by Nana Nwachukwu
Money laundering is a scheme that conceals illegally obtained money in a manner through which it eventually returns to the launderer without raising suspicions. Such finances are hidden in various ventures which appear legal on the outside such as holding companies and charity causes.
With lower tax rates in other countries, easier regulations in setting up holding companies and bank secrecy laws, it was easy for launderers to find places to stash their illicit gains. In Nigeria, establishing a company with foreign participation is much easier than a fully indigenous company and such companies are exempt from paying Company taxes.
Money laundering is often invested in further crime to acquire power and more illicit gains. One of such illicit investments is terrorism. Non-Profit Organizations and Politically Exposed Persons are some of the typologies in Money laundering which use dummy companies and business names to run strings of operations.
The Northern region of Nigeria is of interest to charitable organizations basically because of the level of poverty found therein and it is the base of the deadly Boko Haram Terrorist Sect. Assuming ‘Y’ is a mini-terrorist organization based in Nigeria masking as an NPO, then receives funding regularly from other NPOs based in different parts of the world which funds the terrorism of the Boko Haram Sect. Such NPOs in turn receive funds from Money launderers (who may be involved in Guns and ammunition running) under anonymous donations.
Money launderers find this attractive because large sums of money can be moved without questions; NPOs are exempt from taxes. Also, poverty in volatile regions makes it easier to trust NPOs as they are deemed to be carrying out functions which help such regions.
Politically Exposed Persons
Mr B a Director in a Government Ministry receives large sums of bribes to approve applications which are irregular and invests Police Pension Funds for personal gains. He hides such cash using companies run by relatives or associates. These companies have bank accounts which exist as a front and such money is routed outside the country using these companies as a trade front.
This is preferred by launderers because PEPs have legit access to large sums of money and it reduces suspicions as to their being in possession of such money. Also PEPs are more likely to be granted visas and entry permits to different countries.
We have ways of checkmating money laundering but such ways have been bastardized. The bank is one of such ways. KYC (Know Your Customer) is merely a farce in these banks. These days, Customer Due Diligence is waived simply because the bankers are out to meet a target sum for the month to retain their jobs. It is an open secret that the bank aids the money launderers in hiding their loots too. Let bank managers set up units that do actual visitation and monthly updating of the actual location of companies in other to verify existence. Banks should also liaise with Corporate Affairs Commission to ensure the Companies and Non-Profit Organizations exists as they should and not on paper.
Secondly, Corporate Affairs Commission should revisit their registration categories. Peer Groups, Social strategy platforms and Charity organization should be separated as a matter of registration in order to know the organizations which should receive funds from foreign aids (Charity organizations) and those which should raise money for fostering whatever cause they believe in from within Nigeria (Social strategy platform). It would be easier to keep a track on the money that circulates and also to know the source of this money if this is done and a medium of actual accountability is set up.
Thirdly, the Corporate Affairs Commission should set up an effective system which de-lists companies automatically on their systems once there is a consistent deficit on annual returns for Four (4) Years. There should also be a Customer Due Diligence Unit in the Corporate Affairs Commission that checks out the addresses supplied by the Companies that are registered with them.
We have to stop pretending that terrorism is not in this country. The faster we realize that, the better it is. All holes through which terrorists are funded must be pluggged.
 Dionysios S. Demetis ‘Technology and Anti-money Laundering: A Systems Theory and Risk-based Approach’ (Edward Elgar Publishing, Cheltenham 2010) 7
 WH Muller, ‘Anti-Money Laundering—a Short History’ in WH Muller, CH Kalin & JG Goldsworth (eds) Anti-Money Laundering: International Law and Practice (Wiley, Chichester 2007) 3, 4