Nigeria: In The Face Of Expulsion From The Egmont Group

Last Updated: 15 March 2018
Article by Olubusola Diya and Oshokha Ilegogie

Nigeria, through the Nigerian Financial Intelligence Unit ("NFIU"), is a member of the Egmont Group of Financial Intelligence Units ("the Egmont Group"). The Egmont Group is an international anti-corruption body consisting of the Financial Intelligence Units (FIUs) of the countries who are signatories to its charter. The Group serves as the operational arm of the International Anti Money Laundering and Counter Finance Terrorism apparatus. The primary purpose of the Egmont Group is to provide a platform for the secure exchange of financial intelligence between and among its member FIUs

The NFIU was established in 2004 as a unit under the control of the Economic and Financial Crimes Commission (EFCC), to serve as the Nigerian equivalent of FIUs in the Egmont Group. The creation of the NFIU was in line with Section 1(2)(c) of the EFCC Establishment Act 2004 which designates the EFCC as the Financial Intelligence Unit in Nigeria. This establishment of the NFIU as a unit under the EFCC was initially accepted by the Group, although the Group, in 2013, had expressed concerns regarding the operational autonomy of the NFIU.

In July 2017, the Egmont Group suspended the NFIU from the Group and further threatened to expel the NFIU by January 2018 if Nigeria did not comply with some of the Group's requirements. The suspension was due to Nigeria's non-compliance with a regulation of the Group which mandates that FIUs of member countries should be autonomous and have independent control over their funds, operations and staffing needs. In other words, the NFIU should be a distinct and autonomous entity.

Another ground given for the NFIU's suspension was the allegation that Nigeria was leaking confidential information obtained from the Group (specifically information relating to the status of suspicious transaction report details and information derived from international exchanges) to the media, and was using the confidential information obtained from the Egmont Group to blackmail individuals.

The Egmont Group has, in previous times, suspended other FIUs such as the German FIU. This suspension was however lifted in 2017 after Germany reorganised its FIU as an administrative unit under the jurisdiction of the German Central Customs Authority. Although the German FIU was not re-established as an autonomous body, the Group was satisfied that the re-organisation of the German FIU was sufficient to ensure its autonomy.

Impact of the NFIU Suspension

The Group constitutes the highest inter-governmental association of financial intelligence agencies in the world, and suspension from the Group could have adverse implications for any country.

For instance, as a result of Nigeria's suspension from the Group, the NFIU can no longer exchange and receive sensitive financial information from other member countries. Consequently, Nigeria has been denied access to vital intelligence and information on money laundering, financing of terrorism, the proliferation of arms, financial crimes and related offences aimed at supporting local and international investigations, prosecutions and asset recovery.

Expulsion- What does it mean for Nigeria and its people?

The Egmont Group will be deliberating on the expulsion of Nigeria from the Group at its Head of FIU and Working Groups Meeting scheduled to hold from 12 March 2018 to 15 March 2018 in Argentina.

A potential consequence of expulsion from the Group is that Nigerians may be denied access to foreign card schemes used by Nigerian Banks such as MasterCard and Visa. Nigerian financial institutions may be restricted to issuing payment cards under local card schemes limited to Nigeria, which in turn may limit Nigerians to only internal card transactions. Furthermore, Nigerians may be unable to fulfil any domestic or international transactions using MasterCard or Visa cards issued by their banks.

The limitation to the usage of only local bank cards may also hurt the ability of Nigerians and Nigerian bodies to enter into offshore contracts, and businesses would have to find alternative ways of fulfilling such transactions. This will affect both manufacturers who source raw materials internationally and importers. An effect could be a drastic increase in the cost of goods and services within the country.

Another likely consequence of Nigeria's expulsion from the group is that Nigerian banks may have to have to access foreign trade lines and loans at a premium, making such facilities more expensive for them. This added cost will, in turn, be passed on to businesses and customers. Nigerians travelling outside the country may have to rely on only cash for their transactions, which in turn will push them to the parallel market since the official forex market is limited to specific transactions.

The resultant pressure on the demand for forex at the parallel market could lead to a depreciation in the value of the Naira and a reduction in the purchasing power of the average Nigerian. It will be recalled that at the peak of the foreign exchange crisis in 2016, many Nigerians were forced to rely on the parallel market to meet their personal and commercial forex needs.

An expulsion may also hinder the activities of various Nigerian government ministries, departments and agencies which utilise information received from the NFIU to carry out their respective criminal investigatory and prosecutorial duties. The expulsion may have a negative impact on the activities of banking sector regulators such as the Central Bank of Nigeria, Securities and Exchange Commission, and National Insurance Commission. These bodies use information received from the NFIU to carry out their oversight functions.

Compliance: What Steps Have Been Taken?

In a bid to comply with the directive of the Group, the Nigerian Senate fast-tracked the passing of the Nigerian Financial Intelligence Agency (Establishment, etc.) Bill, 2017 (the "Bill") which seeks to establish the Nigerian Financial Intelligence Agency (the Agency) as an independent entity. The Bill passed its third reading on 27 July 2017.

However, the Bill has not been sent to the President for his assent because the Senate and House of Representative Committees on Financial Crimes and Anti-Corruption are yet to agree on if the NFIU should be domiciled in the CBN or the EFCC. As at 2 March 2018, it was reported that the President of the Senate and the Speaker of the House had resolved that the NFIU be domiciled in the CBN.

Key features of the Bill are:

The Bill establishes a legal, institutional and regulatory framework for the management and operation of the Agency. It also proposes that the Director-General of the Agency shall be responsible for the administration and management of its staff, thus making the Agency an autonomous body. The Bill also establishes a fund into which budgetary allocations approved by the National Assembly shall be paid to run the Agency. The Bill proposes a part-time governing board for the Agency, which shall include representatives from Federal Ministry of Justice, Federal Ministry of Finance, Central Bank of Nigeria and security agencies such as the Economic and Financial Crimes Commission.

The Bill also seeks to amend The Economic and Financial Crimes Commission (Establishment) Act by deleting sections 1 (2) (c) and 6(l) of the Act which designates the NFIU as the FIU for Nigeria. It also seeks to the Money Laundering (Prohibition) Act by substituting the word "Commission" in those sections with the words "Nigerian Financial Intelligence Agency".

Lastly, the bill proposes that the Agency be domiciled in the CBN for institutional location and logistic support. This will meet the requirements of the Egmont Group regulation on the autonomy of FIUs. For instance, Ghana's FIU is currently domiciled within the country's central bank.

Conclusion

Given the imminent threat of Nigeria's expulsion from the Group and the projected impact of such expulsion, there is the need to accelerate the enactment of the Bill. This will facilitate the reorganisation of the NFIU to ensure compliance with the Egmont Group's regulations, such that the NFIU will become a distinct and autonomous entity with full control over its funding, personnel recruitment and management, and operations.

Also, the NFIU (or other relevant bodies) should ensure that it complies with the Egmont Group's regulations, including ensuring that information received from other FIUs remain classified and are only disclosed to duly authorised persons.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions