VZCZCXYZ0000
OO RUEHWEB

DE RUEHUJA #0236/01 0361414
ZNR UUUUU ZZH
O 051414Z FEB 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2019
RUEAWJA/DEPT OF JUSTICE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUEHOS/AMCONSUL LAGOS 8690

UNCLAS ABUJA 000236 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR INL/AAE 
JUSTICE FOR OIA, AFMLS, AND NDDS 
TREASURY FOR FINCEN 
DEA FOR OE, OI AND OC 
LAGOS FOR DEA AND FBI 
 
E.O. 12958:  N/A 
TAGS: EFIN SNAR KTFN KCRM NI
SUBJECT: NIGERIA: 2007-2008 INTERNATIONAL NARCOTICS CONTROL STRATEGY 
REPORT (INCSR) PART II, MONEY LAUNDERING AND FINANCIAL CRIMES 
 
REF: 07 STATE 138226 
 
¶1. Although the Federal Republic of Nigeria is not an offshore 
financial center, Nigeria's large economy is a hub for the 
trafficking narcotics and other contraband. Nigeria is also a center 
of criminal financial activity, reportedly for the entire continent. 
Individuals and criminal organizations have taken advantage of the 
country's location, weak laws, systemic corruption, lack of 
enforcement, and poor socio-economic conditions to strengthen their 
ability to perpetrate financial crimes at home and abroad. Nigerian 
criminal organizations are adept at devising new ways of subverting 
international and domestic law enforcement efforts and evading 
detection. Their success in avoiding detection and prosecution has 
led to an increase in many types of financial crimes, including bank 
fraud, real estate fraud, and identity theft. In addition, advance 
fee fraud, also referred to internationally as "419" fraud, in 
reference to the fraud section in Nigeria's criminal code, is a 
lucrative financial crime that generates hundreds of millions of 
illicit dollars annually for criminals. Despite years of government 
effort to counter rampant crime and corruption, Nigeria continues to 
be plagued by crime. The Economic and Financial Crimes Commission 
(EFCC) along with the Independent Corrupt Practices Commission 
(ICPC) and the improvements in training qualified prosecutors for 
Nigerian courts yielded some successes in 2006 and 2007. 
¶2. In June 2001, the Financial Action Task Force (FATF) placed 
Nigeria on its list of non-cooperative countries and territories 
(NCCT). In December 2002, Nigeria enacted two pieces of legislation 
to remedy the deficiencies. It passed an amendment to the 1995 Money 
Laundering Act extending the scope of the law to cover the proceeds 
of all crimes. The Government of Nigeria (GON) also passed an 
amendment to the 1991 Banking and Other Financial Institutions 
(BOFI) Act expanding coverage of the law to stock brokerage firms 
and foreign currency exchange facilities, giving the Central Bank of 
Nigeria (CBN) greater power to deny bank licenses, and allowing the 
CBN to freeze suspicious accounts. In 2004, the Economic and 
Financial Crimes Commission (Establishment) Act, established the 
Economic and Financial Crimes Commission (EFCC), the body that 
investigates and prosecutes money laundering and other financial 
crimes, and coordinates information sharing. The Economic and 
Financial Crimes Commission Act also criminalizes the financing of 
terrorism and participation in terrorism. Violation of the Act 
carries a penalty of up to life imprisonment. In May 2006, the FATF 
visited Nigeria to conduct an evaluation of the revisions made to 
the government's AML regime. FATF recognized that the GON had 
remedied the major deficiencies in its anti-money laundering regime 
and removed Nigeria from the NCCT list. 
 
¶3. Since its inception in April 2004, the EFCC has had the mandate 
to investigate and prosecute financial crime. It has recovered or 
seized assets from people guilty of fraud both inside and outside of 
Nigeria, including a syndicate that included highly-placed 
government officials who were defrauding the Federal Inland Revenue 
Service (FIRS). Several influential individuals have been arrested 
and are currently awaiting trial. EFCC members also embarked upon a 
campaign to identify and prosecute former officials. Some EFCC 
members have been killed for their efforts to expose and enforce the 
laws against corruption and financial crime. 
 
