It is nearly impossible to adopt a practical approach to a controversial topic – opinions flare up and accusations land on the unassuming. Nigeria has controversy written all over it. In breaking away from the country’s controversial (and supposedly non-existent) approach to fighting terrorism, our enterprise here is to consider the country as a success story against terrorist financing.
This success serves as a template for vigilant surveillance in the financial sector and its resulting resilience. Tackling terrorist financing requires the successful sharing of information with national institutions. In these respects, the Nigerian effort has been commendable.
The Nigerian Framework against Terrorist financing
Terrorist financing is conducted through the smuggling of arms, cash couriers and other relevant assets. It is also facilitated through trade and non-governmental organisations/charities and levies. This is well documented by the Financial Action Task Force (FATF) Report on Terrorist Financing in West Africa (2013). In crippling these sources, the Central Bank of Nigeria (CBN) fined banks ₦122.5 million in 2012 and ₦36.8 million in 2013 - these are only selected instances. The CBN has also withdrawn licenses from over a hundred Bureaux de Change, a significant number of which were in breach of record keeping requirements for funds from autonomous sources. The general idea being that these sources could be terrorism facilitating.
These instances have led to Nigeria carrying its head high as the FATF congratulated it for progress made in crippling strategic avenues for terrorist finance. The 6th Follow up Report on the country by GIABA (Inter Governmental Group against Money Laundering in West Africa 2014) also documents and congratulates the country for its sustained efforts.
Nigeria has also implemented practical initiatives to tackle terrorism from the bottom up. CBN regulations, for example, require specific customer due diligence for wire transfers and require that names and assets are never anonymous. It is also generally required that bankers research the depositors and recipients of cash. This is in addition to prohibiting banks from keeping accounts in fictitious names. These regulations, constantly changing, will usually never be a matter of national debate but nevertheless, represent seminal achievements in the fight against terrorist financing.
Is Nigeria a success story against Terrorist Financing?
Commentators are fond of pointing out the (unfairly famous) Transparency International study, which ranks Nigeria 136 out of 175 states in terms of corruption. It is understandably more difficult to highlight that Nigeria is no longer subject to the FATF’s monitoring process and has also been delisted from the FATF’s non-cooperative jurisdictions list.
In offering a counter narrative to the Transparency International study, this piece does not dismiss the problem of corruption. Our enterprise here is to arrive at a clear picture of the Nigerian landscape against terrorist financing, a picture which is ignored when discussing corruption and the fight against terrorism in the country. This picture is not one that could have been painted if Nigeria was plagued with corruption at every level. Another suggestion is that perhaps, the unilateral social condemnation of terrorism has ended up driving efforts to create effective frameworks against the act.
To tackle any problem in financial regulation, authorities have to adopt an approach of vigilant surveillance in one way or another. This means the regulation and supervision of financial institutions, premised on a rationale that problems in one institution can damage the whole financial system. Vigilant surveillance and resilience has not been fully achieved in Nigeria when one considers the scale of financial crime. However, in specific respect to terrorist financing, a problem in financial regulation, Nigeria is indeed a success story. This is because deficiencies in the country’s key legislation, such as the initial non-criminalisation of terrorist financing, have been addressed. That key legislation is comprised in the Money Laundering Prohibition Act 2011 (MLPA) and the Terrorism Prevention Act 2011 (TPA). The TPA, enacted in 2011, already had an amendment in 2013. These acts are a significant part of structured efforts to address terrorist financing loopholes, thereby ensuring that the country’s framework on terrorist financing is in tandem with international standards.
The result - A resilient financial sector?
This success story should come as no surprise, since vigilant surveillance, with respect to terrorist financing is high priority on Nigeria’s anti-terrorism agenda. The obvious question this evokes is simple – Will this framework translate into effective frameworks against financial crime; at present, a nightmare for investors? Only time will tell. What can be seen today is a promising anti-terrorist financing agenda that continues to be strengthened.
That agenda continues to address issues such as making sure bank personnel are able to identify loopholes usually exploited by terrorist financiers. In these respects, special training sessions are organized by the Committee of Chief Compliance Officers of Banks in Nigeria (CCCOBIN) and the Central Bank of Nigeria (CBN). Banks have also received important training on reporting requirements and suspicious transactions. Importantly, there is an Annual AML/CFT (Anti Money Laundering and Combating Financing Terrorism) Employee Training Programme Report filed to the CBN and NFIU (Nigeria Financial Intelligence Unit). For a relevant period identified by the CBN, banks have to show that senior officers have been adequately trained on the terrorist financing issues identified. These initiatives have and continue to result in one of the world’s most effective anti-terrorism frameworks.
Maybe the unfairly famous Transparency International study will now stop getting so much attention. Corruption on the part of both governments and the private sector has long since been the narrative. However, when that narrative is being explored, it is useful to consider that Nigeria’s efforts at the implementation of anti-terrorism standards have led naturally to improved use of intelligence produced by the Nigerian Financial Intelligence Unit (NFIU). The NFIU has done this by conducting training for officers of relevant authorities to utilise intelligence which strengthens the financial sector’s resilience against terrorism.
This is an underappreciated part of the country’s investment landscape. In spite of the notoriety, the Nigerian authorities have continued to soldier on, as the links between the NFIU, financial regulators and security agencies in Nigeria continue to be cemented through the creation of anti-terrorism finance units.