Cablegate: Nigeria: Money Laundering Section of 2002 Incsr

This record is a partial extract of the original cable. The full text of the original cable is not available.




E.O. 12958: N/A

The following is Post's submission of the Nigeria section
of the 2002 INCSR Money Laundering Chapter.


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

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.



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