The Financial Action Task Force (FATF) placed Nigeria on its list of non-cooperative countries and territories (NCCT) in combating money laundering in June 2001. However, the FATF's May 2006 evaluation of the reforms in the Nigerian anti-money laundering (AML) regime recognized the progress Nigeria made in implementing AML policies and establishing a financial intelligence unit (FIU). As a result, it removed Nigeria from the NCCT list in June 2006, but continued to monitor it for compliance with international standards. In June 2007, the FATF ended this monitoring process. Nigeria also became the first country in the West African sub-region to be admitted into full membership of the Egmont Group of FIUs on May 30, 2007. Nigeria is one of the 15 founding members of the Groupe Inter-gouvernemental d'Action contre le Blanchiment de l'Argent en Afrique (GIABA), which was established in 1999. All these developments demonstrate Nigeria's willingness to fight money laundering and meet FATF standards. A 2007 International Monetary Fund Report on Nigeria notes that in order to remain off of the FATF's NCCT list, Nigeria's central agency for combating economic and financial crimes, the Economic and Financial Crimes Commission and other agencies are intensifying their AML efforts and strengthening their legislative framework. However, the assessments found weaknesses in the implementation of laws, judicial delays in prosecutions and convictions, and a paucity of resources and powers of major crime fighting agencies. This information notwithstanding, there is little information addressing Nigeria's actual compliance with the FATF's Recommendations and Special Recommendations.

General Overview

According to the 2007 U.S. Department of State (DoS) Report, the Financial Action Task Force (FATF) placed Nigeria on its list of non-cooperative countries and territories (NCCT) in June 2001. However, as the U.S. DoS report notes, the FATF conducted an evaluation of the reforms in the Nigerian anti-money laundering (AML) regime in May 2006 and recognized the progress Nigeria made in implementing AML policies. It then removed Nigeria from the NCCT in June 2006, but continued to monitor the country's efforts for compliance with international standards. According to the FATF's 2007 report, the formal monitoring process ended in June 2007.

A 2007 International Monetary Fund (IMF) Report on Nigeria notes that in order remain off of the FATF's list of NCCT, Nigeria's central agency for combating economic and financial crimes, the Economic and Financial Crimes Commission (EFCC) and other agencies are intensifying their AML efforts. Similarly, a 2005 report by the IMF welcomed Nigeria's progress in strengthening its AML framework. It found that enforcement had been strengthened with the passage of the amended AML Act in 2002, the establishment of the Nigerian Financial Intelligence Unit (NFIU) within the EFCC, and a doubling of the EFCC's budget. The Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) were also found cooperating in providing sensitive banking data to the NFIU.

In its 2005 Report, the IMF evaluated the progress made by Nigeria in terms of strengthening its AML framework. It noted that by end of March 2005, the EFCC had increased staff strength from 80 to 315 (including secondary staff from other agencies), and added that more than 53 cases were under prosecution, 500 individuals in custody, and seizures worth $750 million, including cases involving three of the most important "419" (term used to refer to the fraud section or Law 419 in the Nigerian Criminal Code) criminals, as well as top Nigerian government and administrative officials. However, the report also criticized the adversarial nature of the judicial system and delays in prosecutions that restrict convictions.

The 2005 FATF review observed that the government had substantially improved its cooperation and willingness to address its AML deficiencies. Nigeria subsequently enacted the Money Laundering (Prohibition) Act of 2004 and the Economic and Financial Crimes Commission (Establishment) Act of 2004, which superseded and improved upon the previous versions of these laws and addressed the main remaining legal AML deficiencies. As a result of this progress, in July 2004 the FATF asked Nigeria to submit plans to enable the FATF to evaluate actual implementation of the legislative changes. The FATF review also offered some recommendations to Nigeria: (1) to continue to build upon the efforts and fully implement its AML reforms; (2) to increase staff funding and resources for the various AML bodies; (3) to institute an effective system for bank inspections; and (4) to pursue money laundering investigations and prosecutions more effectively.

The 2005 IMF report found that the Nigerian government had been working to demonstrate its willingness to fight money laundering and meet FATF conditions by providing more investigative resources and enabling environment to the EFCC and other investigative agencies through priority budgetary allocation as well as donor funding from the European Union (EU), the United Kingdom's Department for International Development (DFID) and the World Bank.

