Nigeria Babajide O Ogundipe and Chukwuma Ezediaro Sofunde, Osakwe, Ogundipe & Belgore Domestic legislation 1 Domestic law Identify your jurisdiction s money laundering and anti-money laundering (AML) laws and regulations. Describe the main elements of these laws. The laws governing money laundering in Nigeria are the Money Laundering (Prohibition) Act and the Economic and Financial Crimes Commission Act. The main elements of these laws prohibit: the conversion or transfer of resources or property derived directly from illegal and unlawful activity; collaboration in concealing or disguising the genuine nature, origin, movement or ownership of the resources, property or rights derived from the above-mentioned acts; retaining the proceeds of criminal activity; and conspiring to commit or the aiding and abetting of any offence under the Money Laundering Act. Money laundering 2 Criminal enforcement Which government entities enforce your jurisdiction s money laundering laws? The government entities that enforce the provisions of the Money Laundering Act include the Economic and Financial Crimes Commission, the National Drug Law Enforcement Agency, the Central Bank of Nigeria and the Nigeria Police Force. 3 Defendants Can both natural and legal persons be prosecuted for money laundering? Yes, both natural and legal persons can be prosecuted for money laundering. 4 The offence of money laundering What constitutes money laundering? Money laundering is considered to be the conversion or transfer of resources or properties derived from criminal activity and collaboration by concealing or disguising the ownership, movement, location or deposition of such resources or properties. Under the Money Laundering Act, acts and omissions will constitute criminal liability. A strict liability standard would apply to certain offences committed under the Act. A negligence standard can be applied to offences where the accused person has failed to carry out an imposed duty. Financial institutions can be prosecuted or pursued for the money laundering activities of their customers under the Money Laundering Act. 5 Qualifying assets and transactions Is there any limitation on the types of assets or transactions that can form the basis of a money laundering offence? There is no limitation on the types of assets or transactions that can form the basis of a money laundering offence. 6 Predicate offences Generally, what constitute predicate offences? Any criminal activity would constitute a predicate offence because the Money Laundering Act refers to illegal or criminal activity. Since any criminal activity can serve as a predicate offence, it follows that where the violation of tax and currency exchange laws in Nigeria amounts to a criminal act, such violation would serve as a predicate offence (see sections 2 and 15 of the Act). 7 Defences Are there any codified or common law defences to charges of money laundering? There are no codified or common law defences to charges of money laundering.
8 Resolutions and sanctions What is the range of outcomes in criminal money laundering cases? Enforcement matters can be resolved through plea agreements, settlement agreements, prosecutorial discretion or similar means. The use of such methods is, however, in its infancy in Nigeria. Nigeria is a federation, with power to legislate on criminal procedural matters vested in state legislatures and only one state, Lagos, has thus far passed any legislation dealing with plea bargains. The Lagos state legislation was passed in 2012 and does not provide any detailed framework for plea bargains. The sanctions for money laundering vary according to the offence. They include a term of imprisonment of between two and three years or a fine not less than 1 million naira for individuals and fines of 3 million to 25 million naira or the winding-up and forfeiture of assets and properties for legal persons. 9 Forfeiture Describe any related asset freezing, forfeiture, disgorgement and victim compensation laws. The Economic and Financial Crimes Commission Act, the Corrupt Practices and Other Related Offences Act, the Criminal Procedure Act and the Money Laundering Act all have provisions dealing with the forfeiture of assets upon conviction for offences committed. The Economic and Financial Crimes Commission Act permits the Commission to apply to a court for an order freezing an account where it believes the money to be the proceeds of committing an offence under the Act. 10 Limitation periods What are the limitation periods governing money laundering prosecutions? There are no limitation periods for instituting criminal prosecutions in Nigeria. 11 Extraterritorial reach Do your jurisdiction s money laundering laws have extraterritorial reach? As the legislation does not claim to have any extraterritorial application and Nigeria does not claim any such reach, money laundering laws would not apply to conduct outside Nigeria. AML requirements for covered institutions and individuals 12 Enforcement and regulation Which government entities enforce your jurisdiction s AML regime and regulate covered institutions and persons? Do the AML rules provide for ongoing and periodic assessments of covered institutions and persons? The Central Bank of Nigeria, the Nigerian Drug Law Enforcement Agency, the Economic and Financial Crimes Commission, the Nigeria Police Force and the Nigerian customs service are the main agencies engaged in the enforcement of anti-money laundering laws. 13 Covered institutions and persons Which institutions and persons must carry out AML measures? Institutions and persons who are obliged to carry out anti-money laundering measures include banks, financial advisory firms, jewellers, chartered accountants, legal practitioners, hotels, casinos, supermarkets, tax consultants, car dealers, dealers in luxury goods, bureaux de change, insurance institutions, money brokerage firms, investment management firms, project consultancy firms, financial consultancy firms, pension funds management, etc. 14 Compliance Do the AML laws in your jurisdiction require covered institutions and persons to implement AML compliance programmes? What are the required elements of such programmes? Yes, the Anti-Money Laundering Law requires covered institutions to