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A Synopsis Of The Money Laundering (Prevention And Prohibition) Act 2021
On the 12th May 2022, President Muhammadu Buhari signed the Money Laundering (Prevention and Prohibition) Bill into Law. The Money Laundering (Prevention and Prohibition) Act 2022 (“the Act”) repeals and abolishes the Money Laundering (Prohibition) Act 2011 (as amended). The Act aims at providing a comprehensive legal and institutional framework for the prevention, prohibition, detection, prosecution and punishment of money laundering and other related offences in Nigeria.
The fundamental objective of the Act also includes strengthening the existing system for combating money laundering and related offences; making adequate provisions to prohibit money laundering; expanding the scope of money laundering offences and providing appropriate penalties. The new law also establishes the Special Control Unit Against Money Laundering (“the Unit”) under the Economic and Financial Crimes Commission (“EFCC”) for effective implementation of the money laundering provisions of the Act in relation to the designated non-financial businesses and professions.
This article examines some relevant provisions of the Act, and their likely implications on money laundering activities in Nigeria.
2. NOTABLE PROVISIONS IN THE ACT ON PROHIBITION OF MONEY LAUNDERING
2.1Limitation on Cash Payment
The Act prohibits individual and corporate bodies, except in a transaction through a financial institution, from making or accepting cash payment exceeding the sum of N5,000,000.00 or its equivalent and N10, 000,000.00 or its equivalent, respectively.
Furthermore, the Act prohibits the conduct of two or more transactions separately with one or more financial institutions or designated non-financial Business and Professions (“the Relevant Institutions”) with the intent to avoid the duty to report a transaction which should have been reported under the Act or breach the duty to disclose information under the Act by any other means.
2.2 Duty to Report International Transfer or Transportation of Funds, Securities and Cash
The Act makes it mandatory for both individuals and corporate bodies (including a money service business) to send a report in writing to the Unit, the Central Bank of Nigeria (“CBN”) and the Securities and Exchange Commission (“SEC”) where any transfer of funds or securities to and from a foreign country, exceeds the sum of US$10, 000 or its equivalent, within a day from the date of the transaction.6 This report shall indicate the nature and amount of the transfer, the names and addresses of the sender and the receiver of the funds or securities.
Flowing from the above, the Act also makes it mandatory on all individuals engaged in the transportation of cash or negotiable instruments exceeding the sum of US$10, 000 or its equivalent to declare such fact to the Nigerian Customs Service. The Nigerian Customs Service shall report such declaration to the CBN and the Unit.
Any individual who falsely declares or fails to make a declaration in compliance with the provision of the Act as stipulated above commits an offence and is liable upon conviction to forfeit the undeclared funds or negotiable instrument or to imprisonment for a term of at least two years or both.
2.3 Identification of Customers
In addition to existing obligations on the relevant institutions to identify and verify the identity of their customers, the Act imposes further obligations on them to identify a customer, whether permanent or occasional, natural or legal person, or any other form of legal arrangement, using identification documents as may be prescribed in relevant regulations.
Furthermore, the Act requires that the relevant institutions verify the identity of these customers using reliable, independent sources, documents, data or information. The Act also requires these institutions to take reasonable measures to identify and verify the identity of any person purporting to act on behalf of a customer, and ensure such a person is duly authorized.
The Act also requires the relevant institutions to undertake customer due diligence measures in the following circumstances:
- When establishing business relationships;
- When carrying out occasional transactions beyond the applicable designated threshold prescribed by relevant regulations, including transactions carried out in a single operation or in several operations that appears to be linked,
- When carrying out occasional transactions that are wire transfers,
- Where there is a suspicion of money laundering or terrorist financing regardless of any exemptions or thresholds and;
- Where there are doubts about the veracity or adequacy of previously obtained identification data.
Moreso, the Act imposes an obligation on the relevant institutions, where they suspect or have reasonable grounds to suspect that the amount involved in a transaction is the proceeds of a crime or an illegal act, to require identification of the customer notwithstanding that the amount involved in the transaction is less than US$1,000 or its equivalent.
2.4 Reporting Suspicious Transactions
The Act provides for circumstances where it shall be deemed that a transaction is suspicious and they include any of the following:
“Where a transaction-
- Involves a frequency which is unjustifiable or unreasonable;
- Is surrounded by conditions of unusual or unjustified complexity;
- Appears to have no economic justification or lawful objective;
- Is inconsistent with the known transaction pattern of the account or business relationship; or
- In the opinion of the relevant institutions or non-financial business and profession involves the proceeds of a criminal activity, unlawful act, money laundering or terrorist financing.