How can the anti-graft war be won? It is by effective prosecution and conviction of looters, says Mr. Timothy Melaye, the Nigerian Head of Information Centre of the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA). He speaks with COLLINS NWEZE on GIABA’s efforts to curb financial crimes by empowering agencies, such as, Economic and Financial Crimes Commission (EFCC) and Nigeria Financial Intelligence Unit (NFIU).
To what extent do you think bureau de change operators aid money laundering?
What I would say is this, GIABA has put a lot of resources and efforts in training financial institutions and non-financial businesses and professionals and therefore I expect that the financial institutions across the region are fully aware of their responsibilities. There is what is called the committee of chief compliance officers of banks in Nigeria. GIABA has provided series of trainings to these officers to be able to make sure financial institutions comply with their responsibilities. Financial institutions do not have responsibility to investigate or prosecute anyone. Their responsibility is to stand as the gatekeeper, the money comes through the financial institutions or goes out through the financial institutions and where there are suspicious transactions, they have obligations as a sole responsibility to report such as suspicious transactions. It must be reported to Nigeria Financial Intelligence Unit (NFIU) and if a bank notices any suspicious transaction or what can be termed as a suspicious transaction, they have a responsibility to report too. After reporting, then they have carried out their due diligence responsibility. Now they need to carry out customer due diligence, identify your customers, now we have people who are not the actual owner of money or people who come in a disguise or people who come to open account fictitiously, or people who come as third party to open account in support of someone else. The suspicious transactions report says if my name is linked to the name of a prominent person who is considered as politically exposed persons, then the banks need to do enhanced due diligence reports on that. The report will make them file suspicious transactions so that all those who are linked can be identified, their transactions gotten and be properly documented.
The Central Bank of Nigeria (CBN) is accusing some bureaux de change (BDC) of money laundering. Some of the operators were linked to the arm-for-cash scam; how did things get to this point?
You see, there is a threshold on transactions for the BDCs. They were identified before. Now there are so many BDCs that are not registered, that are not known and if anything happens, you cannot trace them, you just see them on the roadside and you attend to them but now, BDCs are forced to register. If you have any transactions with registered BDCs, it is easy to track the transaction because you are supposed to take receipts. By such receipts, you will be able to know if they are registered or not. This is not a fight for only the CBN, for only the banks, for only the BDCs. It is a fight for everyone. Those of us that transact business with the BDCs, do you ever ask for receipt? Do you ever find if the BDC you are transacting with is registered? If he gives you fake currency, can you go back to him? Can you go back to his office? If you met him on the road, do you just go and stand on the road looking for him? So it’s a responsibility for us all to ensure that the society will remove quacks from the business. One of the things society needs to do is to make sure it puts in systems to ensure that crimes are reduced to the barest minimum if not absolutely eradicated. So one of the things that is put in place is to ensure the BDCs are operating within the ambit of the law. Apart from being delisted, there are lots of sanctions that can be meted out to erring BDCs. When you don’t have the laws, you have set yourself up for failure. So it is simple. When there is a lawless society, it is even illegal to be abiding by any law.
There have been many policies around foreign exchange (forex) by the CBN; how realistic are some of these policies? What are the consequences if BDCs stop reporting their transactions to the regulator?
The CBN has the responsibility of safeguarding and managing the financial systems and those decisions will be taken based on certain information that is available to them. Now BDCs can get forex on allocation from the CBN. Whether they get the forex from CBN or not, they have obligation to report. If for instance in my domiciliary account, I have never seen $1 million before and today I put $20 million, the bank has responsibility to file suspicious transactions report. That they didn’t get it from the CBN is not a justification for them not to file such report, you understand. BDCs have a responsibility to file transactions returns. So in a case where the BDCs do not file a return or file what it should file, then such operator is breaking a law. And when he is breaking a law at the slightest provocation, if he is caught up with, he is out of business. So the fact that CBN is not providing forex for them is not the reason why they shouldn’t file what they should file because CBN regulates their operations and when you are a regulator, you take your decision based on what is happening in the market and the fact that you didn’t buy from them is not the reason why you should stop filing returns. If I come to a BDC now and I am a business man and I say I have $500,000 to sell to you, the person should be able to file transactions reports to Special Control Unit against Money Laundering (SCUML). The BDC is supposed to report to their reporting line, be it SCUML or CBN or even financial intelligence unit so that they identify who this person is, and if need be, investigation can commence .If it is a legal business without crime, nobody disturbs him, if crime has been committed then he will face the penalties.
What form is the investigation supposed to take?
