Identifying how funds flow in and out of an economy is at the centre of national security. Stakeholders have, therefore, called on the new National Security Adviser, Mallam Nuhu Ribadu, to mandate his team to work with banks and other financial institutions to ensure that funds move to the right individuals and companies that will not jeopardise national security. They insist his previous role as the Economic and Financial Crimes Commission (EFCC) chairman adequately prepared him for the tasks ahead, writes Assistant Business Editor COLLINS NWEZE.
The financial system is the getaway to the economy and central to national security. The banks and other financial institutions are also seen as the gatekeepers in ensuring that funds do not get into wrong hands that would threaten national security.
With over $30.4 billion ferried out of Africa yearly, stakeholders are intensifying commitment to fighting money laundering and terrorist financing by ensuring that people comply with regulations in doing their businesses.
That explains stakeholders’position that the appointment of Nuhu Ribadu as National Security Adviser by President Bola Ahmed Tinubu was strategic.
As the pioneer Chairman of Economic and Financial Crimes Commission (EFCC), Ribadu has a major advantage in securing banks and other financial institutions support in ensuring that illicit financial flows do not jeopardise national security.
As former EFCC chief, he turned the agency into the most-feared law enforcement organisation in the country.
Section 4 of the National Security Agencies Act, 1986 empowers the President, as the Commander-in-Chief of the Armed Forces, to appoint a Coordinator on National Security, while Section 4(3) of the Act defines the roles of the Coordinator on National Security to include advising the President on the intelligence activities of the (created) agencies.
The NSA is also expected to make recommendations in relation to the activities of the agencies to the President as contingencies may warrant … and doing such other things in connection with the foregoing provisions of this section, as the President may determine.
Views from stakeholders
President, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, said the financial institutions are the gatekeepers to the economy.
He said the NSA should engage stakeholders in the financial industry to get intelligence information needed for him to deliver on his assigned responsibilities.
He said: “It is expected and given that the financial institutions and other financial institutions should have measures to identify and mitigate risk.’’
He said the Bureau De Change’s (BDCs) play a moderating role in the forex market and have a significant intelligence market information.
“The NSA needs to ensure the inclusion of all players in his intelligence structure. In terms of his capacity and capability, being a former chairman of EFCC, he is well prepared to handle the opportunity he got and perform. ABCON as a self-regulatory association is willing to collaborate with him in ensuring his objectives on anti-money laundering, counter terrorism financing are met to highest level,” Gwadabe said.
President, Bank Customers Association of Nigeria (BCAN), Dr. Uju Ogubunka, said the NSA should, aside collaborating with banks and other financial institutions, ensure that the neighbouring countries’ borders, are manned by efficient and competent officers that will prevent illicit financial flows.
He said the NSA and his team should also secure the co-operation of financial sector regulators like the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), Nigeria Financial Intelligence Unit (NFIU), among others, in ensuring that funds get into wrong hands.
He said the anti-money launderings laws are adequate, but there could be need to design a system that makes illicit financial flow tracking easier, based on new realities.
In a report in the national dailies, one of the analysts said Ribadu’s appointment has, understandably, moved not a few eyebrows. Nigeria is accustomed to having retired military officers appointed as the NSA, although a few retired police officers have manned the position in the past.
Ironically, police officers who had served as NSA, such as Gambo Jimeta and Ismaila Gwarzo, served during military regimes. But civilian administrations since 1999 have appointed only retired military officers.
As noted by many commentators, the schedule of the NSA straddles various but relevant professional capabilities, such as the military, law enforcement, intelligence services, international relations, the financial controls and developmental spheres.
In the United Kingdom, all the six persons who have been appointed the NSA since 2010, have been career diplomats or civil servants. The NSA, Sir Timothy Earle Barrow, is a civil servant who became a diplomat and served as the British Ambassador to the European Union, before his appointment.
In the United States, which our democracy is modelled after, many of the people appointed have had no military background. Condoleezza Rice was a university scholar when President George Bush appointed her NSA from 2001 to 2005. The man who took over from her, Stephen John Hadley, was a lawyer and civil servant. The curent NSA, Jacob Jeremiah Sullivan, was also a civil servant.
The analyst explained that in the modern world, the role of the NSA is changing. Governments are looking for intelligent men and women whose resumés show capabilities in peace building, intelligence gathering and analysis, alongside developmental issues and, in the case of Nigeria, an advocate of inclusiveness.
Former United Nations Secretary-General Ban Ki-moon said in 2015, while addressing the Security Council, “Post-conflict societies must prioritise social, economic and political inclusion if they are to have any hope of rebuilding trust between communities”, to underline the need for inclusivity in the governance of conflict states.