¶4. The National Assembly passed the Money Laundering (Prohibition) 
Act (2004), which applies to the proceeds of all financial crimes. 
Nigeria also employs the 1995 Foreign Exchange (Monetary and 
Miscellaneous Provisions) Act.  The legislation gives the CBN 
greater power to deny bank licenses and freeze suspicious accounts. 
This legislation also strengthens financial institutions by 
requiring more stringent identification of accounts, removing a 
threshold for suspicious transactions, and lengthening the period 
for retention of records. Money laundering controls apply to banks 
and other financial institutions, including stock brokerages and 
currency exchange house, as well as designated non-financial 
businesses and professions (DNFBPs). These institutions include 
dealers in jewelry, cars and luxury goods, chartered accountants, 
audit firms, tax consultants, clearing and settlement companies, 
legal practitioners, hotels, casinos, supermarkets and other 
businesses that the Federal Ministry of Commerce designates as 
obliged. The EFCC Act provides safe-harbor provisions to obliged 
entities. Nigeria has no secrecy laws that prevent the disclosure of 
client and ownership information by domestic financial services 
companies to bank regulatory and law enforcement authorities. 
 
¶5. The Special Control Unit against Money Laundering (SCUML), is a 
special unit in the Ministry of Commerce which monitors, supervises, 
and regulates the activities of all DNFBPs. Oversight, however, has 
reportedly not been very rigorous or effective. Amendments to the 
2004 EFCC Act gave the EFCC the authority to investigate and 
 
prosecute money laundering, enlarged the number of EFCC board 
members, enabled EFCC police members to bear arms, and banned 
interim court appeals that hinder the trial court process. 
 
¶6. The Nigerian Financial Intelligence Unit (NFIU, established in 
2005), derives its powers from the Money Laundering (Prohibition) 
Act of 2004 and the Economic and Financial Crimes Commission Act of 
¶2004. Housed within the EFCC, it is the central agency for the 
collection, analysis and dissemination of information on money 
laundering and terrorism financing. The NFIU is a significant 
component of the EFCC, complementing the EFCC's directorate of 
investigations. It does not carry out its own investigations. Legal 
provisions give the NFIU power to receive suspicious transaction 
reports (STRs) submitted by financial institutions and designated 
non-financial businesses and professions.  The NFIU also receives 
reports involving the transfer to or from a foreign country of funds 
or securities exceeding $10,000 in value. All financial institutions 
and designated non financial institutions are required by law to 
furnish the NFIU with details of their financial transactions. 
 
¶7. The NFIU fulfills a crucial role in receiving and analyzing STRs. 
As a result of the NFIU's activities, banks have improved both their 
timeliness and quality in filing STRs reported to the NFIU. The NFIU 
has access to records and databanks of all government and financial 
institutions, and it has entered into memoranda of understandings 
(MOUs) on information sharing with several other FIUs. In 2006, the 
NFIU received 3,772,843 currency transaction reports (CTRs). Out of 
the 47 cases the NFIU developed, 12 investigations are ongoing, and 
the NFIU disseminated 18 and placed 10 under monitoring. The NFIU 
closed seven in-house cases. Because the disseminated cases are 
still under investigation, no formal feedback came from stakeholders 
for either 2006 or 2007. There were 73 money laundering convictions 
from January 2005 through October 2006. The trial court process has 
improved after several experienced judges received assignations 
specifically to handle EFCC cases; encouraged, EFCC officials have 
brought more cases to court. Additional information for 2007 is not 
available. 
 
¶8. Due to the activities of the EFCC, the enactment of new laws, and 
a public enlightenment campaign, crimes such as bank fraud and 
counterfeiting have been reported and prosecuted, sometimes for the 
first time. The EFCC is the agency with the most capacity to 
effectively investigate and prosecute financial crimes, including 
money laundering and terrorist financing. The EFCC coordinates 
agencies' efforts in pursuing financial crime investigations.  In 
addition to the EFCC, the National Drug Law Enforcement Agency 
(NDLEA), the Independent Corrupt Practices Commission (ICPC), and 
the Criminal Investigation Department of the Nigeria Police Force 
(NPF/CID) are empowered to investigate financial crimes. Reportedly, 
the Nigerian Police Force is incapable of handling financial crimes 
because of alleged corruption and poor institutional capacity. 
 
