On the $4 million of CBN monies spent abroad for education on 419, 419 Coalition reiterates its opinion that those monies would have been much better spent on counter-419 enforcement in Nigeria. Others can educate on 419 but only Nigeria can punish the 419 criminals operating within its borders.

Here is this latest White Paper. A couple of tables with no bearing on 419 have been edited out for brevity:

RESPONSE TO FINANCIAL CRIMES ENFORCEMENT NETWORK’S (FINCEN) ADVISORY NOTICE ON NIGERIA

INTRODUCTION

The attention of the Federal Government of Nigeria has been drawn to the black listing and classification of Nigeria as a non-cooperative country in the fight against money laundering by the Financial Action Task Force (FATF) based in Europe. The FATF has claimed that Nigeria’s money Laundering Law was too narrow and focused mainly on drug trafficking.

Equally, the Financial Crimes Enforcement Network (FinCEN) of the United States Department of Treasury in April, 2002, indicted the Nigerian Legal System of harbouring deficiencies in its anti-money laundering law. This indictment, which came in the form of an advisory note, to all American banks and financial institutions dealing with Nigeria, warned of the risks of being duped by conmen exploiting the loopholes in Nigeria’s anti-money laundering law.

The Government of the Federal Republic of Nigeria uses this medium to state emphatically that both the accusation of FATF and the indictment of FinCEN do not reflect the true position of things and merely tended to portray Nigeria in a negative manner, despite all the efforts that have been made by the Federal Government of Nigeria and its relevant agencies to curb money laundering.

The following are responses by the Federal Government of Nigeria (FGN), the Central Bank of Nigeria (CBN), the Nigerian Police as well as the Nigeria Drug Law Enforcement Agency (NDLEA) to specific issues raised in the FinCEN Advisory notice.

l. FINCEN ADVISORY NOTICE TO ALL AMERICAN BANKS

1) NIGERIA LAW FAILS TO CRIMINALISE THE LAUNDERING OF ILLICIT PROCEEDS OTHER THAN THOSE DERIVED FROM NARCOTICS

The pre-occupation of Nigeria’s money laundering law is with drug trafficking. This places restrictions on the application of the law to other financial crimes. Apart from the emphasis on narcotics, the Federal Government of Nigeria promulgated a Decree in 1995 on Advance Fee Fraud (section 419 of the Nigerian Criminal Code) not only to prosecute the principal culprits of this crime, but also to address the accessories associated with it. Since illicit proceeds obtained from other criminal activities such as grand corruption, looting of public treasury, terrorism, prostitution, arms and human trafficking, tax evasion, bribery and corruption can equally be laundered, there is an urgent need for the money launderinglaw to be so amended to capture the proceeds from these crimes. Consequently efforts are being made to amend this law.

2) NIGERIAN BANKS ARE NOT REQUIRED BY LAW TO REPORT ALL SUSPICIOUS TRANSACTIONS.

This assertion by FINCEN is incorrect, as the Central Bank of Nigeria has issued circulars mandating banks and other financial institutions to render returns on suspicious transactions. Where there are no reportable transactions for a particular period, a NIL return should be submitted. This is constantly monitored by our Bank Examiners. A format, which was specifically designed for reporting such transactions, was circulated to all the banks immediately after the promulgation of the law. In addition, Section 6 of the Money Laundering Act requires suspicious transactions to be reported to the Regulatory Authority.

3) THERE IS NO PENALTY UNDER NIGERIAN LAW FOR FAILING TO REPORT SUSPICIOUS TRANSACTIONS

Again, this observation is not true. The NDLEA is empowered to keep surveillance on all financial institutions on this matter. Besides, non-compliance with the CBN circulars is a sanctionable offence. Part ll (Section 14l-18) of the law contains various offences and the corresponding penalties for failure to comply with all the provisions of the Act including the suspicious transactions reporting obligation. In addition, the CBN is in the process of further reviewing the Money Laundering (ML) Act with a view to incorporating other financial crimes with specific sanctions.

4) NIGERIAN’S LEGAL, SUPERVISORY & REGULATORY SYSTEMS CREATE SIGNIFICANT OPPORTUNITIES & TOOLS FOR MONEY LAUNDERING AND INCREASE THE POSSIBILITY THAT TRANSACTIONS INVOLVING NIGERIAN ENTITIES AND ACCOUNTS WOULD BE USED FOR ILLEGAL PURPOSES.

