US embassy cable - 02ABUJA2786

C O N F I D E N T I A L SECTION 01 OF 02 ABUJA 002786 
 
SIPDIS 
 
 
DEPT FOR AF AND INL 
. 
TREASURY FOR OFFICE OF ENFORCEMENT--DANIEL GLASER AND SHAUN 
LONERGAN 
 
 
E.O. 12958: DECL: 10/03/2017 
TAGS: KCRM, EFIN, SNAR, NI 
SUBJECT: NIGERIA: EMBASSY VIEWS ON LOOMING FATF SANCTIONS 
DECISION 
 
REF: 03OCT02 LONERGAN/TAYLOR TELCON 
 
 
Classified by Ambassador Howard F. Jeter.  Reasons: 1.5 (b) 
and (d). 
 
 
1.(U) This is an action message. 
 
 
2.(C) The Embassy understands that an October 1 Washington 
interagency meeting concluded that the USG should recommend 
counter-measures against Nigeria during next week's Financial 
Action Task Force (FATF) Plenary session in Paris.  According 
to the USG representative to the FATF, Treasury's Shaun 
Lonergan, the GON did not report adequate progress when a GON 
delegation met with the FATF's Africa and Middle East Review 
Group (AMERG) on September 25. 
 
 
3.(C) We agree that the GON did not energetically address the 
issue during most of the year; yet, after months of 
unsuccessful dialogue,  the GON is now motivated to take 
needed steps towards money laundering reform.  President 
Obasanjo has charged his Principal Secretary, Stephen 
Oronsaye and Attorney General Kanu Agabi with leading the 
dialogue with the FATF and with coordinating GON legislative 
and policy reforms.  This seriousness was envinced after the 
FATF and the Embassy warned the President that 
"counter-measures" would be taken if the GON did not show 
genuine progress on this issue. 
 
 
4.(SBU) Steps taken during the last four weeks include 
significant amendments to the GON's existing Banks and Other 
Financial Institutions (BOFI) Act of 1991 and its Money 
Laundering Act of 1995.  Also, the President submitted a 
revised draft Financial Crimes Commission Bill.  These 
amendments make a number of major improvements, including: 
expanding the scope of money laundering to include the 
proceeds of all crimes; adding "other financial institutions" 
to those required to submit currency transaction reports over 
a threshold of the equivalent of $5,000; and giving the 
Central Bank greater authority to freeze suspicious accounts. 
 A stumbling block to finalize the legal reform is the 
lethargy of the National Assembly in passing these and many 
other proposed laws. 
 
 
5.(C) We feel a credible threat of imminent counter-measures 
is far stronger and will afford much better leverage than the 
actual imposition of those sanctions at this stage.  This 
will encourage the Executive Branch to redouble its efforts 
and will place a great deal of political pressure on members 
of the National Assembly not to let their legislative 
inaction result in the imposition of sanctions on their 
country. Assuming this blame would be something the Assembly 
would like to avoid during an election year, we think the 
legislature would be compelled to act uickly on the proposed 
legislation now before it.  Conversely, implementation of 
sanctions might be counter-productive.   The Executive and 
Legislature are locked in an intense political battle. 
Imposition of sanctions right now would be blamed on the 
President and the Assembly would have no incentive to help 
him resolve the issue even though doing so would be clearly 
in tne country's interest.  Again, maintaining the threat of 
sanctions will put an equal onus on both the Executive and 
Legislature. 
 
 
6.(C) Additionally, the imposition of sanctions could produce 
a defensive backlash, in which advancing money laundering 
reforms will prove more rather than less difficult.  If the 
USG sanctions will be those contained in the Patriot Act, the 
strain to the bilateral relationship could be significant. 
Because of the anti-terrorism motivation behind the Patriot 
Act, the Nigerians will perceive that we are viewing their 
inaction as some type of implicit support for terrorism. 
This would be unfortunate because Nigeria has been one of our 
strongest anti-terrorism allies in Africa.  Nigerians will 
resent being sanctioned under the  same legal weapon used 
against terrorists and rogue states. 
 
 
7.(C) The argument for imposition of counter-measures is 
sound and these measures would hurt Nigeria.  However, we are 
not sure that this is what we want to do.  Diminishing 
Nigeria's economcy and economic prospects, at this stage, 
would not appear to be in the U.S. interest.  If our goal is 
to advance money laundering reforms, we should adopt a more 
measured approach.  We propose the USG representative to the 
FATF advocate imposing a tight 60-day deadline for the GON to 
pass (not introduce or consider) required anti-money 
laundering legislation in the National Assembly.  This would 
give the Executive and Legislature time to act on the 
new-found momentum in passing the requisite anti-money 
laundering legislation.  The Embassy would also press key 
leaders in the legislature to move expeditiously on the 
issue.  Failure to pass this legislation would automatically 
trigger the appropriate sanctions under the Patriot Act or 
similar mechanism. 
8.(U) Please advise. 
JETER