NFIU Autonomy Bill:
As Senate Enters Committee Stage
Walter Duru
Last Wednesday, the long overdue Nigerian Financial Intelligence Agency (NFIA) Autonomy Bill passed through the second reading at the floor of the Nigerian Senate, after which it was referred to the Committee on Financial Crimes, Drugs and Narcotics.
The Bill seeks to establish the Nigerian Financial Intelligence Agency as the central body in Nigeria responsible for receiving, requesting, analysing and disseminating financial and other related information to all law enforcement, security agencies, other relevant authorities, as well as exchange of intelligence with over 139 FIUs globally.
At this stage, the Committee is expected to consult widely and organize a public hearing on the Bill.
In his lead debate on the fundamental principles of the Bill, the Chairman of the Senate Committee on Drugs, Narcotics and Financial Crimes, Senator Victor Lar reiterated its overwhelming importance in the war against money laundering and terrorism in Nigeria.
He lamented over the absence of an independent institution with full paraphernalia to gather intelligence effectively in the war against terrorism, terrorism financing, money laundering and other complex crimes in Nigeria; a situation he blamed for the listing of Nigeria on the Financial Action Task Force (FATF) high risk countries.
"The implication of being on the FATF target list is that Nigerian businessmen and women seeking financial instruments and facilities outside Nigeria or from international financial institutions cannot get them. Nigerians also face the same challenges when trying to open accounts in banks outside. No wonder, the much talked about Direct –Foreign Investment has not been forth coming. Nigerian students who school abroad cannot be trusted to obtain funding arrangements to continue schooling except they pay cash. Some of the observed operational and institutional deficiencies are: Deficient Anti-Money Laundering Act, weak Terrorism Act; Absence of an Independent Financial Intelligence Unit; Absence of Mutual Legal assistance act; Absence of Proceeds of Crime/Asset recovery and management body, as well as the Absence of Whistle Blowers Act". This Bill then, is an attempt in the direction of rectifying one of such deficiencies."
"The Financial Intelligence Unit is essentially to provide Financial Intelligence to all law enforcement agencies and other relevant agencies and Ministries e.g. (DSS, EFCC, ICPC, NAPTIP, NDLEA, NIGERIA POLICE FORCE, NIGERIA CUSTOMS, DIRECTORATE OF MILITARY INTELLIGENCE, NIGERIA INTELLIGENCE AGENCY, FEDERAL INLAND REVENUE, FEDERAL MINISTRY OF JUSTICE, AND FEDERAL MINISTRY OF FINANCE) in the country, as well as to all financial sectors regulators such as the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC), the National Insurance Commission (NAICOM), and to a large extent to the Federal Ministry of Industry, Trade and Investment, (FMIT/Special Control Unit on Money Laundering)."
"As you know, when these agencies operate, they want confidentiality in their relationship with the NFIU, however, if the NFIU is operating as a department of one of the agencies that is also interested in the intelligence, the confidence is lost; this is one of the reasons why this Bill is critical."
Continuing, Lar argued that: "You may recall that the Nigerian Financial Intelligence Unit (NFIU) is currently domiciled within the Economic and Financial Crimes Commission (EFCC) as a Department as provided by Section 1 (2) (c) of the EFCC Act, 2004. However, this provision has since been found to be inconsistent with international standards and has affected the effective functioning of the NFIU. This is because the provisions of that section merely describes EFCC as the NFIU and failed to provide for the distinct powers of the NFIU. Since the NFIU is not set up to be an enforcement agency, this provision negates the core objectives for which the NFIU was established in the first place. It is important to note further that there can only be one Financial Intelligence Unit in every country and Nigeria created one without giving it the full powers to operate."
"THE NFIA, when established is expected to play a dual role, notably at the domestic level, with agencies listed above and internationally with the FATF, EGMONT GROUP OF FIUs and the other FIUs in 139 jurisdictions/countries."
"Several reports by the International Monetary Fund (IMF), GIABA, EGMONT Group of FIUs reflect the urgent need for the NFIU to have a different framework from the EFCC and to ensure that a budget is provided for the NFIU through the "appropriation budget" so as to ensure the security of information and data in the NFIU. One of these reports include the recently concluded GIABA Plenary in Accra which observed as follows: That the Plenary cannot exit Nigeria from the Expedited Regular Follow up process to the voluntary biannual process on grounds of certain remaining deficiencies pointed out by the Working Group on Mutual Evaluation and Implementation (WGMEI) during its meeting on Tuesday May, 7, 2013. The outstanding issues are: Lack of operational autonomy of the NFIU; Lack of comprehensive legislation on mutual legal assistance and Lack of a comprehensive legislation on recovery of stolen assets and proceeds of crime.
