage of several pieces of legislation intended to address strategic deficiencies in the country’s AML/CFT regime. The Nigerian Financial Intelligence Centre (NFIC) Bill, which would make the Nigerian Financial Intelligence Unit (NFIU) a stand-alone agency, and the Proceeds of Crime (POC) Bill have both passed the National Assembly (in 2014 and 2015, respectively) but have not yet been signed into law. Meanwhile, there has been little movement on a draft mutual legal assistance bill, which has not yet passed the National Assembly.
Nigerian financial institutions appear generally conscientious in submitting currency transaction reports (CTRs) to the relevant authorities, although the 2015 volume of such reports declined approximately 60 percent over the same period in 2014. The volume of those reports combined with the fact that many, if not most, are likely to be legitimate transactions, given the cash-based nature of the Nigerian economy, make it particularly difficult for the government to detect suspicious activity.
Nigeria’s oil industry, which generates up to 70 percent of government revenues, has long been mired in corruption and mismanagement under successive governments. In 2015, the National Resource Governance Institute (NRGI) investigation into Nigeria’s oil industry noted opaque transactional practices and overall mismanagement. The former minister of petroleum was later arrested in London after an investigation into massive bribery and money laundering. Nigerian authorities recently created and instituted a Treasury Single Account that requires the Nigerian National Petroleum Corporation to remit all earnings and should dramatically improve transparency in the oil sector over time.
The State Security Service (SSS), also known as the Department of State Services (DSS), is the primary investigating agency for terrorism cases, but some agencies have asserted it does not have the capacity to investigate terrorism financing or money laundering and that it does not share case information with other agencies that conduct financial investigations. There remain general questions as to the role of the SSS/DSS versus that of the EFCC in the investigation of terrorism financing. The ongoing inability and/or unwillingness of Nigeria’s law enforcement agencies to share information or conduct joint investigations significantly hinder the government’s efforts to combat money laundering. This issue is especially important with regard to terrorism financing.
Pervasive corruption, a lack of investigative capacity, inadequate legislative authority, and interagency dysfunction have hindered or blocked numerous prosecutions and investigations related to money laundering. Nigeria should ensure the EFCC and the NFIU are able to perform their functions without undue influence and free from political pressure. Additionally, Nigeria should work to thwart corruption at all levels of government and ensure the agencies that pursue money laundering-related and asset recovery cases, including the EFCC, Nigerian Drug Law Enforcement Agency, Independent Corrupt Practices and Other Related Offenses Commission, Nigerian Agency for the Prevention of Trafficking in Persons, Special Control Unit against Money Laundering, Nigerian Customs Service, and National Police Force, have the resources, support, and capacity to function as investigators or investigative partners in such cases.
Nigeria should continue working to pass and implement effective legislation that ensures the operational autonomy of its FIU, promotes the efficient recovery of criminal proceeds, and provides for mutual legal assistance in accordance with international standards. Nigeria should work to ensure law enforcement agencies cooperate effectively when investigating suspected money laundering. Nigeria should review its safe harbor provisions to protect STR reporting entities and their employees to ensure they are in line with international standards. It also should consider developing a cadre of specially trained judges with dedicated portfolios in order to process financial crimes cases as quickly and effectively as possible. Nigeria also should strengthen and support its Central Authority for international cooperation, which is a component of the Office of the Attorney General.