Law of Banking Law Review Legal Articles Nigerian Law

QUICK REVIEW OF THE CBN’S ANTI-MONEY LAUNDERING/COMBATING THE FINANCING OF TERRORISM (AML/CFT) POLICY AND PROCEDURE MANUAL BY B.K. SAKA.

INTRODUCTION

The Central Bank of Nigeria (CBN) introduced new rules to prevent money laundering in the country called the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Policy and Procedure Manual (“The Manual”) just last month (February 2019), with the aim of further achieving its mandate as set out in the Central Bank of Nigeria Act 2007 (as amended). Within the scope of the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Policy and Procedure Manual, Money laundering is “the act of directly or indirectly concealing or disguising any fund or property that is derived from the proceeds of an unlawful activity. Simply put, it is the process by which “dirty” money is made to look legitimate or “clean” so that funds may be used freely without any trace of its illicit source”.

The Manual essentially sets out strategies and systems to guide workers and Banks alike, in the conduct of their respective business in accordance with extant Anti-Money Laundering laws and guidelines. The Manual intends to set up systems and least models to shield the CBN from being utilized as a channel to launder cash, perpetrate finance terrorism and different types of monetary crimes.

HIGH POINTS OF THE MANUAL

In the released Manual, CBN states its determination to guard against establishing correspondent banking relationships with high-risk foreign banks such as shell banks, with correspondent banks that have historically allowed their institutions to be used for Money Laundering / Financing Terrorism (ML/FT).

The AML/CFT Policy and Procedure Manual provides that exchanges directed through correspondent banking relationships will be overseen in relation to a hazard-based methodology, while Know Your Correspondent (KYC) strategies will be built up to discover whether or not the correspondent bank or the counterparty is itself managed for money laundering counteractive action.

Likewise, where controlled, the correspondent shall verify the identity of its clients as per Financial Action Task Force (FATF) benchmarks, and where this isn’t the situation, extra due diligence will be required to determine and evaluate the correspondent’s internal policy on money laundering and KYC methodology.

The Manual provides that care ought to be taken while doing business with third parties situated in geographic areas with a past filled with supporting terrorism, bases for drug production/distribution, suffering from civil unrest/war.

The Manual provides that it will acknowledge clients after due confirmation of clients’ personalities, address and additionally place of business, in the wake of finding out their wellspring of income /reserves and in the wake of considering the dimension and level of dangers they pose on the bank based on the kind of business under consideration.

Care will be taken to apply a proper dimension of due diligence, contingent upon clients’ risks profiles including that no account will be opened for unknown or ‘made up’ clients. The apex bank would not go into an association with a prospective client until the individual/entity has been appropriately recognized and confirmed. The client acknowledgment process likewise incorporates guaranteeing that the prospective client isn’t on the ‘watch-list’ which includes names of quarantined people and known fraudsters. All organisations that wish to establish account or business relationship with the bank would be providing proof of address while operators of the account shall be required to provide other forms of identification such as international passports/drivers’ licence/national identity card and Bank verification Number, (BVN). This is to ensure the veracity and authenticity of whosoever the bank is dealing with, and also make such person traceable, in cases of disappearance.

The Bank will conduct customer due diligence on a risk-sensitive basis to ensure our limited resources and focused on the higher accounts and/or transactions. The categories to be used are Simplified Due Diligence and Enhanced Due Diligence depending on the nature of the risk involved. The Chief Compliance Officer of the bank shall collate and present the different reports to the banks management and the audit committee of the board, for instance the special reports on funds transactions, swift sanction screening reports, testing for adequacy of AML/CFT Policy compliance and the New area of AML/CFT risks.

The Manual further provides that Whistle blowers shall be protected by the bank if they are threatened or likely to be exposed to risk as a result of reporting any unethical conduct, an employee who harasses and threatens a whistle blower shall be disciplined in line with the provisions of the Human Resources Policy and Procedure Manual (HPRRM).

CONCLUSION

With money-related crimes becoming more common now than at any other era in recent memory, it is vital that financial organizations and governments create strategies to check it. Likely, the most widely recognized method for actuating and actualizing such is by implementing anti-money laundering policies that keep the sneaking of illicitly gotten assets at bay. Most nations currently have their respective anti-money laundering approaches, and many ensure that every monetary institution submits to these arrangements in order to guard against money-related crimes.

Anti-money laundering policies regularly require relevant entities that engage in monetary exchanges to keep careful records of their customers’ accounts and transactions. In the event that they run over any data that gives off an impression of criminal suspicion, they are required to report it to the relevant governmental bodies for further examination. Monetary organizations are vital for the accumulation of financial intelligence, and the open part enormously relies upon them so as to gather information. Also, anti-money laundering policies require financial institutions to occasionally record reports with respect to their customers and completed transactions.

While we do not suffer from scarcity of laws and regulations in Nigeria, implementation has always been the problem. The will power and impartiality of anti-graft agencies, sincerity and commitment to national financial integrity on the part of local banks, as well as responsibility and responsiveness of the CBN remains crucial to achieving financial sanity. All relevant stakeholders must come on board and get nerd-serious to work things out. Otherwise, we would keep making laws and policies to no productive end. The CBN therefore has a lot of work to do. The manual is quite laudable, but making it work is most urgent.

CONTACT FOR QUESTIONS:
Twitter: @_Kolamiposi
Email: kbasyt@gmail.com

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.