implement anti-money laundering compliance programmes. These programmes require that: the identity of the customer be verified and updated; all transactions performed by the customer be recorded in chronological order for a minimum period of five years; such records be submitted to the Federal Ministry of Commerce or the Economic and Financial Crimes Commission; any suspicious transaction be reported to the Economic and Financial Crimes Commission; compliance officers be designated for each level of the financial or non-financial institution; regular training programmes be provided for its employees; and an internal audit unit be established to ensure compliance with and ensure the effectiveness of the provisions of this Act. 15 Breach of AML requirements What constitutes breach of AML duties imposed by the law? Breaches of anti-money laundering duties include the following: a non-financial institution failing to verify the identity of a customer and submitting records of transactions within seven days of such transactions (section 5 of the Money Laundering Act);
failing to report transactions in excess of 5 million naira for individuals or 10 million naira for legal persons within the stipulated periods (section 10); and failing to report an international transfer of funds or securities required to be reported under the Act (section 16e). The law makes tipping off customers an offence punishable by a term of imprisonment of between two and three years or a fine of 500,000 naira to 1 million naira (section 16). 16 Customer and business partner due diligence Describe due diligence requirements in your jurisdiction s AML regime. To initiate a new client or business partner relationship the following steps must be followed: where the client is an individual, he or she will be required to provide a valid original copy of an official document bearing his or her name and photograph; where the client is an institution it will be required to present its certificate of incorporation and other documents attesting to its existence; in existing client and business partner relationships, a party must ensure that such client s records are up to date and that in the event of a transfer of ownership of a corporate client it is aware of the identity of the natural persons who truly own or control the client; and further, the client could be asked to provide references and discreet investigations could be conducted with the law enforcement agencies. Section 3(7) of the Anti-Money Laundering Act states that where it appears that a client may not be acting on its own, the covered institution or person shall seek information as to the true identity of a principal where the client is an individual. Where the client is a legal person the covered institution or person shall take reasonable measures to understand the ownership and control structure of the client and determine the natural persons who truly own or control the customer. 17 High-risk categories of customers, business partners and transactions Do your jurisdiction s AML rules require that covered institutions and persons conduct risk-based analyses? Which high-risk categories are specified? Yes, the Anti-Money Laundering Act requires that covered institutions and persons conduct risk-based analysis. The Act states that where the customer is a public officer, the financial or non-financial institution must: verify the individual s identity by means of a valid original copy of an official document bearing his or her name and photograph; verify the individual s address by means of originals of receipts issued within the previous three months by public utilities; and put in place appropriate risk-management systems and obtain senior management approval during, and before establishing, any business relationship with the public officer. 18 Record keeping and reporting requirements Describe the record keeping and reporting requirements for covered institutions and persons. Under the Anti-Money Laundering Act, where a transaction s frequency is unjustifiable or unreasonable, appears to have no economic justification or lawful objective or is simply inconsistent with the known transaction relationship, the covered institutions or persons are required within seven days after the transaction to: draw up a written report containing the identity of the principal and the beneficiary or beneficiaries; take appropriate action to prevent the laundering of the proceeds of criminal conduct; send a copy of the report and action taken to the Economic and Financial Crimes Commission; keep the record of a customer s identification for a period of at least five years after the closure of the account or the severance of relations with the customer; and keep the record and other related information of a transaction carried out by a customer for a period of five years after carrying out the transaction. 19 Privacy laws Describe any privacy laws that affect record keeping requirements, due diligence efforts and information sharing. There is a law that governs banker customer confidentiality. However the Anti-Money Laundering Act makes it mandatory for the covered institutions and persons to send their records to domestic law enforcement agencies and the Nigerian Financial Intelligence Unit (FIU). The law does not contemplate the sharing of records with foreign law enforcement agencies or other covered persons. This may, however, occur at the FIU level, where information is exchanged. A lawyer s obligation not to disclose privileged communications with clients is also the subject of an express provision in the Evidence Act. 20 Resolutions and sanctions What is the range of outcomes in AML controversies? What are the possible sanctions for breach of AML laws? The sanctions for breach of the Anti-Money Laundering Act range from the imposition of fines to terms of imprisonment. Anti-money laundering matters can be resolved through plea agreements, settlement agreements, prosecutorial discretion or similar means. The use of such methods is, however, in its infancy in Nigeria and there is no formal framework regulating those procedures. 21 Limitation periods What are the limitation periods governing AML matters? There is no limitation period governing anti-money laundering matters.
