Money laundering in Nigeria
Money laundering is the act of concealing the illegal origin of money through the use of legal channels. This can include the use of offshore accounts and other methods. This practice is used to avoid paying taxes or other legal obligations.
People who are involved in money laundering usually have access to large amounts of cash, checks, credit cards, and other forms of payment. These businesses may then use this cash to pay employees, purchase inventory, and make other purchases.
Table of Contents
What is the money laundering act in Nigeria?
The Money Laundering Act was enacted in Nigeria in 2003. This law aims to prevent the generation of illegal funds through the financial system. It defines money laundering as the process of concealing the origin of illegally acquired funds. In other words, it is the process of disguising the ownership of funds that are derived from criminal activities.
What is the punishment for money laundering in Nigeria?
The punishment for money laundering in Nigeria could see individuals face a maximum sentence of seven to 10 years in jail and a fine of at least one million Naira. In most situations, the arrest of the corporate body’s key officers could be made.
In addition, some of these shell companies are locked down either temporarily pending how long the investigation lasts. While the money launderers could see their assets forfeited.
What is the most common way to launder money in Nigeria?
1. Cash
Cash is the easiest method to launder money in any country. Cash is the preferred method of payment in many countries. This is because cash can easily be hidden from view and has no electronic trail. Also, cash does not leave behind any paperwork that could lead to further investigation.
2. Bank Accounts
Bank accounts are great ways to launder money. If you have access to bank accounts, then you can transfer funds into your account, withdraw cash anywhere, and make purchases using your card. However, this may attract attention if you are withdrawing large sums of money.
3. Bitcoin
Bitcoin is a cryptocurrency that uses cryptography to regulate transactions and create a secure means of payment. Many people use Bitcoin to launder money. Transferring bitcoins out of the country makes it difficult for law enforcement agencies to track down the owner of the currency.
4. Proxy servers
This is one of the methods commonly used. Because money may be sent or withdrawn with little or no evidence of an IP address, these techniques make integration extremely difficult to detect.
How many years of punishment do you get for money laundering?
The punishment anyone gets for money laundering in Nigeria goes for a minimum sentence of one month in prison or a fine of N10 million. Sometimes, the money launderer or the mules could pay a fine and still serve a jail sentence of at least 30 days.
Money laundering (prohibition) act say?
The prohibition act states that it is illegal to transfer funds out of the country without proper documentation. The purpose of this law is to target criminal organizations that launder their profits through legitimate businesses.
The act applies to financial institutions and other business entities that knowingly accept funds derived from unlawful activity.
Here is what the prohibition act says:
- (1) No person or body corporate shall make or accept cash payment of a sum exceeding-
(a) N500, 000 or its equivalent, in the case of an individual, or
(b) N2, 000,000.00 (Two Million Naira) or its equivalent, in the case of a body corporate, except in a transaction through a financial institution.
- 2. (1) A transfer to or from a foreign country of funds or securities of a sum exceeding $10,000 or its equivalent shall be reported to the Central Bank of Nigeria (in this Act referred to as “the Central Bank”).
(2) A report made under subsection (1) of this section shall indicate the nature and amount of the transfer, and the names and addresses of the sender and receiver of the funds or securities.
- 3. (1) A person whose usual business is to undertake over-the-counter exchange transactions or a financial institution shall-
(a) Before the commencement of business, submit to the Central Bank a declaration of his or its activity.
(b) before any transaction involving a sum exceeding $5,000 or its equivalent, identify the customer by requiring him to fill out a standard data form and present his international passport, driving license, national identity card, or such other document bearing his photograph as may be prescribed by the Central Bank or the appropriate regulatory authority ;
(c) record all transactions under this section in chronological order, indicating each customer’s surname, forenames, and address in a register numbered and initialed by an officer authorized by the Central Bank for that purpose;
(2) A register kept under subsection (1) (c) of this section shall be preserved for at least 10 years after the last transaction recorded in the register.
(3) Any person or financial institution that fails to comply with the requirements of customer identification and the submission of returns on such transactions as specified in this Act within 7 days from the date of the transaction commits an offense and is liable on conviction-
(a) In the case of an individual to a fine ofN25, 000 for each day during which the
The offense continues;
(b) In the case of a bank or financial institution, to a fine of N l, 000,000 for each day during which the offense continues;-
(c) To the revocation of its license as a bank or financial institution or the withdrawal of by the Central Bank of the authorized dealer’s license. The
- 4.-A casino shall-
(a) verify the identity of a gambler who buys, or brings into exchanges chips or tokens, by requiring the gambler to present an authentic document bearing his name and address;
(b) Record all transactions under this section in chronological order, indicating-
(i) The nature and amount involved in each transaction,
(ii) Each gambler’s surname, forename, and address, in a register numbered initiated by an officer authorized by the Federal Ministry of Commerce for that purpose.