We recognized the need to amend the Money Laundering Act to cover such areas as the Capital Market, Insurance and Finance Companies. There is no legal system that will deliberately circumvent a process it was meant to protect. The National Assembly is in the process of amending the Money Laundering Act to take care of the loopholes mentioned by ‘FATF’ and other international bodies. Secondly, the regulatory and enforcement authorities such as the CBN, NDLEA, Police and Judiciary have recently come together with the sole aim of planning the most effective strategies for combating money laundering activities.

ll. FEDERAL GOVERNMENT EFFORTS

The FGN has been leading the war against financial crimes since inception. Some of the achievements in this area include:

1. Establishment of the National Drug Law Enforcement Agency (NDLEA) via NDLEA Act No.48 of 1989, to check drug trafficking and the associated money laundering.

2. Promulgation of the Money Laundering Act No.3 in 1995, the main instrument criminalizing money laundering in Nigeria.

3. Constituting the Joint Steering Committee on ML Act with membership drawn from relevant ministries, Parastatals and agencies to fashion out the Guidance Notes on ML.

4. Establishment of a Special Fraud Unit within the Nigeria Police to Investigate and prosecute cases bordering on criminal deception (419).

5. Establishment of a Presidential Task Force on Trade Malpractices in 1991 to check advance fee frauds.

6. Enactment of the Advance Fee Fraud and Other Fraud Related Offences Act No. 13 in 1995.

7. Enactment of the Failed Banks (Recovery to Debts) and Financial Malpractices in Banks Act No.18 in 1994.

8. Appointment of a Senior Special Assistant to the President on Drugs and Financial crimes

9. Security raids on car dealers and bureau de change suspected to have links with drug money.

10. Publication of the names of Nigerians convicted abroad for drug trafficking and other crimes to arouse public awareness, concern and control as well as retrial of offenders in Nigeria on their deportation.

11.Publication of a directory of businesses registered by the Corporate Affairs Commission and the names of persons and businesses Implicated in business scams and swindles.

12.Entering into a contract by the Federal Government with an American Firm, Washington regime.

13.Establishment of an Independent Commission on Corrupt Practices in 2000.

14.Establishment of a National Committee on Financial Crimes in 2001.

lll. THE CENTRAL BANK OF NIGERIA’S EFFORTS

The CBN has been in the forefront of the fight against Money Laundering activities ever since the FGN subscribed to the global war against financial crimes, especially as it is known that banks all over the world are the most convenient vehicles used by the fraudsters in realizing their inordinate ambition. Its achievements also include:

1. Emphasising the policy of transparency in financial transactions through the CBN annual Monetary Policy Circulars.

2. Establishment of a Money Laundering Surveillance Unit in the Bank Examination Department in 1994, preparatory to the Criminalisation of money laundering in Nigeria in 1995.

Under the Act, financial institutions are expected to:

- render three mandatory returns to the appropriate authorities using the prescribed format;

- adhere strictly to the principle of know Your Customer (KYC);

- co-operate with the law enforcement and regulatory authorities and observe the procedure for disclosure of suspicious transactions by promptly reporting such transactions to the CBN;

- maintain records of transactions for a minimum of 10 years and

- establish an effective means of retrieving information at short notice;

- arouse awareness on ML by:

appointing ML compliance officers at all levels of operation while a Chief Compliance Officer should be at the Head Office.

organizing continuous training programmes for their employees.

establishing an effective internal control (audit) unit to verify on a regular basis, compliance with policies, procedures and controls relating to ML.

3. Contributing immensely to the publication of the pioneering book on Money Laundering in Nigeria titled “Money Laundering” edited byProfessor Wole Adewunmi, a former President of the Chartered Institute of Bankers of Nigeria (CIBN).

4. Sponsoring its staff on a regular basis, to the annual Cambridge Symposium on Economic Crimes in England as part of its policy to Develop the appropriate capacity on how to fight financial crimes.

5. Attaching some CBN Examiners to the NDLEA since 1995 to assist the Agency with its investigative efforts, especially where it becomes necessary to examine the books and records of banks.

6. Organising public enlightenment and training programmes on ML for financial sector operators, regulators and law enforcement agencies in collaboration with WAIFEM, FITC, etc, with a view to acquainting them with their duties and responsibilities under the ML Act, and also to acquaint them with the current trend in the Global Financial System.