22 Extraterritoriality Do your jurisdiction s AML laws have extraterritorial reach? The anti-money laundering laws do not have extraterritorial reach. The jurisdiction of the laws is restricted to covered institutions and persons within Nigeria. They would only apply to foreign institutions and persons if they were carrying on business in Nigeria. They would also be applicable to subsidiaries of foreign institutions carrying on business in Nigeria. Civil Claims 23 Civil claims and private enforcement Enumerate and describe the required elements of a civil claim or private right of action against money launderers and covered institutions and persons in breach of AML laws. There are no civil claims that equate directly to the criminal offences of theft and the handling of stolen property. However, there are established legal principles that can be used to recover money or property. Essentially, any person or body that has suffered loss as a result of any unlawful act may institute proceedings against the perpetrator of the unlawful act or persons who have assisted or otherwise enabled such unlawful act. In particular, a victim may have claims against third parties involved in money laundering for constructive trusteeship; money owned and received; and tracing in equity or conspiracy. The limitation period for the bringing of civil actions based in tort is six years from the time the cause of action arose. The period may be extended where, for example, a potential defendant has, through fraud, or some other unlawful act concealed the unlawful act from a potential claimant. Awards of damages and restitution for losses suffered are the types of relief that will be available in civil actions. International anti-money laundering efforts 24 Supranational List your jurisdiction s memberships of supranational organisations that address money laundering. Nigeria belongs to the Egmont Group, Interpol, the United Nations Office on Drugs and Crime, and the United Nations Security Council Counter-Terrorism Committee. 25 Anti-money laundering assessments Give details of any assessments of your jurisdiction s money laundering regime conducted by virtue of your membership of supranational organisations. The Inter-governmental Action Group Against Money Laundering in West Africa published a mutual evaluation report on Nigeria on 7 May 2008. The report recommends that particular attention should be given to FAFT requirements regarding the conduct of enhanced due diligence, beneficial ownership, PEPs and ongoing monitoring, as most designated non-financial institutions (DNFIs) seemed unclear on their requirements surrounding these obligations. Also, the evaluation team were concerned about the identification and the ability of the DNFIs to identify high-risk customers. 26 FIUs Give details of your jurisdiction s Financial Intelligence Unit (FIU). The address and contact details of Nigeria s Financial Intelligence Unit are: 12 Ibrahim Taiwo Street Aso Rock Villa Federal Capital Territory Abuja Nigeria Tel: +234 9 460 4633 infoonfiu@efccnigeria.org www.nfiu.gov.ng It became a full member of the Egmont group during the first quarter of 2007. The functions of the NFIU include trailing money transactions in banks and other financial institutions, promoting public awareness and understanding of matters relating to economic and financial crimes, money laundering and financing of terrorist activities, advising the government and regulatory authorities on the prevention and combating of economic and financial crimes, receiving and collecting currency transaction reports (CTRs) and suspicious transactions reports (STRs) and other information relevant to money laundering and terrorist financing activities from financial institutions and designated non financial institutions, as well as analysing and assessing the information and reports it receives. 27 Mutual legal assistance In which circumstances will your jurisdiction provide mutual legal assistance with respect to money laundering investigations? What are your jurisdiction s policies and procedures with respect to requests from foreign countries for identifying, freezing and seizing assets? Nigeria, under the Mutual Assistance in Criminal Matters within the Commonwealth (Enactment and Enforcement) Act, will provide mutual legal assistance with respect to money laundering investigations in the following areas: location and identification of persons; service of documents; examination of witnesses; production of judicial or official records;
appearance of witnesses in the country that makes that request; appearance of persons in custody; tracing of the proceeds of criminal activities; and confirmation and enforcement of orders for the forfeiture of the proceeds of criminal activity. UPDATE AND TRENDS Describe any national trends in criminal money laundering schemes and enforcement efforts. Describe any national trends in AML enforcement and regulation. Describe current best practices in the compliance arena for companies and financial institutions. PLEASE PROVIDE AN ANSWER Sofunde, Osakwe, Ogundipe & Belgore Babajide O Ogundipe Chukwuma Ezediaro boogundipe@sooblaw.com ccezediaro@sooblaw.com 7th Floor, St Nicholas House Tel: +234 1 462 2502 Catholic Mission Street Fax: +234 1 462 2501 Lafiaji Lagos Nigeria www.sooblaw.com AUTHOR & CONTACT INFORMATION Please also provide the following information for the firm professional notice at the end of your chapter: AUTHOR(S): These are the names that will appear in the professional notice. AUTHOR EMAIL(S): These are the emails that will appear in the professional notice. FIRM NAME: FIRM ADDRESS: TELEPHONE NUMBER: FAX NUMBER: WEBSITE ADDRESS: FIRM LOGO: Please supply a greyscale print quality logo (including your firm s name) of at least 300dpi as a separate Jpeg, Tiff or EPS file. Do not include your logo in this document as often the resolution is not suitable for print. The logo will be used in the professional notice only. Images must be at least 300dpi and large in scale to ensure best reproduction. As a guide, images should be a minimum of 1200x1200 pixels (100x100mm) at 300dpi. GTDT ONLINE EDITION
The online edition of this publication features firm descriptions, author biographies and photos. If you would like to take advantage of these features please provide the following information: FIRM DESCRIPTION: a 250-word overview of your firm: AUTHOR BIOGRAPHY: Please supply a short 250-word biography for up to three authors: AUTHOR PHOTOGRAPH: Please supply a photograph of the author(s) as a separate Jpeg or Tiff file. Do not include your photos in this document as often the resolution is not suitable for the website. As a guide, images should be a minimum of 1200x1200 pixels (100x100mm) at 300dpi. Images must be square and ideally middle distance. URL LINKS: Please also provide current URL links to English translations of the relevant legislation in your jurisdiction.