By Babajide Komolafe

Nigeria and other countries in the West African sub-region are performing poorly in the implementation of anti-money laundering measures recommended by the Financial Action Task Force (FATF).

The FATF was set up in 1989 as a global effort to combat money laundering and terrorism financing. Its anti- money laundering/counter terrorism financing (AML/CTF) framework has 40 recommendations on preventive measures that financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) are required to take to combat the crime.

Speaking in  Lagos last week at an international conference on Customer Due Diligence organised by Committee of Chief Compliance Officers of Bank in Nigeria (CCCOBIN), Director-General, Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), Dr  Abdullahi Shehu  disclosed that  countries in the West Africa sub-region are performing poorly in the implementation of these measures.

He said, “So far 13 out of the 15-member states of GIABA have been evaluated and the reports have been published. Almost all of them are still struggling with the implementation of the old FATF Standards, in particular, the following three key components of the AML/CFT, namely: preventive measures to be taken by FIs and DNFBPs (Recs 4 – 25); Institutional and other measures necessary in the system (Recs 26 – 34); and the 9 Special Recommendations on TF (SR I – IX).

“The poor compliance level on the preventive measures is a pointer to the level of vulnerability of the financial systems to money laundering and other related crimes. This poor performance is of serious concern as this component constitutes about 55 per cent of the entire AML/CFT requirements. Thus, weaknesses in this area portend a major source of concern. This, therefore, calls for a holistic action by both the reporting entities (FIs and DNFBPs) and the supervisors and regulators to improve compliance.

“You are aware that two of our member-states (Nigeria and Ghana) are on the FATF list of countries that have not made significant progress in addressing the lacunas in their AML/CFT regimes. This list has some potential negative consequences for the countries.

The low level of compliance with Customer Due Diligence (CDD-R.5) requirements shows that FIs and DNFBPs are yet to adopt comprehensive measures in identifying and verifying the identity of their customers, including that of legal persons, legal arrangements and beneficial ownerships.

In this regard, compliance officers have a critical role to play
“Also, most of the Financial Intelligence Units (FIUs) in this region are operating sub-optimally, hence their capacity to collect, analyse and disseminate suspicious transaction reports (STRs) that facilitate investigation and prosecution is impaired.

Furthermore, the mutual evaluation reports indicated a general low rating on Recommendation 23 for almost all members of GIABA, which suggests that the supervisory and regulatory frameworks for both the FIs and DNFBPs are relatively weak.”