Expdonaloaded News; Tackling illicit financial transactions

EMERGING, trends in global financial systems, particularly the management of deposit transactions and the technologies used to drive them, have predisposed financial institutions to abuse. Some of them have become conduit pipes for illicit cash flows, with dangerous consequences for the economies and security of many countries.
It is in this regard that the recent call by the Central Bank of Nigeria (CBN) for greater vigilance to check illicit fi­nancial flows into Nigeria’s banking sys­tem should be taken very seriously. The concern expressed by the apex bank came against the backdrop of a report by the Washington-based Global Finan­cial Integrity group, which ranked Nige­ria one of the 10 largest countries for illicit financial flows in the world.
The report claimed that about US$15.7 billion (N3.09 trillion) illicit funds go through Nigeria’s banking sys­tem annually. This is scandalous. These illicit fund flows are largely traceable to money laundering, terrorism financing, illicit drug trade and oil theft.
The alarm raised by CBN is long over­due. The statistics from this global fi­nancial watchdog have only reinforced earlier reports on Nigeria’s rating as a fertile arena for the movement of illicit funds around the world.
The figures from Global Financial In­tegrity group are disturbing. For exam­ple, Nigeria was said to have accounted for the lion’s share of an estimated cu­mulative $854 billion illicit cash flows in Africa between 1971 and 2009. The latest report by the group said the trend has been increasing steadily at a disturbing average of 12 percent since 2008.
In particular, the report listed illicit drug couriers, illegal fuel exporters and oil bunkerers as those fleecing Nigeria of over $10 billion (about N200 bil­lion) annually. This is said to have out­stripped the $2.5 billion allegedly lost every year through non-fuel primary commodity exporters.
In addition to the Global Integrity group’s revelation, and the warning by CBN, the former Director General of the Securities and Exchange Commission (now World Bank’s Vice President and Treasurer), Ms. Arunma Oteh, disclosed in September last year that Nigeria lost a total of $140 billion (over N2.8 tril­lion) to illicit financial flows between 2002 and 2011. She told participants at the second Annual Business Lecture or­ganised by the Convention on Business Integrity in Lagos, that over $1 trillion had also been lost through illegal activi­ties like money laundering, tax evasion, transfer pricing and embezzlement of government funds.
The loss of huge sums of money to these illegal activities are major obsta­cles to economic growth. They call for a tightening of Nigeria’s banking system, which had hitherto allowed these illegal money transfers.
The CBN, in an effort to stem the trend, recently directed Deposit Money Banks (DMBs) to stop accepting foreign currency cash deposits from custom­ers, both within and outside Nigeria’s shores, without proper documentation. This is to prevent illicit financial flows in our banking system.
We commend the CBN for its response to this problem. It is necessary to stop such undocumented money movements as such monies could be used to finance terrorism in the country. Security re­ports have revealed that Boko Haram received over $70 million between 2006 and 2011 through shady transactions like money laundering, oil bunkering, kidnapping and dealing in drugs. It was also revealed that Boko Haram, whose violent activities in the North East have claimed over 700 lives in the last seven weeks alone, is now the “seventh rich­est terror organisation in the world”. This calls for a tightening of the loose ends in our banking system by the regu­latory authorities. The time has come to block every way in which our banks can be used for subversive purposes.
Beyond the banks, we urge all organ­isations operating in the country to help tackle the problem of illegal fund movements by instituting robust cor­porate governance, with specific guide­lines to check illicit movement of funds and other corrupt practices.
The National Assembly and anti-graft agencies, especially the Economic and Financial Crimes Commission (EFCC), should pick up the gauntlet and expedi­tiously institute far-reaching measures that will make illicit funds movements a serious offence that attracts severe punishment, such as imprisonment. More than ever before, it is necessary to closely monitor the internal controls of banks and other big revenue generat­ing agencies like the Customs Service and the National Drug Law Enforce­ment Agency (NDLEA).
Altogether, good governance and strict enforcement of transparency, due process and zero tolerance for corrup­tion are key to checking illicit financial flows. This is a serious problem that needs an urgent solution.