….as CBN, NFIU identify BDC operators as weak link in anti-graft war 

By Ikechukwu Nnochiri

ABUJA– The Inter-Governmental Action Group Against Money Laundering in West Africa, GIABA, on Tuesday, urged the Federal Government to focus attention on foreign currency exchange operations in the country, describing it as a new safe haven for treasury looters and terrorism financiers.

It maintained that a recent National Risk Assessment (NRA) of Nigeria, identified specialised financing businesses, especially Bureau de Change (BDC) operators, as the most vulnerable to money laundering. 

The regional body, through its Director General, Mr. Edwin Harris Jr, made the disclosure at the opening session of a 3-day national workshop on enhancing Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Compliance by Foreign Exchange Bureaus, in Abuja.

It said the NRA identified several vulnerabilities in relation to BDC operators in the country, among which included limited awareness of Money Laundering/Terrorism Financing (ML/TF) risks; poor implementation of AML/CFT preventive measures, as well as weak supervision/monitoring for AML/CFT compliance.

“In addition, the NRA noted concerns about the preponderance of unlicensed BDCs (black market operators), and the fact that a number of the transactions are cash-based, which constitutes a serious money laundering/terrorism financing risk.

“These findings are consistent with the outcomes of a typology study on Money Laundering and Terrorism Financing through the Informal and Illegal Currency Exchange Service Providers in West Africa, published by GIABA in 2020.

“The study found the sector vulnerable to ML/TF and concluded that money laundering through foreign currency exchange operations is a very efficient way of disguising the true origin of illegal proceeds and their integration into the legal financing system of the region.

“These findings were also re-echoed in the 2021 MER of Nigeria and contributed to the low level of effectiveness of the country in Immediate Outcomes 1, 3 and 4”, the GIABA boss added.
 

Continuing, he said: “Nigeria has the largest economy and financing sector in the region. Nigeria has significant trade with countries in the region with important cash-based transactions. 

“Furthermore, Nigeria shares borders with countries that are members of distinct monetary zones, namely; the West African CFA zone and the Central African CFA zone. 

“Trade and financing exchanges with these neighbouring countries involve currency exchange and therefore a strong demand of bureau de Change services. 

“The galloping inflation that the world economy is experiencing as well as the depreciation of the Naira, have led to greater demand for international currencies, in particular the US dollar, insofar as holding foreign currency is considered a means of mitigating the effects of inflation and the depreciation of the national currency”.

He, therefore, tasked critical stakeholders in the country’s finance sector to collaborate and improve the compliance of the currency exchange sector with acceptable international AML/CFT preventive measures. 

Meanwhile, in his remarks, the Governor of the Central Bank of Nigeria, CBN, Mr. Godwin Emefiele, noted that BDC operators play vital role in the Nigerian economy, stressing that FG has put in place, a strong regulatory framework to check their licensing and operations.

“We have specific requirements for licensing that ensures complaince. In fact, it is like passing through the eye of a needle to get a license to operate a Bureau de Change this period. 

“We also have a very robust system that helps to wade off criminal elements so as to reduced the incidence of fraudulent activities with the industry”.

Emefiele, who was represented by a Director at the CBN, Mallam Aminu Buhari, said the workshop, which had BDC operators and officials of major anti-graft agencies in the country as participants, would provide a platform for the cross-fertilization of ideas.

Likewise, the Director and Chief Executive Officer of the Nigerian Financial Intelligence Unit (NFIU), Modibbo Tukur, identified BDC operations as a weak link in the anti-graft war.

He said the country was committed to the full implementation of all the recommended action plans with a view to tackling corruption, money laundering and terrorist financing.

In his goodwill message, the National President of the Association of Bureau de Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, commended GIABA for organising the workshop. 

“This conference no doubt clearly demonstrates to the regional agency, understanding of our gate keepers’ role in the financial ecosystem.

“As key players in the foreign exchange bureau sector, we have a responsibility to ensure that our operations are transparent, accountable and complaint with international best practices on AML/CFT”, he added.