¶9. In 2007, the EFCC marked significant successes in combating 
financial crime. Through EFCC efforts, a former inspector general of 
police was arrested and prosecuted for financial crimes valued at 
over $13 million. The GON seized his assets and froze his bank 
accounts. Currently serving a prison sentence, he still faces 92 
charges of money laundering and official corruption. Five former 
state governors are under investigation for money laundering. The 
EFCC is working with the FBI on a case involving a group of money 
brokers laundering money through banks in the United States. In 
2006, the EFCC received a surge of petitions and leads provided by 
whistleblowers. Reportedly, many of these alleged abuses of office 
involved politically exposed persons (PEPs) and/or their 
collaborators. As the period coincided with preparations for the 
general elections in 2007, some of the investigations politically 
charged. The Legal and Prosecution Unit, responsible for the 
prosecution of all cases, is examining 437 of these cases for 
possible prosecution. The Unit prosecuted several high profile cases 
involving powerful and well connected persons and their associates. 
 
 
¶10.  The EFCC filed 588 cases between 2006 and mid-2007.  In 2007, 
the Legal Unit had obtained 53 convictions by mid-year. 
Investigations led to the recovery of approximately 30 Billion Naira 
(approximately $259 million). Suspects returned several billion when 
it became apparent that the Commission was about to expose the 
abuses. Some governors were arrested for laundering their state 
government funds. The Executive Chairman, appearing before the 
Senate to present a report of the Commission's activQies, revealed 
allegations of corrupt practices and abuse of office reportedly 
associated with 31 out of the 36 then serving Governors. Some of 
these Governors had a constitutional immunity guaranteed that 
expired in May 2007.  They are now standing trial in various courts 
 
for various offenses including money laundering. 
 
¶11. While the NDLEA has the authority to handle narcotics-related 
cases, it does not have adequate resources to trace, seize, and 
freeze assets. Cases of this nature are usually referred to the 
EFCC. Depending on the nature of the case, the tracing, seizing, and 
freezing of assets may be executed by the EFCC, NDLEA, NPF, or the 
ICPC. The proceeds from seizures and forfeitures pass to the federal 
government, and the GON uses a portion of the recovered sums to 
provide restitution to the victims of the criminal acts. The banking 
community is cooperating with law enforcement to trace funds and 
seize or freeze bank accounts. Since its establishment the EFCC has 
reportedly seized assets worth $5 billion. 
 
¶12. Section 20 of the 2004 EFCC Act provides for the forfeiture of 
assets and properties to the federal government after a money 
laundering conviction. Foreign assets are also subject to 
forfeiture. The properties subject to forfeiture are set forth in 
EFCC Act Sections 24-26, and include any real or personal property 
representing the gross receipts a person obtains directly as a 
result of the violation of the act,  or traceable to such receipts. 
They also include any property representing the proceeds of an 
offense under the laws of a foreign country within which the offense 
or activity would be punishable for more than one year. All means of 
conveyance, including aircraft, vehicles, or vessels used or 
intended to be used to transport or facilitate the transportation, 
sale, receipt, possession or concealment of the economic or 
financial crimes is likewise subject to forfeiture. Forfeiture is 
possible only under criminal law. There is no comparable law 
governing civil forfeiture, but the EFCC has established a committee 
addressing this deficiency by drafting legislation. 
 
¶13. The EFCC has the authority to prevent the use of charitable and 
nonprofit entities as money laundering vehicles, although it has not 
reported any cases involving these entities. 
 
¶14. Nigerian criminals initially made the advance fee fraud scheme 
infamous. Today, nationals of many African countries and from a 
variety of countries around the world also perpetrate advance fee 
fraud. While there are many variations, the main goal of 419 frauds 
is to deceive victims into the payment of a fee by persuading them 
that they will receive a very large benefit in return, or by 
persuading them to pay fees to "rescue" or help a newly-made 
"friend" in some sort of alleged distress. A majority of these 
schemes end after the victims have suffered monetary losses, but 
some have also involved kidnapping, and/or murder. Perpetrators use 
the internet to target businesses and individuals around the world. 
 
¶15. The Government of Nigeria continued throughout 2007 with its 
effort to eradicate 419 crimes.  GON efforts previously led to the 
successful prosecution and conviction of a number of them, but the 
problem is far from over. Following the promulgation of the Advance 
Fee Fraud Act of 2006 the EFCC held an interactive session with 
stakeholders.  The EFCC also briefed cyber cafe operators, business 
centers, internet service providers, telecommunication companies and 
banks on their responsibilities under the new law. One of the 
requirements is to register their businesses with the EFCC. To keep 
pace with the sophistication with which the fraudsters operate, the 
EFCC deployed interception technology to enhance the investigation 
of crimes particularly those committed through cyberspace. The 
Advance Fee Fraud Unit burst several employment, credit card, and 
e-payment scams, shut down several domains and cloned websites, 
raided residential houses, seized computers, and blocked fraudulent 
e-mail addresses, telephone lines and faxes associated with cyber 
crimes. Although the EFCC has tried to combat 419-related cyber 
crimes, there have been few recorded successes as a result of its 
cyber crime initiatives. 
 