7. Establishment of an Inter-Departmental Committee in year 2000, on Monday Laundering, Advance Fee Fraud and other Financial Crimes to coordinate the efforts of the CBN in fighting financial crimes. The Committee’s terms of reference, amongst others, include:

. Monitoring developments in the Nigerian and I nternational Financial Systems as they relate to ML and other financial Crimes.

. liaising with similar bodies and agencies both locally and internationally with a view to fostering greater understanding and cooperation in the fight against ML. Advance Fee Fraud and other Financial Crimes.

8. Embarking on public enlightenment campaigns against drug trafficking and advance fee fraud locally and internationally in both the print and electronic media. On the whole, the CBN has spent over US$4million in placing advisory advertisements in over 80 newspapers and magazines in twelve languages in over thirty-six countries.

9. Establishment of an office named International Financial Transactions Surveillance Office (IFTSO) in the CBN in September 1997. The office is charged with the sole responsibility of combating Advance Fee Fraud scams, in so far as they are reported to the CBN.

10.In October 2000, CBN sponsored two of its staff to a one-week workshop on Money Laundering Counter-measures organised by FinCen in Washington DC

IV. THE NIGERIA POLICE EFFORTS

The Federal Government had established a Special Fraud Unit (SFU) under the Nigeria Police charged with the responsibility for investigating, arresting and prosecuting advance fee fraudsters. The Unit is also charged with the responsibility of recovering monies and/or properties fraudulently obtained. The Nigeria Police, through the SFU has done a lot in combating the menace of Advance Fee Fraud. These include:

Arrest and prosecution of a large number of advances fee fraudsters.

Recovery of monies and goods fraudulently obtained various victims

Disruption of the operations of various 419 syndicates in Nigeria by carrying out raids at their hideouts and confiscating their tools of trade such as computers, fax machines, telephones, forged documents etc.

Blocking of accounts used in receiving 419 funds

Seizure of cars, electronics and other items purchased with the proceeds of 419 funds.

Liaising with the law enforcement agencies of other countries, especially the US Secret Service to track down fraudsters.

collaborating and sharing of information with other law enforcement agencies within Nigeria.

Organising enlightenment campaigns to sensitise the public on how to react to advance fee fraud solicitations.

Using of Nigerian foreign missions to campaign against 419.

The statistical data showing the modest achievement of the SFU is presented below:

(A) STATISTICS OF THE NO. OF CASES REPORTED FROM 1993 TO JUNE 2001

No. of persons arrested 1954

No. of cases charged to court 254

No. of cases prosecuted 154

No. of convictions 22

No. of persons acquitted 7

No of cases with FDPP/Legal Section 52

(B1) AMOUNT LOST (B2) AMOUNT RECOVERED

I) N3,390,323,262 I) N 6,662,279

II) $ 1,812,474,402 ii) $12,530,105

III) E 2,928,100 iii) E48,885

IV) DM 40,070,042 iv) DM870,070

V) CFA 38,622.851 v) CFA 386,922

(C) STATISTICS OF THE LIST OF ITEMS RECOVERED FROM 1993 TO JULY 2001

ITEM NO VALUE IN N

1. Vehicles 381 114,300,000

2. Computers 71 7,500,000

3. Fax Machines 730 14,600,000

4. Telephone Boxes 801 5,607,000

5. Cellular phones 88 3,520,000

6. Photocopy machines 9 720,000

7. Generator Sets 13 880,000

8. Television Sets 38 950,000

9. Radio 46 1,389,000

10. Video Recorders 23 529,000

11. Typewriters 23 460,000

12. Passports 215 215,000

13. Stabilizers 24 140,000

14. Cameras 3 150,000

15. Fridges 6 42,000

16. Air Conditioners 6 159,000

17. Fans 11 55,000

18. Double barrel guns 6 210,000

19. Pistols 1 Nil

20. Wrist Watches 12 220,000

GRAND TOTAL N151,628,000

V. NDLEA EFFORTS The NDLEA and CBN are the two organisations charged with the responsibility for implementing the Money Laundering Act. NDLEA’s efforts so far include:

1. Dismantling of major drug syndicates such as MS Toyin Igbirra, the Okonkwo brothers and the Tunde Shakiru Shokunbi syndicate who specialized in the recruitment of under-aged girls as couriers to North America and other countries.