According to the Groupe Inter-gouvernemental d'Action contre le Blanchiment de l'Argent en Afrique (GIABA) website, Nigeria is one of the 15 founding members of the GIABA, which was established in 1999 by a decision of the Authority of Heads of State and government of the Economic Community of West African States (ECOWAS). The core objectives of the GIABA are to protect the national economies and the financial systems of signatory States against the proceeds of crime and terrorism financing through improved measures and intensified efforts, and to strengthen cooperation amongst its members in the area of AML/CFT. GIABA's mandate was revised in January 2006 to fully incorporate and properly reflect the imperative to fight the financing of terrorism. Toward these ends, the GIABA conducts FATF-style self- and mutual evaluations on the efficacy and progress of domestic measures of member countries, and encourages other African States to join GIABA. The EFCC website informs that Nigeria became the first country in the West African sub-region to be admitted into full membership of the Egmont Group of Financial Intelligence Units (FIUs) in May 2007. The EFCC finds the decision an endorsement of the country's AML/CFT program and the operations of its FIU. The Egmont Group leadership including the Heads of all FIUs in the Egmont Group welcomed the removal of Nigeria from the FATF list of NCCTs and commended the law enforcement efforts of the country in the fight against financial crimes, money laundering and terrorist financing.

The Principles

1. Legal Systems and Related Institutional Measures

II

There is little information publicly available regarding Nigeria's compliance with this Principle. However, the 2005 FATF review observes that the AML/CFT laws enacted by Nigeria are comprehensive and have helped Nigeria make considerable progress in broadening its AML/CFT framework. On this basis, the FATF invited Nigeria to submit a plan in June 2004 to enable the FATF to evaluate actual implementation of the legislative changes. According to the 2007 U.S. DoS Report, the Nigerian legislative framework has specific laws pertaining to the criminalization of money laundering. As detailed in the report, Nigeria enacted three pieces of legislation in December 2002: an amendment to the 1995 Money Laundering Act extending the scope of the law to cover the proceeds of all crimes; an amendment to the 1991 Banking and Other Financial Institutions (BOFI) Act expanding coverage of the law to stock brokerage firms and foreign currency exchange facilities, giving the CBN greater power to deny bank licenses, and allowing it to freeze suspicious accounts; and the Economic and Financial Crimes Commission (Establishment) Act establishing the EFCC, which coordinates AML investigations and information sharing. Further, the U.S. DoS reports that in 2004, the Nigerian National Assembly passed the Money Laundering (Prohibition) Act, which strengthened financial institutions by requiring more stringent identification of accounts, removing a threshold for suspicious transactions, and lengthening the period for retention of records; and amended the 2002 Economic and Financial Crimes Commission (Establishment) Act, enlarging the number of EFCC board members, as well as strengthening the power of the EFCC to nab and prosecute ML/TF criminals.

The 2003 FATF Review of Nigeria commended the Money Laundering (Amendment) Act of 2002 for significantly enhancing the scope of Nigeria's 1995 Money Laundering Law by extending predicate offences for money laundering from drugs to "any crime or illegal act," extending certain AML obligations to non-bank financial institutions, and extending customer identification requirements to include occasional transactions of $5,000 or more. The 2007 U.S. DoS Report also mentions legislation in relation to Special Recommendation 2 - Criminalization of Terrorist Financing (TF) in Nigeria. The Economic and Financial Crimes Commission (Establishment) Act of 2002, as amended in 2004, criminalizes the financing of and participation in terrorism, with a penalty of up to life imprisonment, and authorizes the EFCC to identify, freeze, seize, and forfeit terrorist finance-related assets.

As regards Recommendation 3 - Confiscation, freezing and seizing of proceeds of crime - the 2007 U.S. DoS Report observes that seizure of property is governed by Section 20 of the EFCC (Establishment) Act of 2004. Further, the EFCC is assisted by the National Drug Law Enforcement Agency (NDLEA), the Independent Corrupt Practices Commission (ICPC), and the Nigeria Police Force (NPF) in this role. The proceeds from seizures are forfeited to the federal government. Despite having the authority to handle narcotics-related cases, the NDLEA does not have adequate resources to trace, seize, and freeze assets, and hence the cases are usually referred to the EFCC, which is more competent in investigating and prosecuting financial crimes, including money laundering and terrorist financing. The U.S. DoS report observes that the banking institutions are cooperating with law enforcement to trace funds and seize or freeze bank accounts. However, forfeiture is possible only under the criminal law. To correct this loophole, the EFCC has set up a committee to draft pertinent legislation.

With respect to Recommendations 26, 30, and 32 concerning the FIU and its functions, the 2007 U.S. DoS Report notes that Nigeria established the NFIU within the EFCC in 2005 and that the agency draws its powers from the Money Laundering (Prohibition) Act of 2004 and the Economic and Financial Crimes Commission Act of 2004. As regards Recommendations 27, 28, 30, and 32 dealing with law enforcement, prosecution, and other competent authorities, the 2007 U.S. DoS Report notes that the EFCC is the primary agency for investigating and prosecuting financial crimes. It has recovered or seized assets of fraud inside and outside Nigeria, including a high-profile case of highly placed government officials defrauding the Federal Inland Revenue Service. The EFCC is assisted by the NDLEA, the ICPC, and the Criminal Investigation Department (CID) of the NPF in investigating financial crimes. However, the report assesses the NPF as incapable of handling financial crimes because of corruption, poor institutional capacity and paucity of resources. The EFCC has the authority to coordinate all other agencies in financial crimes investigations.