¶16. The EFCC's success in investigating and prosecuting financial 
crime, especially high-level corruption, has brought it both the 
support of the international community and the ire of corrupt 
officials. In December 2007, the Government of Nigeria reassigned 
the EFCC Chairman, the country's highest ranking and most publicly 
visible anti-corruption official, Nuhu Ribadu, to a year-long 
training course. This reassignment coincides with the high-profile 
trials of several officials, including seven former governors. 
Ribadu has served as the face of Nigerian AML/CTF efforts, and his 
removal could undermine the perception of the GON's commitment to 
fighting corruption. The reassignment of Ribadu may also impact the 
NFIU's autonomy and its ability to act independently. 
 
¶17. Nigeria criminalized the financing of terrorism under the 
Economic and Financial Crimes Commission (Establishment) Act of 
¶2004. The EFCC has authority under the act to identify, freeze, 
 
seize, and forfeit terrorist finance-related assets. Nigerian 
financial institutions periodically receive the UNSCR 1267 Sanctions 
Committee's consolidated list, but have not yet detected a case of 
terrorist financing laundered through the banking system. 
 
¶18. Nigeria is a party to the 1988 UN Drug Convention, the UN 
Convention against Transnational Organized Crime, the UN 
International Convention for the Suppression of the Financing of 
Terrorism, and the UN Convention against Corruption. Nigeria has 
also ratified the African Union Convention on Preventing and 
Combating Corruption. Nigeria ranks 147 out of 180 countries in 
Transparency International's 2007 Corruption Perceptions Index. 
 
¶19. The United States and Nigeria have a Mutual Legal Assistance 
Treaty, which entered into force in January 2003. Nigeria has signed 
memoranda of understanding with Russia, Iran, India, Pakistan and 
Uganda to facilitate cooperation in the fight against narcotics 
trafficking and money laundering. Nigeria has also signed bilateral 
agreements for exchange of information on money laundering with 
South Africa, the United Kingdom, and all Commonwealth and Economic 
Community of West African States countries. The EFCC worked with 
foreign partners to raid notorious cyber cafes to curtail the 
activities of the 419 fraudsters. The EFCC collaborated with the 
United States Postal Services and the UK Serious and Organized Crime 
Agency (SOCA) to intercept over 15,000 counterfeit checks. A 
collaboration scheme between the EFCC, the United States, the UK and 
the Dutch was constituted to more effectively address the problem of 
international fraud including identity theft and e-marketing fraud. 
Nigeria is a member of the Intergovernmental Task Force against 
Money Laundering in West Africa (GIABA), a FATF-style regional body. 
GIABA's Director General holds the Directorship General. The NFIU is 
a member of the Egmont Group. 
 
¶20. The Government of Nigeria continued to pursue money laundering 
both within and outside the country in 2007. Nigeria should continue 
to pursue its anti-corruption program and support both the ICPC and 
EFCC in their mandates to investigate and prosecute corrupt 
government officials and individuals.  Nigeria should take steps to 
ensure the autonomy and independence of those entities. The Special 
Control Unit Against Money Laundering (SCUML) should strengthen its 
supervision of designated non-financial businesses and professions 
by transferring supervisory authority from the Ministry of Commerce. 
The GON should continue to engage with the FATF and other relevant 
international organizations to identify and eliminate remaining 
anti-money laundering deficiencies. Nigeria should ensure that the 
Police Force has the capacity to function as an investigative 
partner in financial crime cases, as well as work to eradicate any 
corruption that might exist within that and other law enforcement 
bodies.  Nigeria should continue to support the EFCC's efforts, 
including drafting a law for civil forfeiture provisions to the 
AML/CTF framework, and pursuing those who commit financial crime, 
regardless of political status. Nigeria should continue towards 
implementation of a comprehensive AML regime that promotes respect 
the rule of law; willingly shares information with foreign 
regulatory and law enforcement agencies; is capable of thwarting 
money laundering and terrorist financing; and maintains compliance 
with all relevant international standards. 
 
SANDERS