2. Destruction of large expanse of Indian hemp farms through its

Operation Burn the Weed exercise. From 1996 to 2000, the Agency destroyed the following hectares of cannabis farmlands: [Table excised for brevity - 419 Coalition]

From January to October 2001, a total of 1,881 Indian hemp suspects had been apprehended, with 263,031.81 kilograms of the illicit drugs seized in the process. Success has also been achieved in the arrest and seizure of cocaine and heroin, including psychotropic substances, as shown in the table below: [Table excised for brevity - 419 Coalition]

Two factors have accounted for the drastic reduction in arrests and

Seizure of cocaine and heroin from 1994 to date. First, is the better focused security measures adopted by NDLEA operatives at entry and exit points and second is the suspension of VARIG flight operations direct from Brazil to Nigeria which was the source of transportation used by drug traffickers to import huge quantities of cocaine to Nigeria. Heroin smugglers have changed their transit routes to South Africa and other neighboring countries.

3. The Agency has in place, a master plan involving the cooperation of other Agencies like the Police, State Security Service (SSS), NGO’s and relevant Ministries and Organisations in the war against the illicit trade in drugs and drug abuse.

4. The Federal Government has initialed the Poverty Alleviation Programme, among other welfarist programmes, having recognised that poverty and unemployment are the basis factors necessitating the involvement of Nigerian in drug trafficking.

5. To reduce the mobility of drug traffickers, drug convicts are now made to forfeit their international passports, assets (moveable and immoveable) to the government upon conviction. These assets are then sold to Nigerians through public auction.

6. The Federal Government through a Presidential order repealed Act 61 of 1998 that withdrew NDLEA from the seaports. This was to ensure that the war against drug trafficking is not interrupted.

7. The NDLEA Drug Reduction Enlightenment Campaign, which had been carried to schools, organisations, and public gatherings, has succeeded in reducing the consumption rate of drugs in Nigeria and has discouraged more people from entering into the illicit drug trade.

8. The Money Laundering Unit of the Agency has investigated, arrested, and frozen the assets and properties of drug suspects. The NDLEA has also provided useful information to its counterparts abroad, especially in the U.S.A. to facilitate their investigations.

Through the efforts of its prosecution unit, a lot of sentences have been secured in the courts. Some of the drug convicts are still serving different jail terms. Drug barons such as Musa Alubankudi and Joe Brown Akubueze have received long jail terms. CONCLUSION

We have discussed at length here the various efforts made to tame financial crimes at the local, national and international levels. We have successfully established a network of controls through which a regular surveillance is ensured. It is gratifying to note, however, there has been considerable acceptance of the need to guard against criminal abuse of the nation’s financial system by money launderers because of the appreciation of the grave dangers which unchecked money launderers because of the appreciation of the grave dangers which unchecked money laundering activities pose to our economic, social and political development in Nigeria. The war against financial crimes is one that cannot be fought and won by a single country alone. Criminal gangs and activities must be tackled through inter-agency partnership and inter-country collaboration. Today, Nigeria is the only country in the West African sub-region that has an anti-money laundering legislation. Money laundering is now a global phenomenon. Its law has not been part of the basic banking legislation. From the way things are now, this law has to be an integral part of the banking laws. A recent survey by the IMF revealed that most industrial or developed countries, which served as role models for developing countries, have not included anti-money laundering provisions in their basic banking legislation. This trend seems to be underpinned by consideration of bank secrecy. Yet, provisions for bank secrecy and measures to deal with offshore banking are crucial to effectively curb money laundering. Smith (1993) notes that the “existence of offshore banks in tax and secrecy havens and the reluctance of those countries, notably some developed countries, to breach the confidentiality on which their financial sectors depend to attract deposits, have allowed drug traffickers to develop complex international networks”. In addition to money launderers, treasury looters and corrupt government officials in the Sub-Saharan Africa have increasingly also made use of these networks. The case for confidentiality in banking legislation is unassailable. Success in combating financial crimes can no doubt assist the stability and soundness of the financial system, the soundness of the financial system, the world over.

Today, however, we should be talking of sophisticated measures to counter the sophisticated exploits of the financial system by the criminals. The picture painted by FinCen is certainly not true or helpful. We write to assure our numerous well-wishers particularly, foreign investors that the present democratic government will not condone or shield criminals from being prosecuted or encourage treasury looters. Together with other international agencies such as the United States of America Secret Service, Federal Bureau of Investigation, Scotland Yard, London Metropolitan Police, Hong Kong Police and the Serious Fraud Office of the New Zealand Police, FATF and lastly but not the least, FinCEN, we will also continue to review the installed procedures from time to time with a view to preventing further in-roads for such criminal proceeds.