It’s the responsibility of the law enforcement agency to carry out the investigation. One if I file a suspicious transactions report, if for instance a bank files suspicious transaction report to NFIU, the body will do an analysis. Based on the analysis, it will either send information to the appropriate law enforcement agency or agencies or not. The agencies now have a responsibility to carry out investigations and investigations can take any form. If someone works in a bank and his salary is N10 but today he pays in $500 million into his account, the responsibility of the financial institution is to file a report. We saw this transaction and think it is unusual, they have finished their responsibility. The NFIU will look at it and analyse it what is this money for, this money came into his account as a transfer for a workshop that is about to happen, why wasn’t it transferred to the official account of the organisation? After they do their analysis, they send the report to EFCC or special fraud unit of the Police or straight to Independent Corrupt Practices and other Related Offences Commission (ICPC), those people will carry out their investigation. If need be, they might invite you, if no need, they would do their investigation without inviting you. If you are cleared, they let you go, if you are not cleared, they call you to come and explain. If the explanation is not justifiable and crime has been committed, you pay for it and this is what the process is and it saves virtually the society.
Does it apply in both public and private companies?
It applies to everybody. It doesn’t matter today if you paid unusual account or paid into Abuja, they should report it. They are not saying the person has committed a crime, that is why its called suspicious transactions. Sometimes, it could be currency transactions, it could just be volume of currency, it might not be suspicious. It might be regular, maybe you just saw everyday from my account, N1 million is paid into a particular person everyday. It might just be this is unusual, the frequency is worrisome, somebody needs to file a report and this is the simple process. That is why we encourage that the financial system keeps their safeguards. All the non designated financial businesses and professions keep their safeguards. Even if you are an estate agent and somebody is coming to buy 600 houses or buy an estate and you know that this guy works as a civil servant, you have a responsibility to report.
How would you assess the Nigerian situation, where there are visible allegations of money laundering activities and proliferation of small arms?
Well, let me not say I want to assess Nigeria’s situation because I would require some parameters to do a thorough assessment. However, Nigeria as a strong country is a strong member of GIABA, and of course strong member of ECOWAS. And like other strong countries and as members of ECOWAS, of course it is our responsibility to protect the economy of Nigeria from the proceeds of crime, ensuring that terrorists financing do not take place by ensuring that Nigeria as a country does comply with the 40 recommendations of the FATF and put up systems to ensure the implementation of those recommendations to the letter. Those recommendations are to guide and ensure that crimes that we are working against do not get perpetuated in Nigeria. However, Nigeria is one of the countries in recent times that have shown commitments to complying with those recommendations in terms of enacting the laws. Let me say clearly that in a lawless society, it is criminal to be law abiding. When there is no law, you have set the stage for failure, so by Nigeria’s position to enact the laws against money laundering, terrorists financing, proliferation of arms, against all the required issues that have been laid out is the first step to ensuring you have put in place measures to stop that. Secondly, the measurement of effectiveness of those laws can’t be done in isolation. So, I would say Nigeria is working hard to comply with those recommendations. They have taken appropriate measures in enacting the laws and the stage we are now is measuring the effectiveness of those laws and GIABA will be embarking on second round of mutual evaluation of member states. Nigeria is in category of those that would be done.
Basically, what is GIABA about?
It is Inter-Governmental Action Group against Money Laundering in West Africa (GIABA). It is an ECOWAS institution, established in 2000 by the authority of Heads-of-States and governments of Economic Community of West Africa States (ECOWAS). It’s a specialised institution, and the Financial Action Task Force (FATF) regional body. The FATF is the global body responsible for building standards and recommendations to fight money laundering, terrorists financing and proliferation of small, light and weapons of mass destruction. Within the confines of this work, GIABA has a mandate to protect the economy and financial institutions of West African states from the laundering of the proceeds of crime and so work with the FATF recommendations to ensure that terrorists financing is not happening within the region and by extension across the world. That is the core mandate and responsibility of GIABA.
How does it feel knowing that money laundering, proliferation of small arms, terrorists financing and all those things you are supposed to be fighting against still thrive in our societies?
