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Banks shut doors on BDCs, politically-exposed persons

By Omoh Gabriel, Business Editor

Indications emerged weekend that banks have started to close the accounts of suspect Bureaux de Change (BDCs) and some politically exposed persons to avoid Economic and Financial Crime Commission’s  (EFCC) raid on them. Top bankers said that in some of the banks, both registered and unregistered Bureaux de Change are facing the risk of having their accounts closed by banks.

File: Banks
File: Banks

Financial Vanguard learnt that banks’ internal investigations have shown that funds being traced by the EFCC is after, have either passed into the system through BDCs or through politically exposed persons. It was learnt that banks’ managements are cleansing their operations to rid their system of unwanted funds. Investigation also revealed that bankers who have in one form or the other compromised the “Know Your Customer” (KYC) policy of banks, have been silently relieved of their duties.

Some of the sacked staff in recent times, for which the government has asked banks to halt further retrenchment, are among those found to have compromised the KYC policy of the banks. In one of the banks last week, a senior manager was sacked for foreign exchange deals that was detected to be connected to money laundering.

Bankers also said that banks are now very sensitive to sources of funds. In one of the top banks, it was gathered that every fund transfer received by banks now are being carefully scrutinised and those found suspicious are rejected and returned to senders. A marketing staff of one of the banks said: “It is no longer about getting funds but what kind of fund it is. Marketers’ worry now is how to identify clean funds that will not land them in trouble”.

It was learnt that most of the funds laundered by politicians were mostly through BDCs. It would be recalled that the recent discovery of N12 billion in the bank accounts of two directors in the federal civil service, allegedly diverted from pension funds, prompted the EFCC to raid some banks. The commission was searching to fish out top bank officials who aided corrupt government officials to launder funds stolen from the public purse.

It was gathered then that the seven banks involved in the practice, whose names were not disclosed, were on top of the commission’s list of notorious banks whose top managers were already under the radar of the anti-graft agency.

A senior EFCC source had told Financial Vanguard that “the inquiry into the banking sector was connected with the recent discovery of the looting of pension funds by two senior officials of the federal civil service.” The source added: “The Pension Fund scam which saw the diversion of over N12 billion every year by some handlers of the scheme was an inter-bank arrangement where the affected top managers working in a syndicate filtered the money with the connivance of the government officials who have been talking with EFCC officials since the investigation took shape.

“No financial crime can take place without the support of the banks. Most of the banks in one way or the other are involved in such acts, but seven banks are fully involved and their managers are in the know.”

In the last three or four weeks, operatives of the EFCC have raided several banks. The operatives have raided Access Bank, Sterling Bank and interrogated their managing directors, quizzed an executive director in First Bank and arrested the Managing Director of Fidelity Bank.

The visit of the anti-graft agency is connected to ongoing investigations into alleged bribery of election officials ahead of the 2015 presidential elections, to the tune of N2.3 billion. The Central Bank of Nigeria (CBN) has justified the raids being carried out on some banks by the EFCC. Deputy Governor of the apex bank, Dr. Obadiah Mailafia, said in Kaduna that the EFCC has the right to investigate any organisation or persons suspected of engaging in fraudulent activities.

He said such raids were justified as long as there were sufficient reasons to believe that the affected banks were engaging in questionable dealings. The EFCC recently raided the head office of Sterling Bank in Lagos, allegedly in search of documents relating to certain questionable transactions involving the defunct Equitorial Trust Bank (ETB) which it acquired some years back.

If banks carry through their ongoing internal reforms on funds transfer and deposit, it may become very difficult for politicians to use banking service to launder funds.

Former CBN Governor, now Emir of Kano, Sanusi Lamido Sanusi, had said that corruption in the build-up to Nigeria’s 2015 election was partly responsible for the increase in the number of bureaux de change in the country. He added that it is “absolutely wrong” for bureaux de change to buy hundreds of millions of dollars without accountability.

“We have seen evidence of huge demand for dollars by bureaux de change, huge purchases of cash that are not accounted for and that signals money laundering and we’ve got to deal with it.

“It is a small class of people that has access to huge rents, and that rent has been dollarised,” he said. Sanusi added that the bank had been monitoring portfolio outflows and imports and found that neither could explain the surge in dollar demand. Politicians in Nigeria often spend heavily on patronage to secure seats or pay off rivals, with at least some of this money acquired through corruption or links to crimes such as oil theft or kidnapping.

 

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