"Consistent observations by the international community on Nigeria despite the establishment of the EFCC, is that Nigeria does not have a single platform for receiving financial intelligence reports. This prompted the EFCC through a board resolution to modify the EFCC Act without reference to the National Assembly by trying to create the NFIU as an independent body. This move still did not address the issues, as a law, IPSO FACTO cannot be changed by a resolution of the Board."
The distinguished Senator further explained some of the major constraints of the NFIU as is presently constituted to include that: "The "Commission" is the term recognized under the Money Laundering Prohibition Act, 2011 and not the NFIU, even in areas where the NFIU is the only recognized entity to perform those functions related to the receipt of suspicious transaction reports. As such, the law is defective and the NFIU is constantly confronted with situations where such reports are rendered to various units of the EFCC, in clear breach and departure from the intended rationale behind the establishment of the NFIU. A good example is Section 6 of the MLP Act, 2011 as amended in 2012. Further recall that an attempt to amend Section 6 in December 2012 to read "NFIU" instead of "Commission as the entity to receive suspicious transaction report in line with international standard was rejected by the Senate because the NFIU is yet to be defined in the law; The attendant non-cooperation of other law enforcement agencies in working with the NFIU is as a result of lack of confidence in the independence of the NFIU and clear definition of the mandate of the NFIU which should be distinct from the mandate of the EFCC; The need for high-level confidentiality in the conduct of the NFIU cannot be guaranteed as it is currently constituted; Inadequate funding is hindering the implementation of the core functions of the NFIU as no separate budgetary provision has been made for it in the EFCC budget."
Earlier in an interview, the Chairman, House of Representatives Committee on Drugs, Narcotics and Financial Crimes, Honourable Jagaba Adams, who sponsored the same Bill at the lower Chamber described it as very essential in the fight against money laundering and terrorism in Nigeria, especially, as the country passes through serious security challenges.
Just recently, the Financial Action Task Force (FATF)-the global standard setter against terrorism and money laundering delisted Nigeria from the list of high risk countries, a feat that would have been impossible if the NFIA Bill was not at the National Assembly.
Prior to the delisting, Nigerians suffered unimaginable humiliations and losses at the international economic market. The country's financial instruments were rarely honoured. Nigerian businessmen and even corporate organisations were treated as lepers at the international scene. Today, following the Federal Government's strong commitment to addressing the issues that kept Nigeria on the list, the NFIA Bill inclusive, the FATF delisted Nigeria from the list, while monitoring closely to ensure that all FG's promises are kept. It is believed that this latest push is in keeping with the Federal Government's commitment.
The recent sanction of five hundred and twenty five thousand Pounds (£525,000) imposed on the United Kingdom branch of Nigeria owned Guaranty Trust Bank Limited for money laundering shocked Nigerians and reduced the significantly reduced the share price of GTBank. I remembered the obvious fact that my country has a very long way to go in the fight against money laundering.
The notice of sanction, with reference number: 466611, sent to the GTBank was a clear warning that Nigeria must take deliberate steps to strengthen its money laundering Agency (ies) and also take the fight against money laundering and other related offences more seriously, before the worst happens.
The notice reads in part: "For the reasons given in this notice, the Authority hereby imposes on Guaranty Trust Bank (UK) Limited (GTBUK or the Firm) a financial penalty of £525,000 for breaches of Principle 3 (management and control) of the Authority's Principles for Businesses between 19 May 2008 and 19 July 2010 (the Relevant Period). GTBUK agreed to settle at an early stage of the Authority's investigation. It therefore qualified for a 30% (Stage 1) discount under the Authority's executive settlement procedures. Were it not for this discount, the Authority would have imposed a financial penalty of £750,000 on GTBUK."
"During the Relevant Period GTBUK breached Principle 3 because it failed to take reasonable care to establish and maintain effective anti-money-laundering (AML) Page 2 of 33 systems and controls in relation to customers that were identified by the Firm as presenting a higher risk of money-laundering or terrorist financing for the purposes of the 2007 Regulations, including those customers deemed to be a politically exposed person (PEP)."
So, Guaranty Trust Bank UK entered plea bargain? It is indeed a Nigerian Bank, owned and managed by Nigerians. That, which they practice at home and nothing happens, they practiced abroad and something happened! Something is obviously wrong with our system.
Meanwhile, undisputable facts show that one cannot separate money laundering from terrorism, drug trafficking and other high profile crimes. Available statistics show that a greater percentage of funds laundered are used for dangerous intercontinental and cross-border crimes. One now asks: At this critical time of security challenges and increase in drug trafficking, what is Nigeria doing to tackle the mother crime- money laundering? Why the delay in passing the NFIA BILL?
