Introduction:
On May 13th, 2022, the President of the Federal Republic of Nigeria, President Muhammadu Buhari, signed three bills into law to improve the country’s anti-money laundering and counter-terrorist financing framework, among this bill passed into law, is the Anti-Money Laundering Law. Which commenced on the 12th day of May 2022.
The new regime of the Anti-money Laundering Law in Nigeria has provided some important and also addresses the gap identified in Nigeria’s 2nd round of Mutual Evaluation as assessed by the Governmental Action Group Against Money Laundering in West Africa on compliance with the Financial Action Task Force Global Standards.’’
We will discuss some notable features of the Anti-Money Laundering Law in Nigeria and its effect:
Restriction to make or accept cash payment: Prior to this effect, individuals and cooperate entities who have exceeded the maximum threshold are within the monetary thresholds of #5,000,000 (5 million Naira), approximately ($10,000) for individual and #10,000,000 (ten million naira) approximately ($20,000,) for Cooperate entity stipulated by the law, can use another financial institution if they want to perform another transaction; however, this new law has restricted the concept and prohibits such activity. Failure to adhere to this regulation is a breach of law that attracts sanctions.
Identification of customers: The Act stipulated that the financial institution is mandated to verify and Know the customers, whether as a corporate entity or as an individual. The following procedures will be part of the process for the transaction to be approved by the Financial Institutions. For the customers to initiate a transaction using FORM A, for example, it was easier to make transactions earlier this year and in previous years. However, this section has mandated that the financial institution make amends and diligently verify the procedures. Also, the foreign bank details will be provided, with a letter of authority if the payment is being made by proxy. There is a mandatory obligation for the financial institution and designated non–financial business and profession.
New products, business practices, and controls:
The law provided that the financial institutions and designated non-financial businesses and professions shall identify and assess the money laundering and terrorism financing risks that may arise in relation to the development of new products and new business practices, including new delivery mechanisms and the use of new or developing technologies for both new and pre-existing products in accordance with the requirements specified by the regulatory authorities. This means that the financial institutions and designated non-financial businesses and professions shall undertake risk assessments before launching or using such products, business practices, and technologies and take appropriate measures to manage and mitigate the risks.
The Special Control Unit Against Money Laundering:
The Special Control Unit against Money Laundering (SCUML) was established as a specialised unit of the Federal Ministry of Commerce and Industry by the Federal Executive Council of Nigeria in September 2005 in compliance with the provisions of the Money Laundering (Prohibition) Act 2004. The Special Control Unit against Money Laundering and the Economic Financial Crimes Commission is the regulatory authority for the implementation of the AML/CFT regime with respect to the DNFI sector in Nigeria.
SCUML is statutorily under the Federal Ministry of Industry, Trade, and Investment but operationally domiciled within the EFCC as the Commission drives the operational activities of the Unit in line with Sections 6(C) and 7(2) of the EFCC Establishment Act, 2004.
However, this issuance of the SCUML certificate has been suspended by the Economic and Financial Crimes Commission, EFFC, which they said ‘’ is an administrative measure designed to bring the agency to full compliance with its Statutory Responsibilities and Obligations under the new Money Laundering Act,2022. The statement further reads, “The law fundamentally altered the existing regulatory framework and substantially invalidates the certificates issued by SCUML. Which did not reflect its new status as an agency fully domiciled in the Economic and Financial Crimes Commission.
‘It, therefore, became important to suspend the issuance of the old certificate until a new one takes into account the new regulations is printed. Due to the nature of the document as a security document, there are processes that should be in place before printing it.
It is also the obligation of the EFFC to carry out the important process and effect the changes after commencing the issuance of the new certificate to the applicant;
The function of SCUML:
Some of the SCUML key functions which help to actualize its mandate:
Registration and certification of DNFIs in Nigeria.
Sensitization of DNFIs in Nigeria on their compliance obligations under the Money Laundering (Prohibition) Act 2022 and the implementation guidelines.
Monitoring and Supervision of the activities of DNFIs as they relate to AML/CFT.
Conducting off-site, on-site, and spot-check inspections of DNFIs.
Taking necessary enforcement actions to ensure compliance with the AML/CFT Laws and Regulations.
Collections of Statutory Reports: Cash-based transaction reports (CBTRs) and Currency Transaction Reports (CTRs) for onward forwarding to the Nigeria Financial Intelligence Unit (NFIU). Etc.
Conclusion
The bill has been passed into law and has also taken effect. To fight against terrorism and money laundering in Nigeria, all the laws should be duly and diligently followed to avoid breach of duty, which will attract sanction to the defaulter.
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