(2) A register kept under subsection (1) (b) of this section be preserved for at at least 10 years after the last transaction recorded in the register.
- 5. (1) A financial institution shall verify its customer’s identity and address before opening an account, issuing a passbook, entering into a fiduciary transaction with, renting a safe deposit box to, or establishing any business relationship with the customer.
(2) An individual shall be required to provide proof of his-
(a) Identity by presenting to the financial institution a valid original copy of an official document bearing his name and photograph; (b) address, by presenting to the financial institution the originals of receipts issued within the previous three months by public utilities.
(3) A body corporate shall be required to provide proof of its identity by, presenting its certificate of incorporation and other valid official documents attesting I the existence of the body corporate.
(4) The manager, employee, or assignee delegated by a body corporate to open or operate. an account shall be required to produce not only the documents specified in subsection (2) of this section but also proof of the power of attorney granted to him on that behalf.
(5) A casual customer shall be identified in the same way as in subsection (2)0. This section for any transaction involving a sum exceeding 08$5,000 or its equivalent or for any number of transactions whose total exceeds N500, 000.00 if the total amount is known at the commencement of the transaction or as soon as it is known to exceed the sum ofUS$5,000 or its equivalent.
(6) Where a financial institution: reasonably suspects that the amount involved in a: the transaction is the proceeds of a crime or an illegal act, it shall require identification of the customer notwithstanding that the amount involved in the transaction is less than US$5,00O or its equivalent.
(7) If it appears that a customer may not be acting on his account, the financial institution shall seek from the customer by all reasonable means, information as to the true identity of the principal.
6. (1) When a financial institution is requested to carry out a transaction, whether or not it relates to the laundering of the proceeds of a crime or an act, the financial institution shall seek information from the customer as to the origin and the destination of the funds, the aim of the transaction and the identity of the beneficiary.
(2) A financial institution shall within 7 days after the transaction referred to in subsection (l) of this section
(a) drawn up a written report containing all relevant information, on the matters mentioned in subsection (1) of this section together with the identity of the principal and, where applicable, of the beneficiary ;
(b) Take appropriate action to prevent the laundering of the proceeds of a crime or an illegal act; and.
(c) send a copy of the report, and action taken to the Central Bank, the Commission, the Security and Exchange Commission, or such other appropriate regulatory authority, as the case may be.
(3) A financial institution winch fails to comply with the provisions of subsections (2) of this section commits an offense and is liable on conviction to a fine of NI,000,000 for each day during which the offense continues.
7. A financial institution shall preserve and keep at the disposal of the authorities specified in section 8 of this act.
(a) The record of the customer’s identification for at least ten years after the closure of the accounts or the severance of relations with the customer; and
(b) the record of transaction carried out by a customer and the report provided ~or in section 6 of this Act, for at least ten years after carrying out the transaction or making of the result as the case may be.
8. The records referred to in section 7 of this Act shall be communicated only to the Central Bank, the National Drug Law Enforcement Agency (in this Act referred to as “the Agency”), judicial authorities, customs officers, and such other persons as the Central Bank may, from time to time, by an Order published in the Gazette, stating
Special surveillance on certain transactions
Preservation of records
Communication of information
9. (I) every financial institution shall develop programs to combat the laundering of the proceeds of a crime or other illega1 act, and these shall include-
(a) The designation of compliance officers at the management level at its headquarters and every branch and local office;
(b) Regular training program for its employees;
(c) The centralization of the information collected; and
(d) The establishment of an internal audit unit to ensure compliance with and ensure the effectiveness of the measures taken to enforce the provisions of this Act.
(2) Notwithstanding the provisions of this Act. the Governor of the Central Bank shall impose a penalty of not less than I million Naira or the suspension of any license issued on a financial institution for failure to comply with the provisions of, subsection (I) of this section.
10. (I) notwithstanding anything to the contrary in any other law or enactment, a financial institution or Casino shall report to the Agency in writing, within 7 days of any single transaction, lodgment, or transfer of funds above
(a) NI, 000,000 or its equivalent, in the case of an individual; and (b) 5 million Naira or its equivalent, in the case of a body corporate.
(2) A person, other than a financial institution, may voluntarily give information on any transaction, lodging, or transfer of funds over-
(a) 100,000 or its equivalent, in the case of an individual; and
(b) N5, 000,000 or its equivalent, in the case of a body corporate.
Conclusion
Money laundering is the process of concealing the origin of illegally obtained funds. This can be done through various methods, including transferring money into other accounts, buying assets, etc.
Money launderers use different methods to launder money. Most of the time, it is carried out by mules. The punishment for money laundering ranges from arrest, serving a jail term, or forfeiture of the asset.
