President Muhammadu Buhari, this week, in Abuja, signed into law, three bills aimed at improving the anti-money laundering and counter-terrorist financing/proliferation financing framework in Nigeria.
Money laundering refers to the process of taking illegally obtained money and making it appear to have come from a legitimate source. It involves putting the money through a series of commercial transactions in order to “clean” the money.
For example, money may be placed in a business and disguised as sales revenue in order to camouflage its origin. Money laundering is illegal in itself.
The bills signed by the President to check money laundering are the Money Laundering (Prevention and Prohibition) Bill, 2022; the Terrorism (Prevention and Prohibition) Bill, 2022; and the Proceeds of Crime (Recovery and Management) Bill, 2022.
Speaking at a signing ceremony at the Council Chamber, State House, the President said the bills are in tandem with his administration’s commitment to fight corruption and illicit financing activities.
And, crucially, he added that the bills are critical to the governance agenda and the development of Nigeria.
“The new laws have provided enough punitive measures and containment strategies against abuses and compromises,” he said, noting that the inadequacy of the repealed acts had impacted legal actions against offender.
Crucially, too, the President said: “We will not rest until we rid the nation of the menace of money laundering, terrorism and other financial crimes.”
Why should government rest in its anti-money laundering campaign that is so important to the continued peace and survival of the country?
The effects of economic crime can be more damaging than what analysts often describe, especially in a developing country like Nigeria. For a long time, money laundering has become another terror threatening the growth of the economy such that it drags the wheel of governance and economic development.
It is estimated that amount of money laundered globally in one year is 2% to 5% of global GDP, or US$800 billion to US$2 trillion – and that’s a low estimate. Money laundering often accompanies activities like smuggling, illegal arms sales, embezzlement, insider trading, bribery and computer fraud schemes. It’s also common with organised crime including human, arms or drug trafficking and prostitution rings.
The U.N. Office on Drugs and Crimes estimates that annual illicit proceeds total more than $2 trillion globally and proceeds of crime generated in the United States were estimated to total approximately $300 billion in 2010, or about two percent of the overall U.S. economy at the time.
However, for an illegal enterprise to succeed, criminals must be able to hide, move and access the proceeds of their crimes. Without usable profits, the criminal activity cannot continue. This is why criminals resort to money laundering.
Money laundering involves masking the source of criminally derived proceeds so that the proceeds appear legitimate, or masking the source of monies used to promote illegal conduct.
Money laundering generally involves three steps: placing illicit proceeds into the financial system; layering, or the separation of the criminal proceeds from their origin; and integration, or the use of apparently legitimate transactions to disguise the illicit proceeds. Once criminal funds have entered the financial system, the layering and integration phases make it very difficult to track and trace the money.
Money laundering affects indigenous entrepreneurs which the Buhari-led administration has tried to assist. The illicit funds gotten from money laundering activities are used in bringing goods to the market and such goods are being sold at prices below the cost prices.
This will, undoubtedly, affect the business of other entrepreneurs in the same business. Money laundering promotes none or low profit making enterprises which tend to discourage indigenous entrepreneurs who got their funds from legitimate sources.
This development, eventually, frustrates these indigenous entrepreneurs out of the system leaving the economy of the countries into the hands of launderers. The resultant effect of this is that the economy of the country depends on the unsteady operators of its economy, the launderers, who have no intention of making profit, thereby jeopardising the economic stability of the country.
Another effect of money laundering on the Nigeria economy is that it attacks the reliability of the people on financial institutions. It was observed that between the 80s and 90s the reputation of the financial institutions in Nigeria was very low because the financial institutions relied extensively on the illicit proceeds of economic and financial crimes.
These financial institutions only enjoyed these funds for a very short period, before they became disintegrated and some liquidated because they could not stand the test of time. Banks like the National Bank, Allied Bank, Bank for Credit and Commerce International were some of the banks that were affected during these periods.
Foreign investors find it extremely difficult to invest in any venture in the country during these periods due to obvious reasons which are the effect of financial and economic crimes on the economy of the country. These also hindered the growth of the economy of the country.
Money laundering could lead to increase in liability and heighten the risks for assets quality in the financial system. When this happens, it may create systemic risks for the financial services industry and consequently lead to loss of confidence and credibility in the financial institution.
On the international level, the socio-economic effect of money laundering on Nigeria is that the reputation of the country had been negatively affected with such development imposing some constraints on Nigeria in international economic relations.
In fact, until recently, Nigerians were treated with disrespect in almost every entry points of western countries on account of the country’s association with money laundering and other crimes.
The negative impact of money laundering and other financial and economic crimes on the country can be attributed to the reduction of international opportunities extended to the country which had prevented foreign investors to invest into the financial and economic growth of the country.
For example, a report written by the Nigerian Bureau of Statistics (NBS) says that a great decline in capital importation for investment purposes into Nigeria has occurred. According to NBS, the total value of capital imported into Nigeria in the first quarter of 2016 was $710.97 million, the lowest level since the series began in 2007. This represents a decline of 54.34% since the final quarter of 2015, and a year on year decline of 73.79%.
However, Nigeria must not be allowed to continue to suffer due to actions of some few dubious people. In fact, it is based on the need to check the illegal activities of these few that the recent signing of the three bills aimed at improving the anti-money laundering and counter-terrorist financing/proliferation financing framework in Nigeria cannot be underestimated.
Still, it is desirable that Buhari reappraises the roles of established institutions fighting corruption and economic crimes such as the Economic and Financial Crime Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC), with a view to strengthening them and boosting their capacities.
Of course, the National Assembly members should be commended for their tenacity, courage and commitment in ensuring that Nigeria has put in place effective measures to address the menace of money laundering, terrorism and terrorism financing.
ASUU, end the strike for Nigeria’s sake
This week, President Muhammadu Buhari appealed to the members of the Academic Staff Union of Universities (ASUU) to consider the plight of students and call off the ongoing strike.
The President also urged students in the country’s public tertiary institutions to exercise patience as the government strives to address the nagging issues in the university system within the ambit of the resources available.
He made the appeal at the event marking the 19th National Productivity Day and the conferment of the National Productivity Order of Merit Award (NPOM) on 48 eminent Nigerians and organisations in both the public and private sectors, for their high productivity, hard-work and excellence.
Although the need for the lecturers to end their industrial action cannot be overemphasised, it, logically, seems that they, alone, without the government playing its own part, cannot bring the strike to a successful end.
To end the strike, the two parties need to agree to do so and agree as soon as possible. Specifically, the teo parties should honour agreements willingly and sanely entered into for academic activities to commence in the affected universities.
No doubt, it is with a view to finding a way to achieve that objective that the President directed his Chief of Staff, Minister of Labour and Employment, Minister of Education, Minister of Finance, Budget and National Planning to meet relevant parties at the negotiation table to critically look at the grey areas in the demands of the striking ASUU and other university-based labour unions.
Therefore, it is hoped that the government’s delegation and the unions should, actively and meaningfully, participate at the ongoing negotiations process and, at the same time, realise that the nation and its youths, who are leaders of tomorrow, look up to them to amicably resolve their disagreements and pave way for reopening of the universities.
Above that, the disputing parties must not feel shy or refrain from, where necessary, shifting position, lowering demands and expectations and make compromises all with the intention to peacefully and successfully bring to an end the needless closure of our universities.