The Nigeria Financial Intelligence Unit (NFIU) is the Nigeria arm of the global Financial Intelligence Unit (FIU) and is presently domiciled within the Economic and Financial Crimes Commission (EFCC) as an autonomous Units, a situation that has not allowed its potentials to be explored as a result of undue interference. The setting up of the NFIU is part of the efforts of the federal government to combat money laundering and the financing of terrorist activities in Nigeria. Setting up of NFIU in 2005 was also part of the precondition for the removal of Nigeria from the Financial Action Task Force list of Non-cooperation countries and territories (NCCTs) in 2006. There appears to be a consensus that the aim may not be fully achieved if it does not operate independently.
Investigations revealed that its intelligence findings and recommendations are usually suppressed by some 'unseen hands', hence, creating opportunities for the flourishing of the money laundering cartel business and inadvertently, increase in terrorism activities.
The sensitive role of the FIU in Nigeria in providing intelligence to underpin the work of law enforcement and security Agencies in Nigeria cannot be over emphasized.
Its functions include: to receive and collect Currency Transactions Reports (CTRs) and Suspicious Transactions Reports (STRs) and other information relevant to the money laundering and terrorist financing activities from financial institutions and designated non-financial institutions; receive reports on cross-border movement of currency and monetary instruments; analyze and assess the information and reports it receives; mandatory review of supervisory reports and criminal referrals; maintain a comprehensive financial intelligence database for information collection and exchange with counterpart FIU's and law enforcement agencies around the world and maintain a network and link of information with the regulatory authorities and law enforcement agencies in Nigeria.
Others are: to advise the governments and regulatory authorities on prevention and combating of economic and financial crimes; liaise with compliance officers and ensuring strong compliance culture in financial institutions; provide financial intelligence reports/statistics in the investigation and prosecution of offenders under the relevant laws; promote public awareness and understanding of matters relating to economic and financial crimes, money laundering & financing of terrorist activities and to trail money transactions in banks and other financial institutions.
Speaking earlier on the Bill, Senate Committee chairman on Drugs, Narcotics and Financial Crimes, Senator Victor Lar says, "NFIU was set up as a precondition for the removal of Nigeria from the Financial Action Task Force (FATF) list of Non-cooperating countries and territories (NCCTs). We have sponsored a Bill for its autonomy and upgrading, known as the Financial Intelligence Agency. We are taking steps to conscientise Nigerians on its implications."
Continuing, Lar says, "I am not satisfied with the anti-corruption war in Nigeria. Both institutionally and operationally, I am not satisfied. In the first place, when we came onboard as members of this Committee, we had the noble desire to exit Nigeria out of the target group of Financial Action Task Force, having been placed on observation and target for the previous two years; we tried to look at it, observed the deficiencies that attracted the placement of Nigeria on the target group and tried to work towards meeting them as a vehicle for exiting Nigeria. First and foremost was the anti- money laundering law which has been amended and has given us a pass mark; then the terrorism and the terrorism financing Bill which has also been amended. However, establishing an independent and autonomous financial intelligence Agency is what we are working on and, as a matter of fact, we have tried to fast-track the process of the NFIA Bill. The advantages are quite obvious. Part of it will be to meet up the international requirements and standards, as a way of exiting the financial embargos and sanctions. Apart from adding to the credibility of the information that will be taken by the FIA, it will enable the Economic and Financial Crimes Commission (EFCC) to concentrate on operations and enforcement."
Having initiated the process, the Senate and House of Representatives Committees, in partnership with other stakeholders, must take deliberate steps to embark on an intensive advocacy programme to conscientise, educate and enlighten Nigerians on the implications of the Bill and the need for its urgent passage. This is a serious matter and goes beyond politics.
Those arguing that the NFIA Bill will amount to a duplication of the already existing Anti- graft agencies are obviously ignorant of the dangers Nigerians are exposed to, by the continued delay in the autonomy and independence of the NFIU.
The recent move by the Federal Executive Council to set up a Committee that brainstormed and strategized on how to remove Nigeria from the FATF list is commendable. For the Stephen Oronsaye-led Presidential Task Force on FATF, posterity will remember them. We expect that the Vice President Namadi Sambo-led Committee tackles the NFIA Autonomy Bill head on, by throwing its full weight behind the Senate Committee's move and facilitate the passing and signing into law the NFIA Act.
Now that the Senate has taken the lead, it is expected that the House of Representatives follows up to be on the same page, as any further delay could be dangerous.
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