MEDIA reports this week indicated that the Central Bank of Nigeria (CBN) and the Financial Reporting Council of Nigeria (FRC) sanctioned four commercial banks between January and June for money laundering and various infractions. The apex bank punished the banks for failing to comply with its Know-Your-Customer guidelines. The banks were asked to pay sums ranging from N10 million to N2 million for, among other things, violating the Anti-Money laundering/Combating the Financing of Terrorism regulations.
They were equally punished for other offences such as failure to comply with anti-money laundering requirements and the CBN’s manual of operations for fund transfer, as well as late resolution of customer complaints and deficiency in account documentation/late records retrieval. The banks however insisted that they remained committed to fighting all forms of financial crime, including money laundering, terror financing, bribery and corruption and had continually implemented a framework for the prevention of the financing and proliferation of weapons of mass destruction.
The country’s money deposit banks are indeed not new to infractions and sanctions. For instance, in August 2018, the CBN wielded the big stick on mobile telecoms firm, MTN Nigeria Communications Limited, and four commercial banks for alleged financial infractions. The apex bank wrote to MTN Nigeria demanding a refund of about $8.13 billion allegedly repatriated illegally out of Nigeria. The affected banks were asked to refund various amounts totalling N5.87 billion. The banks were accused of committing “flagrant violation of extant laws and regulations of the Federal Republic of Nigeria, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and the Foreign Exchange Manual, 2006.”
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To all intents and purposes, the apex bank’s latest sanctions are no more than a kiss, not even a slap, on the wrist. Going by the sanctions, the highest being N10 million and the lowest N2 million, there is nothing that could conceivably deter the banks from the very serious offences of money laundering in the foreseeable future. If anything, the sanctions convey the unfortunate, although admittedly accurate, view that the Nigerian state is wired to protect the rich and oppress the poor. Asking banks that are reportedly making billions of naira from financial infractions to pay as low a fine as N2 million is not a reasonable way of curbing such crimes. Conversely, private individuals involved in money laundering are forced to pay for their crimes. They forfeit the proceeds of their crime to the government and serve jail sentences. However, corporate organisations are committing the same crimes and getting away with them. Truth be told, the banks continue to do these things because the penalty is quite cheap. And that, precisely, is where the problem lies.
Punishment for financial crimes, by any definition, ought to be costly. For instance, it is highly unlikely that MTN Nigeria will be involved in the practices for which it paid very dearly in the near future, or ever again. Therefore, to really serve as deterrent, the sanctions meted out to money deposit banks must be severe. They ought to really deter. In addition, those responsible for such infractions ought to be made personally liable. That way, they would avoid such crimes in the future if they ever get to the same positions where they perpetrated the crimes. They should be named and shamed. If there are lacunas in the extant laws that are being exploited to perpetuate these crimes, such lacunas must be addressed through legislation. In addition, the system must be tinkered with in such a way that whoever emerges as Governor of the CBN has not engaged in financial malpractices at any time. That way, those in charge of the money deposit banks would be aware of the fate that awaits them if they fail to play by the rules.
As a matter of fact, not a few Nigerians feel that it is interested parties in the banks that are made CBN Governors. That impression needs to be erased.