BDCs scale up strategies to curb money laundering, terrorism financing

In the face of increasing threats posed by money laundering and terrorism financing to national development, members of the Association of Bureaux De Change Operators of Nigeria (ABCON) are deploying new strategies to tame the twin problem by ensuring that their channels are not used for illicit financial flows. SULAIMON OLANREWAJU reports.

While delivering a keynote address at the opening session of the 16th Conference of the Committee of Intelligence and Security Services of Africa (CISSA) in June this year, President Muhammadu Buhari put the blame for the rising underdevelopment and pervasive security challenge in Africa at the doorstep of illicit outflow of funds from the continent. According to the president, “Frankly, we may never know the true extent of the damage. Estimates, however, suggest that African countries lose over 60 billion US dollars annually due to illicit financial outflows, a staggering amount for a continent in dire need of development finance.”

The president also opined that the illicit outflow is usually laundered and deployed to funding terrorism, among other nefarious businesses.

But President Buhari is not the only one worried about the illicit flow and its effects, it is a global concern. The African Development Bank in a 2012 report states that money laundering and outflow of funds affect human development and is a major bulwark to economic growth and poverty reduction. A World Bank report states that “Illicit financial flows (IFFs) pose a huge challenge to political and economic security around the world, particularly to developing countries.” Similarly, a 2018 report by the Council on Foreign Relations with the title Global Governance to Combat Illicit Financial Flows states that “IFFs help make crime pay: they aid those associated with transnational organized crime to move and spend their ill-gotten gains. They are also integral to the financing of terrorist and insurgent groups, which threaten domestic and foreign security, imperil civilians and military personnel … Moreover, the ability to launder, stash, and spend funds overseas enables corruption, which can destabilize countries and regions. IFFs can also undermine security forces, rendering them less able to respond to threats of criminality and terrorism.”

The general consensus is that illicit fund is usually transferred to other countries for laundering through financial institutions, especially those involved in money transfer such as the bureaux de change (BDC).

However, BDC operators in Nigeria, being conscious of the threats posed by Money Laundering and Terrorist Financing (ML/TF) in Nigeria and on the continent, have stepped up their capacity development with a view to curbing the twin problem.

According to the President of the Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, the association is equipping the over 4,500 BDCs in the country with the right technology and skills to tackle illicit financial flows within the country.

He added that the BDCs meet regularly with regulators, government agencies/officials and experts to analyze, monitor and identify strategies for the effective implementation of Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) measures.

Gwadabe said in furtherance of the association’s bid to ensure that its members comply with the international regulations concerning money laundering and terrorism financing, it would be playing host to the Financial Action Task Force (FATF), Mutual Evaluation team later this month.

The FATF, an inter-governmental body, was established in 1989 with the mandate to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

According to the ABCON president, the FATF assessment was designed to evaluate the implementation and effectiveness of the laws, regulations or other measures required to ascertain the effectiveness of the AML/CFT regime. The mutual evaluation will equally provide information on the progress made by Nigeria in meeting its obligations towards the FATF recommendations.

Gwadabe disclosed that ahead of the FATF team visit in September, ABCON, in collaboration with the Central Bank of Nigeria (CBN), is organising a sensitisation workshop for over 4,500 licensed BDCs in Nigeria. The workshop will hold in the six geopolitical zones.

He said that as the global body that sets standard for AML/CFT efforts, the FATF team will assess banks and other financial institutions’ compliance with the AML/CFT measures.

Like other previous evaluations for Nigeria, the FATF team will carry out checks at the branches of selected banks and BDCs across the country, adding that compliance at the airports and land borders may also come under their scrutiny.

Gwadabe said Nigeria, which has been one of the regional champions mentoring other member states in the development of their AML/CFT systems, has largely addressed its action plan by enacting legislation to criminalise money laundering and terrorist financing. The country is also implementing procedures to identify and freeze terrorist assets and ensuring that customers’ due diligence requirements apply to all financial institutions.

Gwadabe said BDCs have met a number of compliance requirements specified by FATF and local regulators. The BDCs have conducted enhanced due diligence, a major compliance requirement on some high-risk customers. The collation and reporting of foreign currency transactions and suspicious transactions by BDCs are now fully automated.

The ABCON had in February, launched its Live Run Automation Portal in Lagos. The technology automates all BDC operations with those of Nigeria Inter-Bank Settlement System (NIBSS), Nigeria Financial Intelligence Unit (NFIU) and the Central Bank of Nigeria (CBN) to improve the level of compliance of the BDCs with set regulations.

The platform allows BDCs send their reports online real time, thereby removing the challenge of manual rendition of reports that has been confronting operators for decades. The project is also boosting the perception of BDCs in Nigeria especially in the eyes of international investors.

Gwadabe said the world is going digital, and BDC operators under his leadership are committed to staying ahead of the competition by deploying time-tested technology to deliver effective services to customers and ensure compliance. He said the Live Run portal has enhanced BDCs compliance with set regulations and promoted market integrity. According to him, the portal has sustained transparent transactions in the BDC corridor, boost the morale of its members and ensure their continuous operations.

The ABCON chief said the group had fully upgraded its Information Communication Technology (ICT) platforms, to achieve full digitisation of BDCs operations in line with its goal of sustaining transparent operation and prompt rendition of weekly returns to regulatory agencies.

