Background
The Financial Action Task Force (FATF) being a globally recognized and empowered organization to fight financial crimes & especially money laundering & terrorist financing has been active since its formation. Specifically, the Third world countries including the African states and countries are also main targets due to non-compliance to AML regulations.
In 2003, FATF proposed the 40 recommendations for effective measures to be taken by the regulatory authorities, countries & organizations to mitigate the threat of terrorism financing & money laundering. These 40 recommendations are one of the most robust steps taken in documented form and have driven the countries towards formation of many legal bodies to fight fincrime actively.
The summary of the 40 recommendations is given as follows:
- Countries should establish a legal and regulatory framework to combat money laundering and terrorist financing.
- They should establish financial intelligence units (FIUs) to collect and analyze financial information related to money laundering and terrorist financing.
- Governments shall take measures to identify and verify the identity of customers of financial institutions and other businesses that are vulnerable to money laundering or terrorist financing.
- Responsible authorities shall detect and report suspicious activity related to money laundering and terrorist financing.
- Countries should take strict actions to freeze and seize the proceeds of money laundering and terrorist financing.
- Nationwide measures should be taken to cooperate with other countries in relation to money laundering and terrorist financing investigations and prosecutions.
- Countries should establish measures to ensure that money launderers and terrorist financiers are effectively punished.
- Governments should ensure that legal persons, including companies, are held accountable for money laundering and terrorist financing offenses.
- Authorities shall ensure that non-profit organizations are not misused for money laundering or terrorist financing purposes.
- Also, to ensure that financial institutions and other businesses are subject to effective supervision and regulation to prevent money laundering and terrorist financing measures must be taken.
- Countries should establish measures to ensure that their laws and regulations on money laundering and terrorist financing are consistent with international standards.
- Countries should establish measures to ensure that their financial systems are transparent and open to scrutiny by national authorities.
- Countries should ensure measures for their laws and regulations on money laundering and terrorist financing are effectively implemented and enforced.
- Countries shall ensure that their financial institutions and other businesses have appropriate policies, procedures, and controls in place to prevent money laundering and terrorist financing.
- Governments should establish measures to ensure that their financial institutions and other businesses are aware of their obligations under anti-money laundering and counter-terrorist financing laws and regulations.
- Countries should ensure that their financial institutions and other businesses cooperate with law enforcement authorities in relation to money laundering and terrorist financing investigations and prosecutions.
- Countries should establish measures to ensure that their financial institutions and other businesses report suspicious activity related to money laundering and terrorist financing to the appropriate authorities.
- Countries should establish measures to ensure that their financial institutions and other businesses have adequate training and resources to detect and prevent money laundering and terrorist financing.
- Countries should establish measures to ensure that their financial institutions and other businesses have appropriate systems and controls in place to protect against money laundering and terrorist financing through new technologies, such as the internet and mobile phones.
- Countries should establish measures to ensure that their financial institutions and other businesses have appropriate systems and controls in place to protect against money laundering and terrorist financing through alternative remittance systems.
- Countries should establish measures to ensure that their financial institutions and other businesses have appropriate systems and controls in place to protect against money laundering and terrorist financing through correspondent banking relationships.
- Countries should establish measures to ensure that their financial institutions and other businesses have appropriate systems and controls in place to protect against money laundering and terrorist financing through the use of cash couriers.
- Countries should establish measures to ensure that their financial institutions and other businesses have appropriate systems and controls in place to protect against money laundering and terrorist financing through the use of trade-based money laundering techniques.
Read more about: The Forty Recommendations by FATF (2003)
Definition of EFCC
The Economic & Financial Crimes Commission (EFCC) is an agency in Nigeria that was formed as a response to the strict actions by FATF where it named Nigeria as the 23rd non-compliant nation to the AML laws and regulations. Since its formation in 2003, it has been active against Fincrime, especially the Money Laundering & Terrorism Funding.
Currently, the EFCC is governed by Abdurasheed Bawa, The Executive Chairman and the head office is in Jabi, Abuja. The Economic and Financial Crimes Commission (EFCC) has released the guidelines for participating in the auction of properties that have been subjected to Final Forfeiture Orders across the country. Thus, we can say that EFCC has been formed under the influence of FATF. Also, the agency
Also Read: Good Governance & KYC/AML
The latest updates on EFCC
On 12th May, 2022 an act was passed by the said agency to mitigate the Fincrime of Money Laundering. It is called the Money Laundering (Prevention and Prohibition) Act 2022.
This act primarily aims to detect, prevent, prohibit and prosecute the Money Laundering activities within Nigeria. Different sanctions & regulations were imposed under this act.
- Limit was set on cash payments for individuals and the corporate organizations that they cannot exceed the limit of cash payment beyond the range N5,000,000 to N10, 000,000 or equivalent to it until and unless the transaction is through a registered financial institution.
- Individuals and corporate bodies, including a money service business, are required to report any transfer of funds or securities to and from a foreign country that exceeds the amount of $10,000 or its equivalent to the Unit, the Central Bank of Nigeria (CBN), and the Securities and Exchange Commission (SEC) in writing within one day of the transaction.
- In addition to already existing requirements for relevant institutions to identify and verify the identity of their customers, the Act imposes additional obligations on these institutions to identify all customers, whether permanent or occasional, natural or legal persons, or any other form of legal arrangement, using identification documents as specified in relevant regulations.
- The act instructs the individuals & corporations to report any suspicious transactions where the identification parameters of the suspicious transaction are given in the act
- The act imposes a strict regulation for all relevant bodies to preserve the financial and other required records and must be accessible by the EFCC at all times.
- Every organization shall take internal preventive measures to mitigate the Money Laundering at all levels
- The communication between client & attorney shall never be disclosed and kept confidential
- The competent authorities are now empowered through this act to keep surveillance on the bank accounts of customers.
- Establishment of the Special Control Unit Against Money Laundering ("SCUML" or "the Unit")
- Punishment for the Offense of Money Laundering
- Publication of a Money Laundering Strategy Report
- Exclusion of Non-Profit Institutions from the Designated Non-Financial Institutions List
How to report someone to EFCC?
Reporting the Fincrime is necessary at all levels. Whether the government or private sector, individuals linked to it & the organizations must actively & timely report them.
For reporting someone to EFCC, one can visit the following website
Final Thoughts
EFCC is a regulatory body just as FATF. It is vitally important for the individuals & organizations in Nigeria to comply with the international AML laws & regulations. Furthermore, the latest approach of KYC in banks and other financial institutions can support the AML activities of EFCC. Lastly, it is obligatory for everyone to play his positive part in eradicating the Money Laundering & other Terrorist Funding at all levels.
Also Read:Threat of Terrorism Financing in non-compliance to KYC & AML