Ribadu is seen by many stakeholders as an advocate of inclusion, making sure that the marginalised members of the society are not only told that they are included, but also feel like they are.
CBN roles
The CBN recently reviewed the provisions of the Anti-Money Laundering, Combating Financing of Terrorism and Countering Financing of Proliferation of Weapons of Mass Destruction (AML/CFT/CPF) Regulations, 2022 to mitigate the potential risks posed by Politically Exposed Persons (PEPs).
The apex bank has reviewed guidelines mandating banks to monitor and restrict transactions by Politically Exposed Persons (PEPs). The policy is expected to affect many Senators and House of Representatives’ members, especially those on their first outing, and grassroots politicians.
The reviewed guidelines asked the banks to undertake a risk assessment on new political office holders to determine the level of risk posed by that customer and the proportionate levels of due diligence and monitoring required.
With this new policy, many of the 109 members of the Senate and a 360-member House of Representatives will have their accounts reclassified.
The circular, signed by CBN Director, Financial Policy and Regulations, Chibuzo Efobi, provided guidance to the banks on what to look out for.
Read Also: Ribadu: Return of anti-corruption fighter
He said: “When considering whether to establish or continue a business relationship with a PEP, the focus should be on the level of money laundering, financing of terrorism and proliferation financing (ML/FT/PF) risk posed by the PEP, and whether the FI has adequate controls in place to mitigate such risks. This is in order to prevent the FI from being used for illicit purposes should the PEP be involved in criminal activities.”
The apex bank explained that in view of the corruption levels in Nigeria, domestic PEPs are rated highly vulnerable to financial risks, therefore, by default, most domestic PEPs are considered high risk.
It said foreign PEPs and PEPs with prominent functions in international organisations should be categorised based on the level of risk as assessed by financial institutions.
The banks are required to conduct customer due diligence (CDD) for establishing that a customer is a PEP, as provided by the CBN regulations.
The banks are also expected to identify and verify the identities of PEPs before providing them with financial services, or as soon as possible afterwards. Identification should also cover legal persons and arrangements that have at least one beneficial owner who is a PEP.
Continuing, it said that once it has been established that a customer is a PEP, the bank should undertake a risk assessment.
“Higher risk PEPs require enhanced ongoing monitoring of the business relationship.The financial institution should implement electronic and/or manual monitoring systems to monitor the business relationship and detect unusual and potential suspicious transactions and activities,” it said.
The CBN said financial institutions, in the course of their businesses, establish business relationships with PEPs whom may be vulnerable to corruption, thus may portend risks to the banks.
According to the apex bank, PEPs pose a high risk of ML/FT/PF due to the possibility that individuals holding such positions may misuse their power and influence for personal gain or advantage to themselves, close family members and/or associates.
“Such individuals may also use their families or close associates to conceal illicit funds and assets. In addition, they may also seek to use their power and influence to gain representation and/or access to, or control of, legal entities for similar purposes,” it said.
The CBN has, therefore, mandated banks to comply with the CBN Anti-Money Laundering, Combating Financing of Terrorism and Countering Financing of Proliferation of Weapons of Mass Destruction (AML/CFT/CPF) Regulations, 2022 to mitigate the risks posed by PEPs.
Among these obligations is the requirement to apply a risk-based approach to identifying PEPs and apply appropriate Enhanced Due Diligence (EDD) measures when dealing with those that pose higher AML/CFT/CPF risks.
The objective of this guidance is to assist FIs in the identification and management of risks with PEPs in their business relationships.
FATF roles
Also, the Financial Action Task Force (FATF) team conducts yearly Mutual Evaluation on Nigeria. The exercise allows it to assess Nigeria’s compliance with the Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) rules.
The evaluation provides information on the progress made by the country in meeting its obligations towards the FATF Recommendations.
The FATF, the global standard-setter in the fight against money laundering and the financing of terrorism and proliferation of weapons of mass destruction, conducts peer reviews of each member on an ongoing basis, providing an in-depth description and analysis of each country’s system for preventing criminal abuse of the financial system.
Nigeria, which has been in the forefront of mentoring other member states in the development of their AML/CFT systems, has addressed FATF action plan by enacting legislation to criminalise money laundering and terrorist financing.
The country is also implementing procedures for identifying and freezing terrorist assets and ensure that customer due diligence requirements apply to all financial instructions.
Gwadabe said BDCs have met a number of compliance requirements specified by FATF and local regulators, saying they have conducted enhanced due diligence, a major compliance requirement on some high-risk customers.
He said the collation and reporting of foreign currency transactions and suspicious transactions by BDCs were now fully automated.
