Published On: Mon, May 14th, 2018

Banks jittery over new anti-money laundering law


Deposit Money Banks (DMBs) are groaning under the additional tightening of recent anti-money laundering rules introduced by the Central Bank of Nigeria (CBN). The nations chief financial regulator has decided to add further bite to its bark as its new rules inhibit banks from squeezing through previous loopholes.

Indeed financial institutions are squirming under the laundering rules as they find the opportunities to boost their bottom lines disappear.

So far CBN governor, Godwin Emefiele, and his management have scrupulously attacked the problem by monitoring foreign transfers and enforcing the currency laws.

Analysts have noted that the concept of money laundering is a bit nebulous but generally involves the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses.

Indeed it is estimated that the amount of money laundered globally annually is between 2 and 5% of global GDP, or $800 billion or $2 trillion in current US dollars. Reports show that an estimated 400billion pounds of laundered Nigerian money is stashed away in Europe, Asia and America. Over time local banks have been suspected to be principal conduits through which the funds disappear from Nigeria.

CBN’s new rule specifically stipulate structured fines for banks, directors and other key officials for 48 enumerated infractions. The new regime is an improvement on the previous laws, which only stipulated fines against on institutions for laundering offences.

Several analysts have applauded the CBN  for improving the money laundering laws, which had hitherto only stipulated fines.

The new anti-money laundering laws are expected to ensure Nigeria’s compliance with Financial Action Task Force (FATF) recommendations No. 35 which states: “Countries  should  ensure  that  there  is  a  range  of  effective,  proportionate  and  dissuasive  sanctions,  whether  criminal,  civil  or  administrative,  available  to  deal  with  natural  or  legal  persons  covered  by    Recommendations  6,  and  8  to  23,  that  fail  to  comply  with  AML/CFT  requirements.  Sanctions  should  be  applicable  not  only  to  financial  institutions  and  DNFBPs,   but also to their directors and senior management.”

The CBN has stated that banks and their board members or chief compliance officers will all be sanctioned for 31 out of the 48 money laundering infractions listed in the new regime. For each of the 31 infractions, the new regime stipulates minimum fines ranging from N500,000 to N1.2 million on board members or chief compliance officers or the internal auditor, and fines ranging from N1 million to N20 million on the offending bank.

Director Financial Policy and Regulations Department of the apex bank, Mr Kevin N. Amugo, informed banks and other financial institutions  through a circular titled: “CBN Anti-Money Laundering and Combating the Financing of Terrorism (administrative sanctions) regulations, 2018.” The circular stated: “Banks and other financial institutions are by this circular, informed of the attached  ‘CBN AML/CFT Administrative Sanctions Regime’ the application of which comes into effect as at the date of the Gazette.

Kindly ensure compliance.” The infractions and penalties stipulated under the new regime include:    failure to approve the AML/CFT policies and procedures -a minimum penalty as follows: N1 million on each member of the board and N20 million on the Deposit Money Banks (DMB); Failure to review/ update the AML/CFT policies and procedures at least every three (3) years, a minimum penalty as follows: N750,000 on the Executive compliance officer in the for instance and N750,000 for each year that the contravention continues.

N500,000 on the Chief compliance officer in the first instance and N500,000 for each year that the contravention continues. N5 million on the bank in the first instance and N1 million for each year that the contravention continues; “Failure to communicate the AML/CFT program of the organization to the employees.

A minimum penalty as follows: N750,000 on the Executive compliance officer, N500,000 on the Chief compliance officer and N10 million on the DMB. ‘Failure of the board or its committee to supervise and ensure the effective implementation of the AML/CFT programme, A minimum penalty as follows: N500,000 on each member of the board and N10 million on the DMB.” “Failure of the officer to generate periodic reports on AML/CFT issues to the board or its relevant committee, a minimum penalty as follows: N750,000 on the Executive compliance officer, N500,000 on the Chief compliance officer and N5 million on the DMB; “Failure to classify ML/TF risks in the bank, failure to put in place guidelines for risk assessment and profiling of customers in institutions’ AML/CFT board approved program and failure to carryout risk assessment and profiling of each account, a minimum of N1 million on the Chief compliance officer of the DMB, a minimum penalty of N3 million on the DMB for failure to put in place guidelines for risk assessment and profiling of customers in AML/CFT program. A minimum of N100,000 per account for failure to carry out risk assessment and profiling of account.

Financial market observers believe that the new anti-money laundering rules will have broad implications for not only the banks but also customers.

