US embassy cable - 03ABUJA158

UNCLAS SECTION 01 OF 02 ABUJA 000158 
 
SIPDIS 
 
 
FOR INL 
 
 
E.O. 12958:  N/A 
TAGS: SNAR, KCRM, EFIN, NI 
SUBJECT: NIGERIA: MONEY LAUNDERING SECTION OF 2002 INCSR 
 
The following is Post's submission of the Nigeria section 
of the 2002 INCSR Money Laundering Chapter. 
 
 
Nigeria. 
-------- 
 
 
The Federal Republic of Nigeria is Africa's largest 
democracy. It is a hub of money laundering and criminal 
activity not only for the West African sub-region but also 
increasingly for the entire continent. Nigerian trafficking 
and money laundering organizations have proven adept at 
devising new ways of subverting law enforcement efforts, 
and evading detection. Their success in avoiding detection 
and prosecution has led to an increase in financial crimes 
of all types, including bank fraud, advance fee fraud, and 
money laundering. Despite the determined efforts of the new 
government to counter years of rampant corruption, crime 
continues to plague Nigerians. 
 
 
Nigerian Advance Fee Fraud is one of the most lucrative 
financial crimes committed by Nigerians. Conservative 
estimates indicate hundreds of millions of dollars in 
illicit profits generated annually. This type of fraud is 
referred to internationally as "Four-One-Nine-Scams," (419 
is the Nigerians criminal code's section on fraud). The 
gist of a "419" scam is to trick victims by persuading them 
that they will receive an exorbitant return for providing a 
relatively modest payment of a fictitious fee in advance. 
Businesses and individuals around the world have been and 
continue to be targeted by these "get rich quick" offers. 
These scams often go beyond confidence games; violence 
against the fraud victims has also occurred.  Substantial 
evidence exists that narcotics traffickers have utilized 
419 Scams to fund their illicit smuggling efforts. 
 
 
The Financial Action Task Force (FATF) in June 2001 and in 
June 2002 designated Nigeria as a Non-Cooperating Country 
or Territory for failing to improve its money laundering 
controls and failing to cooperate with repeated FATF 
requests for information.  In October 2002, FATF gave 
Nigeria  a deadline of December 15, 2002 to adopt necessary 
anti-money laundering legislation or face "counter- 
measures" by FATF members.  Although proposed legislation 
had been held up  in the National Assembly, the GON worked 
energetically in the last months of 2002 to pass 
legislative reforms.  The National Assembly, meeting in 
emergency session on December 14, 2002, passed three key 
pieces of anti-money laundering legislation:  an amendment 
to the 1995 Money Laundering Act, that extends the scope of 
the law's coverage beyond the proceeds of drug trafficking 
to the proceeds of all crimes; an amendment to the 1991 
Banking and Other Financial Institutions (BOFI) Act that 
expands coverage of the law to stock brokerage firms and 
foreign currency exchange facilities and gives the Central 
Bank of Nigeria greater power to deny banks licenses and to 
freeze suspicious accounts; and the new Financial Crimes 
Commission Act that creates a central law enforcement body 
to coordinate anti-money laundering operations and 
information sharing. 
 
 
The National Drug Law Enforcement Agency (NDLEA) and the 
Money Laundering Surveillance Unit (MLSU) of the Central 
Bank of Nigeria will continue to play a role in fighting 
money laundering, but they will no longer have the lead 
roles -- that role will fall to the new Financial Crimes 
Commission.   Under the new legislation passed on December 
14, 2002, financial institutions are required to report 
cash transactions that exceed N1,000, 000 (U.S. $8,800) for 
an individual and N5 million (U.S. $45,000) for corporate 
bodies.  Identification of customers is required when a 
transaction exceeds the threshold amount of U.S. $10,000 or 
its equivalent. 
 
 
In passing these laws, Nigeria met the FATF's immediate 
demand (the December 15, 2002 deadline) of expanded 
coverage of its money laundering laws beyond narcotics 
trafficking and making financial institutions' reporting 
requirements more effective.  The additional legislation -- 
extending coverage of anti-money laws to other financial 
institutions, providing the Central Bank of Nigeria with 
the powers to freeze suspicious accounts and deny licenses 
to banks suspected of money laundering, and creating a 
central coordinating body and financial intelligence unit - 
- go a long way toward bringing Nigeria's money laundering 
control regime into conformity with international 
standards.  Nigeria is well positioned to continue its 
dialogue with the FATF towards the goal of ending its 
designation as a Non-Cooperating Country or Territory. 
 
 
Creation, staffing and the operations of the new Financial 
Crimes Commission will be critical to the effectiveness of 
the new laws.  The Commission should second experienced 
staff from various law enforcement agencies; it should also 
build up its own cadre of professional investigators.  We 
encourage the Government of Nigeria to fund adequately this 
important new Commission and we hope to provide the 
Commission's new staff technical assistance and training. 
With trained staff and adequate operational funding, the 
new Commission can begin to obtain court convictions on 
money laundering cases it investigates, a much needed 
departure from the past lack of money laundering 
convictions. 
 
 
The Corrupt Practices and other Related Offences Act was 
signed into law in June of 2000. The Independent Corrupt 
Practices Commission was established to enforce the newly 
enacted law and granted powers of investigation, arrest and 
prosecution.  The Commission's first public trials began in 
May 2001. Nigeria is a party to the 1988 UN Drug Convention 
and in June 2001 provided notification that it had ratified 
and the 2000 UN Convention against Transnational Crime, 
which is not yet in force internationally. The United 
States and Nigeria signed an MLAT in 1989, which was 
ratified by the United States in 2001, and is currently 
pending approval by the Nigerian Parliament. 
 
 
(end). 
 
 
JETER