Identifying how funds flow in and out of an economy is at the centre of National Security. Stakeholders have therefore called on the newly appointed National Security Adviser, Nuhu Ribadu to mandate his team to work closely with banks and other financial institutions to ensure that funds move to the right individuals and companies that will not jeopardize national security. They insist his previous role as Economic and Financial Crimes Commission (EFCC) Chairman adequately prepared him for the tasks ahead
The financial system is the getaway to economy and central to national security. The banks and other financial institutions are also seen as the gatekeepers ensuring that funds do not get into the wrong hands that would threaten national security.
With over $30.4 billion ferried out of Africa annually, 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 huge advantage in securing banks and other financial institutions support in ensuring that illicit financial flows capable of jeopardizing national security are not allowed in or out of the economy through the right policy implementations.
As former EFCC Chairman, he turned the agency into the most feared law enforcement organisation in the country.
Also, 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 matters concerning 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 of the nation.
He said the National Security Adviser should engage stakeholders in the financial industry to get intelligence information needed for him to deliver on his assigned responsibilities.
He said 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 (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 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, Nigeria Deposit Insurance Corporation, Nigeria Financial Intelligence Unit (NFIU) among others to support in ensuring that funds get to the right places, and not into wrong hands.
He said that the existing 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 national dailies, one of the analysts said Ribadu’s appointment has understandably moved not a few eyebrows. Nigeria is a country accustomed to having retired military officers appointed as the NSA, although there have been a few retired police officers appointed too in the past.
Ironically, police officers who had served as NSA, such as Gambo Jimeta and Ismaila Gwarzo, served military regimes. But civilian administrations since 1999 have appointed only retired military officers.
As noted by many commentators, the schedule of the NSA straddles different 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 current 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 current appointment as NSA.
In the United States, which our democracy is modeled after, many of the people appointed have had no military training. Condoleezza Rice was a university scholar when President George Bush appointed her NSA from 2001 to 2005. The man who took over the office after her tenure was Stephen John Hadley, a lawyer and civil servant. Jacob Jeremiah Sullivan, who’s the current NSA, was also a civil servant before his appointment.
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, that “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 society are not only told that they are included but also feel like they are.
CBN roles
The Central Bank of Nigeria (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 Central Bank of Nigeria (CBN) has reviewed guidelines mandating banks to monitor and restrict transactions by Politically Exposed Persons (PEPs) in the country. The policy is expected to affect many Senators and House of Representatives members, especially those on first term, 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, a large number 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.
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 Politically Exposed Persons (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 organizations should be categorized based on the level of risk as assessed by financial institutions.
The banks are required to conduct customer due diligence (CDD) for the purpose of 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 legal arrangements that have at least one beneficial owner who is a PEP.
Continuing, it said that once it has been established that a new or existing 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 constantly monitor the business relationship and detect unusual and potential suspicious transactions and activities,” it said.
The CBN said that financial institutions, in the ordinary course of their businesses, establish business relationships with PEPs whom may be vulnerable to corruption thus may portend reputational and financial crime 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 provisions of 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 potential risks posed by PEPs.
Amongst these obligations is the requirement to apply a risk-based approach to identifying Politically Exposed Persons (PEPs) and to 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 associated with PEPs in the course of business relationships.
FATF roles
Also, the Financial Action Task Force (FATF) team usually conducts annual 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 Mutual Evaluation equally provide information on the progress made by Nigeria 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 largely addressed FATF action plan by enacting legislation to criminalise money laundering and terrorist financing.
The country is also implementing procedures to identify and freeze 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 are now fully automated.