The chief financial officer (CFO) of Wema Bank, Mr. Tunde Mabawoku, told Business Hallmark that the new anti-money laundering laws would force banks to strengthen monitoring and scrutiny of funds that come into the banks as transfers as well as improve the automated controls put in place to track illegal funds within the financial system.

Former Managing Director of one of the big banks, Mr, Emma Nwosu, said that banks are not usually guilty of money laundering because it is not easy to know when money is being laundered through them. But he advised banks to do more to curb or reduce illegal movement of funds through their systems.

On how the new anti-money laundering rules could cause problems for banks, Nwosu notes that any bank that is fingered to have committed a money laundering offence might suffer a permanent image damage. This, according to him, is in addition to depleting its shareholders’ funds or profits to pay fines as punishment when caught. Money laundering, he said also distorts the amount of money in circulation. However, ”banks at times carelessly allow illegal money to move through their system to fund religious activities and so on.”

”Most money laundering activities are inadvertent. It is difficult to know dirty money. However, banks at times carelessly allow illegal money to move through their system to fund religious activities and so on.” said Nwosu

Pioneer Chairman of the Economic and Financial Crimes Commission (EFCC), Nuhu Ribadu, had said in 2017 that several money laundering frauds happen in Nigeria with the active connivance of banks and their workers.

“Our banking system is prone to abuse by corrupt elements. As investigations revealed every now and then, almost no case of corruption occurs without the involvement of banks and bankers,” he said.

Ribadu explained that the country does not lack in laws and regulations, but on issues of compliance and enforcement.

“We have them in abundance. Even the EFCC Act, for example, amply tackles these issues, we also have the Money Laundering (Prohibition) Act, 2011, the CBN AML/CFT Regulation, 2009 (as amended), among others”, He also said

There is a consensus that Money laundering regulations date back to ancient times and is intertwined with the development of money and banking. It is first seen with individuals hiding wealth from the state to avoid taxation or confiscation or a combination of both.

In China, Wealthy merchants around 2000 BCE would hide their wealth from rulers who would simply take it from them and banish them. They, in addition to hiding it, would move it and invest it in businesses in remote provinces or even outside China.

This prompted many rulers and states to impose rules that would take wealth from their citizens and this led to the development of offshore banking and tax evasion.

As a result, States began to encourage law enforcement agencies to track and confiscate money.

Reportedly, the Economic and Financial Crime Commission (EFCC) had revealed that past Nigerian Politicians stole about US $521 billion and hid it in foreign banks while past military rulers of the country laundered about US $400 billion. EFCC also believes that these monies passed through the banks.

© 2018, Hallmarknews. All rights reserved. Reference and link to this site is required if you wish to reuse any article.

Reactions from Facebook

comments and opinions

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Most Shared

Recent posts

  • China offshore oil coy to invest $3bn in Nigeria

    The China National Offshore Oil Corporation (CNOOC) is to invest an additional three billion dollars in its existing stakes in offshore oil and gas operations in Nigeria. Mr Ndu Ughamadu, the Nigeria National Petroleum Corporation (NNPC) spokesman said this in a statement on Sunday in Abuja. Ughamadu said Mr Yuan Guangyu, the Chief Executive Officer […]

  • Ecobank risk assets deteriorate as Kie bows out

    By FELIX OLOYEDE The exit of Ecobank Nigeria’s erstwhile Managing Director, Charles Kie, has raised a groundswell of speculation in the financial community as sector analysts believe that his exit was abrupt, untimely and suspicious. Over a period of two years, Kie had succeeded in reversing the banks bedraggled balance sheet and profit and loss […]

  • Blood, blood everywhere: Herdsmen, rustlers on the rampage

    –  Violence, a well-articulated plot to grab land – Expert  By AYOOLA OLAOLUWA Nigeria is gradually descending into a Hobbesian state with the growing killings in the Middle Belt, in addition to the destruction of lives and properties in the North West and Boko Haram insurgency in the North East. Defenseless citizens are being killed like […]

  • 2018 budget in jeopardy

    . Delay alone has reduced performance by 13% – Experts By UCHE CHRIS In all likelihood the 2018 budget will end like the three previous budgets of the President Buhari administration: a failure. Having been passed seven months after its presentation and half year gone; and with all the controversies surrounding its passage by the […]

  • MTN to miss market listing target

    By OKEY ONYENWEAKU A weak domestic economy in Nigeria may force telecommunications giant MTN to shift its earlier proposed August 2018 date for a local listing on the Nigerian Stock Exchange (NSE). Analysts believe that the date shift will allow the parties to the Offer plan a more successful listing arrangement that would guaranty full […]