He added that ABCON fully aligns with the statutory provisions of the Money Laundering Prohibition Act, 2011 (as amended), the CBN’s AML/CFT Regulations, 2013 and recommendations of the FATF.

The ABCON boss said that the sorry state of public institutions within the ECOWAS region is disturbing. In many public schools, students learn sitting on the floors, the hospitals lack basic drugs, while the road networks are death traps. According to him, these societal ills thrive where corruption and illicit financial flows are rampant.

He said that ABCON was aware of the growing concerns over illicit financial flows from West African economies, and the need to tackle them by key stakeholders within the region.

He acknowledged the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA’s) 2016 – 2020 Strategic Plan, which showed that the Global Financial Integrity (GFI), the World Bank, the African Development Bank (AfDB), the Africa Progress Panel and the African Union’s High Level Panel on Illicit Financial Flows from Africa all paint a grim profile of the problem.

A joint study conducted by the GFI and the AfDB showed that between 2000 and 2009, about $30.4 billion was illicitly transferred out of Africa each year. Over a longer period of 30 years, calculated from 1980, the resource drain was between $1.2 and $1.3 trillion. Outflows from West and Central Africa stood at (37 per cent), followed by North Africa (31 per cent) and Southern Africa (27 per cent). The IFFs are derived from various offences of money laundering.

The ABCON Foreign Exchange Retailers Institute has also been proposed and will soon be floated by the leadership of the association. The institute falls within the constitutional mandate of ABCON and will be focused on bridging the knowledge gap among operators and promoting capacity building for global competitiveness.

“We therefore urge the Federal Government to mandate relevant authorities such as the Central Bank of Nigeria (can), Corporate Affairs Commission (CAC), Federal Ministry of Education and Federal Ministry of Justice to grant the institute the necessary approval to enable commence operation,” Gwadabe said.

ABCON has, on several occasions, solely organised training programmes for its members, and at other times, partnered NFIU and the EFCC to build capacity for operators. Through the training programmes, BDC operators have been educated on how they can help in tackling money laundering, terrorist financing and the benefits of keeping records of their transactions.

Recently, ABCON organized an anti-money laundering training in conjunction with NFIU and EFCC in Lagos to familiarize BDCs with the process of money laundering — the criminal business used to disguise the true origin and ownership of illegal cash — and the laws that make it a crime.

Speaking during the sensitisation programme against money laundering and terrorism financing campaign at MM2, Lagos, which was attended by many BDC operators, the Acting Chairman, EFCC, Ibrahim Magu, called for continuous sensitisation on issues around AML/CFT reporting to improve transparency in BDCs operations.

He said the EFCC would continue to campaign for financial integrity and transparency in BDCs’ operations. Other stakeholders at the event also spoke on the use of BDCs for illicit political transactions, illegal border cash evacuation, reporting of suspicious transactions, fraud accounts transactions and cash dollar deposits on domiciliary accounts.

• Off shore banking and money laundering (2)

ABCON’s goal for teaming up with the NFIU and EFCC is to ensure that BDCs are not used to launder funds by Politically Exposed Persons (PEPs). The association plans to upscale BDCs’ compliance with the AML/CFT for Banks and Other Financial Institutions in Nigeria, Regulations 2013. The series of capacity building engagements have helped BDCS to understand how to raise and submit both the Suspicious Transaction Reports (STRs) and Currency Transaction Reports (CTRs) to regulators.

ABCON has continued to ensure that BDCs file their reports as and when due. They file reports on all transactions from N10 million for companies and N5 million for individuals. The reports are sent on a weekly basis NFIU, CBN and EFCC. The BDCs also do Know Your Customer (KYC) and due diligence reports as well as the Daily Transaction Returns (DTR) report, which gives details of the total sales made for the day by the BDC and comes in as DTR 202, DTR 217, DTR 305 and DTR 315.

The DTR 217 return gives the information of the customers of whom the forex was sold to. The information contained in DTR 217 includes the name, the international passport number, Bank Verification Number, address, TIN number, email address, among others, while DTR 305 provides details of the customers as well their destination and reason for the purchase of forex. The total amount of forex sold to them is also mentioned with the transaction date.

The DTR 315 tells BDCs’ opening balance, amount purchased in forex, the equivalent in naira and the rate of purchase, amount sold in forex, the equivalent in naira and the selling rate as well as the closing balance.

The Monthly Transaction Returns (MTR) also known as the MTR returns is a compilation of the daily and is sent to the CBN Trade and Exchange Department. It also comes in four parts MTR202, MTR217, MTR 305 and MTR 315. It is pertinent to note that these returns as described above are rendered in soft and hardcopies to the CBN.

Gwadabe said ABCON’s primary goal is to ensure that its members comply with all regulations, assuring that this would be sustained.

He said, “We have internal mechanisms that are always deployed to punish erring operators. We want to continually ensure that BDCs provide liquidity at the retail end of the market and also share intelligent information with government, whenever we have such information. We have also come to realize that knowledge of compliance makes the job of security operative easier.”

Gwadabe added that ABCON also ensures that BDCs provide liquidity at the retail end of the forex market and also share intelligent information with government in the overall interest of the financial system.