There is no society without crime yet. We do hope and look up to one day probably there would be but obviously there is none. With all the sophistication in the US, with all the sophistication in Europe, with all the sophistication across the world, you will see the activities of criminals. The efforts that we put in place are to build the system whereby we mitigate, reduce to the barest minimum these crimes. Today, we make a lot of discoveries, which have made it easier for us to know when a crime is committed. So, sometimes the things we see as increase in crime are actually discoveries of crimes. If for instance they say in one country in Africa or West Africa, somebody is being prosecuted for $20 billion or $1 billion, it is because this information is known, that is why the awareness is taking place. If it is not known, it will be as if there is no crime being committed. What we see now is more discoveries of those crimes, more pursuits to stop them or more prosecution of those who commit these crimes and that are what people usually term to be increase in crime. We see them as more detection of crimes and the more you detect, the more you punish, the more you prosecute, the more deterrent there are and the less crime that people are carrying out. You are dissuading them from committing a crime; when you discover, you detect, you investigate, you prosecute, and sanctions are appropriately carried out to those guilty and those sanctions, I must say, must be dissuasive, proportionate and adequate. When this is done, then, you will have dissuasion. People will not have the incentives to carry out the criminal activities anymore.
Are there specific challenges you are tackling in Nigeria now?
Of course everywhere you see issues of criminality, there are challenges. Not only in Nigeria but eventually in most African countries, corruption is high, trafficking is high, drug related offences are also high. We are trying to work with all relevant agencies, for instance, GIABA provided technical assistance to Economic and Financial Crimes Commission in Nigeria, and this is part of things to strengthen their capabilities to be able to carry out their duties and also encourage the leadership to provide the political will.
What is your view on looters returning stolen money and being left to go; is it the right way to fight corruption?
Well I am not aware of any official document saying some people pleaded and returned funds and if it does exist, I am not aware. What I have seen so far is that there have been arrests ,there are other issues, allegations and as I have said earlier, allegations are just allegations until proven by a competent court of jurisdiction and one is convicted of a crime. If you asked me to return one naira and I returned one naira, there is no court of law that have said I committed a crime; so it is probable discussions and negotiations between private people or public people. What I would say would be of interest is effective prosecution and securing conviction based on the court judgments, then we can now say fine this is a case established by a competent court of law of corruption on money laundering issues and what we see today around is still the process, there are allegations, there are investigations going on, until we see prosecution and conviction, we cannot say crime has been committed. So if people are having any form of discussion by the side, all of those things cannot go as conviction until we secure conviction in the courts. I think many of those cases are being filed in the courts and we are looking forward to see those cases probably prosecuted and if convictions are secured, we will know crime has been committed and appropriate sanction meted out.
What is responsible for the ongoing increased activities by the EFCC in fighting corruption?
Well, I won’t say EFCC is either being active or not active. What I use as a yardstick is the amount of conviction secured. GIABA, as I have said earlier, has provided technical assistance to many anti-corruption agencies in the region and part of that is to ensure that there is more conviction. From the report I have received from the EFCC even in the past, there is large amount of conviction. It might not be purely politically exposed persons but conviction has been going on. What we want to see is more conviction, what we want to see is if people have committed crimes, they should pay for their crimes. Now there are a lot of issues and noise because a lot of politically exposed persons are involved. Whether the EFCC has worked more or less should not be for us to pay attention to. What we want to see is that crimes have been committed and those crimes have been paid for which would be a deterrent to those who want to commit crime in the future. I would not say EFCC has been doing more or doing less than they used to. What I want to say is that convictions were being secured in the past, more convictions should be secured if there are more crimes committed. So we must measure first if in the past, where there are crimes committed, were these crimes investigated, was prosecution process instituted and conviction secured? When we have all of those yardsticks, then we should be able to measure.
If everything goes on and you did not report, the law will catch up with you. So, these are the processes that have been put in place and that are part of the things that GIABA is ensuring that each member state has all of these processes in place. Until those processes are in place and well known and understood, then we will be able to mitigate and fight this crime originally because people now launder money via properties, via luxury cars, they buy all sorts of things. You see somebody has 20 houses, even if nobody is living there; they just lock them because they just want to launder the money. If you go to many cities within the region, you will see that many people have big houses within the high brow areas that are not occupied. If the estate agents are doing their work, when people are procuring, if lawyers are doing their work when people are signing agreements, all of those things supposed to come as suspicious transactions. If they file their reports properly and the agencies do their analysis properly, you will find out that some of these things would be discovered.
Recently, I heard in the news that there is a civil servant whose account has almost N200 million, whose salary is less than 0.01 per cent of that amount. So the financial institutions have responsibility, they are well taught on what these responsibilities are. They understood it and I expect that they are doing their corporate reporting. If they are not, they would pay dearly for it. Sanctions are going on across the world. It is even increasing. PNB Paribas in the U.S paid in billions of dollars in sanctions; HSBC was sanctioned to the tune of $1.9 billion. Any bank that fails to comply, the sanction can kill such a bank.
