Nigeria: Company Fraud And Money Laundering In Nigeria

Last Updated: 20 November 2018
Article by Chinemerem Ezenwa

Money laundering is defined in the Money laundering (Prohibition) Act of 2011 (As Amended) as "when a person in or outside Nigeria directly or indirectly conceals or disguises the origin or; converts or transfers, removes from the jurisdiction; acquirers, uses, retains or takes possession or control of; any fund or property, knowingly or which he/she should reasonably have known that such fund or property is, or forms part of the proceeds of an unlawful act." 1 A body corporate on the other hand is liable on conviction, to a fine of not less than 100% of the funds and properties acquired as a result of the offence committed, and a withdrawal of its license. Where the body corporate persists in the commission of the office for which it was convicted in the first instance, the Regulators may withdraw or revoke the certificate or license of the body corporate.2

Money laundering has also been defined as the "concealment of the source, nature, existence, location and disposition of money and/or property obtained illegally or from criminal activities such as embezzlement, drug trafficking, prostitution, corruption and large scale crime.

Some acts which constitute money laundering under the act are spelt out in Section 15 of the Act. Section 1 of the Act makes it illegal for any individual to accept or make any cash payment that exceeds N5,000,000.00 (Five Million Naira). This means that every cash transaction over N5m must be done via a financial institution. Likewise, corporate institutions shall not make or accept any cash payment of a sum exceeding N10,000,000.00 (Ten Million Naira) except in a transaction through a financial institution.

The Act also provides that any individual who is transporting cash or negotiable instruments in excess of US $10,000 or its equivalent must declare this to the Nigerian Customs Service. Non declaration of the funds or false declaration s an offence that is punished upon conviction by the individual forfeiting the funds in question, or to imprisonment of not less than 2 years or both.3

Notable cases of money laundering in Nigeria include: Federal Republic of Nigeria vs. James Ibori & 5 others, Tafa Balogun vs EFCC, Lucky Igbinedion, the former governor of Edo State was accused by EFCC of embezzling about 4.4 billion Naira and money laundering.

Furthermore, the Economic and Financial Crimes Commission (EFCC) Act in 2004 gave the EFCC and National Drug Law Enforcement Agency (NDLEA) and Central Bank of Nigeria (CBN) power to investigate accusations of money laundering and to inspect bank accounts to help in tracing the takings of crimes. The Nigerian Financial Intelligence Unit (NFIU) is that is a special, independent unit of the EFCC that serves as the country's central agency for the collection, analysis and dissemination of information regarding money laundering and the financing of terrorism.4

Corporate fraud refers to political and business scandals which arise with the disclosure of malpractices by trusted executives of large public companies. This includes misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of corporate assets or underreporting the existence of liabilities, sometimes with the cooperation of officials in other corporations and affiliates.5

A notable corporate fraud case is the case of Cadbury Nigeria Plc. The company was found to be falsifying its financial and accounting reports by inflating its profit figures by millions of Naira. The company was fined for publishing misleading accounts for a number of years in order to boost its profit. In IGP v. Mandilas and Karaberis and Anor, the court held liable the company and its manager for the offence of stealing.6

Financial corporate fraud involves substantive amounts of money and are geared towards maintaining or increasing the share price of the perpetrating companies the stock exchange market. Different forms of corporate fraud include: bribery and corruption, theft of cash, physical assets and confidential information, misuse of accounts, procurement fraud, payroll fraud, financial accounting misstatement, inappropriate journal, vouchers, suspense account fraud, false employment credentials and frauds.7

References

  1. Nigerian Financial Intelligence Unit. Retrieved from https://www.researchgate.net/publication/262300127/download
  2. Dr. A. O. Enofe, C.A Agbakpolor, P. Y. Oyarebu-Ibrahim. (2016). "Forensic Accounting and Corporate Fraud in Nigeria" Journal of Accounting and Financial Management (Vol. 2) (No. 1). Retrieved from  https://iiardpub.org/get/JAFM/VOL.%202%20NO.%201%202016/Forensic%20Accounting%20and%20Corporate%20Fraud%20in%20Nigeria.pdf
  3. Royal Attah, "Corporate Fraud in Nigeria: A Critical Analysis" Retrieved from http://nairastudent.com/corporate-fraud-in-nigeria-a-critical-analysis/#_ftn10
  4. Victor Usifo, (2017), "Money laundering in Nigeria – Meaning, causes, History, Laws, Notable Cases, Effects". Retrieved from https://infoguidenigeria.com/money-laundering/

  Footnotes

1 Money laundering (Prohibition) Act of 2011 (As Amended). Section 15 (2), (3) Retrieved from  http://www.nfiu.gov.ng/index.php/resourses/laws

2 Ibid. Section 15(3)

3 Money laundering (Prohibition) Act of 2011 (As Amended). Section 2 (3) & (5)

4 Victor Usifo (2017) "Money laundering in Nigeria – Meaning, causes, History, Laws, Notable Cases, Effects" Retrieved from  https://infoguidenigeria.com/money-laundering/

5 Royal Attah, "Corporate Fraud in Nigeria: A Critical Analysis" Retrieved from http://nairastudent.com/corporate-fraud-in-nigeria-a-critical-analysis/#_ftn10

6 Attah. Ibid

7 Attah, Ibid.

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.

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