  • APC crises deepens: Amaechi battles for relevance, Modu-Sheriff is new strongman

    By OBINNA EZUGWU Key actors in the ruling All Progressives Congress (APC) managed to keep up appearance to allow for a smooth transition at the party’s recently held national convention. Except for the exchange of blows among Imo and Delta States delegates, the convention was largely a success. But beneath the facade of orderliness, tensions […]

  • INEC declares Fayemi governor-elect in Ekiti

    The Independent National Electoral Commission (INEC) has declared Kayode Fayemi of the All Progressive Congress (APC) winner of the Ekiti Governorship Election held on Saturday. INEC’s Chief Returning Officer for the election, Professor Idowu Olayinka declared the result on Sunday. According to the Returning Officer, Kayode got 197,459 votes to defeat the Deputy Governor of […]

  • President Muhammadu Buhari said on Wednesday that Nigeria will soon sign up to a $3 trillion African free-trade agreement. Nigeria is one of Africa’s two largest economies, the other being South Africa. Buhari’s government had refused to join a continental free-trade zone established in March, on the grounds that it wishes to defend its own […]

  • PDP meets Obasanjo for advice on how to beat Buhari in 2019 polls

    The National Working Committee (NWC) of the Peoples Democratic Party(PDP) will meet with former President Olusegun Obasanjo in Abeokuta on Saturday to seek advice on how to achieve victory in the 2019 polls and beat incumbent Muhammadu Buhari. The National Chairman of PDP, Uche Secondus, made this known in Abeokuta while addressing journalists after a […]

  • GTBank Launches Social Impact Challenge, Aims to Fund Community Development Projects Nationwide

    Following more than two decades of consistent investment in community development, Guaranty Trust Bank plc is taking its Corporate Social Responsibility (CSR) another step further by launching a Social Impact Challenge that will fund dozens of innovative ideas designed and executed by members of the general public. Tagged #SimpleChangeBigImpact, the Social Impact Challenge invites individuals […]

  • Akpobome gives indigent girls educational lifeline

    Akpobome gives indigent girl The hope of indigent girls who have been struggling with their education has been rekindled as Mrs. Mary Akpobome, former executive director, Heritage Bank and her husband,  Mr. Atunyota Akpobome, fondly called Alli-Baba have jointly floated The Purple Girl Foundation with the purpose  of helping them live their dreams. Giving reasons […]

  • Buhari’s NLNG signature project back on track

    President Muhammadu Buhari has congratulated the board, management, staff and shareholders of the Nigerian Liquefied Natural Gas company (NLNG), the NNPC and other Joint Venture partners, Shell, Total and AGIP on the signing of the contracts for the Front End Engineering Design (FFED) of Train 7 of the Nigeria Liquefied Natural Gas Project. The President […]

  • Buhari creates unit to snoop on illegal money transfers

    President Muhammadu Buhari has signed the Nigerian Financial Intelligence Unit bill (NFIU) 2018 into law, creating a body that will henceforth monitor illegal money transfers and money laundering. The Senior Special Assistant to the President on National Assembly Matters (Senate), Sen. Ita Enang, confirmed this development while briefing State House correspondents in Abuja on Wednesday. […]

  • NCC wades into MTN’s labour issues

    The Nigerian Communications Commission (NCC) on Monday said the organisation has opened talks with critical stakeholders on MTN’s labour issues. Mr Tony Ojobo, NCC’s Director of Public Affairs, made this known in a statement by in Abuja. “NCC under the leadership of Prof. Umar Danbatta has opened talks with other critical stakeholders  through the office of […]

  • Weak purchasing power responsible for slowing inflation rate, says Chukwu

    FELIX OLOYEDE The continuous decelerating inflation rate in the country was largely due to weak purchasing power amongst Nigerians, said Johnson Chukwu, Managing Director, Cowry Asset Management Ltd. Speaking on the theme: “Economy: H1 2018 review and prospect for year end” at the second edition of the Bloomberg Media Initiative Africa (BMIA) Cohort 4 quarterly […]

  • Global outrage grows over incessant herdsmen killings

    …there is anarchy in the land – Utomi   By OBINNA EZUGWU The incessant killings in Nigeria by Fulani herdsmen seem to attracting more global attention as U.S. and U.K. have taken the government to task to stop it. During his recent visit to the U.S. by President Buhari, American President Donald had expressed concern […]