2. Preventive Measures - Financial Institutions

II

According to the 2007 U.S. DoS Report, the Money Laundering (Prohibition) Act of 2004 applies to the proceeds of all financial crimes and has been expanded to cover stock brokerage firms and foreign currency exchange facilities, in addition to banks and financial institutions. According to the U.S. DoS report, the legislation gives the CBN greater power to deny bank licenses and freeze suspicious accounts. It also strengthens financial institutions by requiring more stringent identification of accounts, removing a threshold for suspicious transactions reports (STRs), and lengthening the period for retention of records. All financial institutions in Nigeria are required by law to furnish the NFIU with details of their financial transactions, including STRs and reports involving the transfer to or from a foreign country of funds or securities exceeding $10,000 in value. In spite of the above information, there is little information publicly available addressing Nigeria's compliance with this Principle.

In November 2004, the EFCC reported that most Nigerian banks were not in compliance with the law because the ignored its due diligence provisions and neglected to file STRs. The EFCC launched a new initiative to educate bank personnel and the general public about the provisions of the law before imposing sanctions for noncompliance. The 2007 U.S. DoS report found that, as of 2006, Nigeria has not detected a case of terrorist financing laundered through the banking system. It also notes that the United Nations Security Council Resolution 1267 Sanctions Committee's consolidated list is periodically distributed to Nigerian financial institutions.

3. Preventive Measures - Designated non-Financial Business and Professions

II

There is insufficient information publicly available regarding Nigeria's compliance with this Principle. However, the 2007 U.S. DoS Report notes that under the 2004 Money Laundering (Prohibition) Act and the 1995 Foreign Exchange (Monitoring and Miscellaneous Provisions) Act of Nigeria, AML rules apply to non-banking financial institutions including dealers in jewelry, cars and luxury goods, chartered accountants, audit firms, tax consultants, clearing and settlement companies, legal practitioners, hotels, casinos, supermarkets, and other businesses designated by the Federal Ministry of Commerce. The laws also require the designated non-financial institutions to furnish the NFIU with details of their financial transactions, especially STRs, and reports involving the transfer of funds or securities exceeding $10,000 in value to or from a foreign country. The report, however, notes that the oversight of compliance by the Ministry of Commerce has not been rigorous or effective, and recommended that Nigeria further strengthen the supervision of banking and non-banking financial institutions and move the oversight function from the Ministry of Commerce.

4. Legal Person and Arrangements & Non-Profit Organizations

II

There is insufficient information publicly available regarding Nigeria's compliance with this Principle.

5. National and International Co-operation

II

There is insufficient information publicly available regarding Nigeria's compliance with this Principle. The 2007 U.S. DoS Report notes that the EFCC has the mandate to coordinate AML investigations and information sharing in Nigeria and internationally. The report adds that Nigeria is a party to the 1988 UN Drug Convention, the UN Convention against Transnational Organized Crime, the UN International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Corruption. The U.S. and Nigeria also have a Mutual Legal Assistance Treaty since January 2003. Nigeria has signed memoranda of understanding (MoU) with Russia, Iran, India, Pakistan, and Uganda to facilitate cooperation in the fight against narcotics trafficking and money laundering. Nigeria has also signed bilateral agreements for exchange of information on money laundering with South Africa, the United Kingdom, and all Commonwealth and ECOWAS countries. Nigeria has been instrumental in the establishment of a permanent secretariat for the GIABA.

The U.S. DoS Report recommends that Nigeria continue to engage with the FATF and other relevant international organizations to identify and eliminate remaining anti-money laundering deficiencies. Further, Nigeria should share information with foreign regulatory and law enforcement agencies, and maintain compliance with all relevant international standards. The EFCC website notes that Nigeria became the first country in the West African sub-region to be admitted into full membership of the Egmont Group of FIUs in May 2007, and adds that this new status will provide the NFIU access to information on the ESW and enhance its capacity to exchange financial intelligence information with all other members of the Egmont Group.

According to the GIABA website, Nigeria is one of the 15 founding members of the GIABA which was established in 1999 by a decision of the Authority of Heads of State and government of ECOWAS. The core objectives of the GIABA are to protect the national economies and the financial systems of signatory states against the proceeds of crime and terrorism financing through improved measures and intensified efforts, and to strengthen cooperation amongst its members in the area of AML/CFT. GIABA's mandate was revised in January 2006 to fully incorporate and properly reflect the imperative to fight the financing of terrorism. Toward these ends, the GIABA conducts FATF-style self- and mutual evaluations on the efficacy and progress of domestic measures of member countries, and encourages other African states to join GIABA.