VZCZCXRO0930
RR RUEHMA RUEHPA
DE RUEHOS #0448/01 3190937
ZNR UUUUU ZZH
R 140937Z NOV 08
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 0291
INFO RUEHUJA/AMEMBASSY ABUJA 9937
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC

UNCLAS SECTION 01 OF 02 LAGOS 000448 
 
SENSITIVE 
SIPDIS 
 
STATE PASS OPIC FOR DERB, ZHAN, MSTUCKART, JEDWARDS 
STATE PASS TDA FOR LFITTS, PMARIN 
STATE PASS USAID FOR NFREEMAN, GBERTOLIN, GWEYNAND, SLAWAETZ 
STATE PASS EXIM FOR JRICHTER, KJACKSON, KJANIK 
DOC FOR 3317/ITA/OA/KBURRESS 
DOC FOR 3310/USFC/OIO/ANESA/DHARRIS 
DOC FOR USPTO-PAUL SALMON 
TREASURY FOR DFIELDS, AIERONIMO, RHALL, DPETERS 
TRANSPORTATION FOR KSAMPLE 
 
E.O. 12958: N/A 
TAGS: EFIN EINV ECON EAID PGOV NI
SUBJECT: NIGERIA: BANKS NEED HELP TO IMPLEMENT MONEY LAUNDERING LAW 
 
Ref: A) Lagos 409 
 
¶1. (SBU) Summary: The Money Laundering (Prohibition) Act (MLA) 2004 
sets strict reporting requirements on financial institutions in an 
effort to counter money laundering in Nigeria. Local banks 
established the Committee of Chief Compliance Officers of Banks in 
Nigeria (CCCOBIN) in 2007 as an industry self-help measure to 
improve compliance to the MLA.  However, the current regulatory 
system does not provide effective protection for whistleblowers, and 
banks are in need of technical and human capacity development 
assistance.  Some banks are allegedly complicit in the transaction 
of illicit moneys. End Summary. 
 
Law Regulates Financial Transaction 
----------------------------------- 
 
¶2. (U) The Money Laundering (Prohibition) Act 2004 (MLA) sets strict 
reporting requirements on Nigerian financial institutions for 
transactions of large sums.  The Economic and Financial Crimes 
Commission (EFCC) established the Nigerian Financial Intelligence 
Unit (NFIU) in 2004 as an enforcement agency for the MLA.  The MLA 
requires reporting to the NFIU within seven days any single 
transaction over USD 4,200 by an individual, USD 42,000 by a 
corporate body, and foreign transfer of funds exceeding USD 10,000. 
There is a fine of USD 8,400 per day past the seven day window for 
failing to comply with the reporting requirement.  The MLA also 
allows financial institutions, when suspicious about the legality of 
a transaction, to seek information from the customer about the 
origin, destination, and purpose of the transaction, and the 
identity of the beneficiary.  Regulatory authorities can place bank 
accounts involved in suspicious transactions under surveillance; and 
banks cannot invoke customer confidentiality as a ground for 
objection.  To counter the laundering of illicit funds through 
businesses, the MLA now requires businesses to report their returns 
starting six months after incorporation. 
 
CCCOBIN Promotes Compliance 
--------------------------- 
 
¶3. (U) In 2007, compliance officers from all 24 Nigerian commercial 
banks voluntarily came together to create the Committee of Chief 
Compliance Officers of Banks in Nigeria (CCCOBIN) as an industry 
self-help measure to better implement the MLA.  Sadiq Bello, CCCOBIN 
Chairman/ General Manager of Guaranty Trust Bank, and Pattison 
Boleigha, CCCOBIN Secretary/ General Manager of Access Bank, told 
EconOffs October 15 that the Committee meets monthly to discuss 
policy developments and ways to improve internal compliance 
capacity.  One key achievement was the establishment of a common 
platform for the opening of new accounts. 
 
Banks Lack Capabilities to Track 
Funds Outside of Financial System 
--------------------------------- 
 
¶4. (SBU) The enforcement of the MLA has driven illicit funds out of 
the formal financial system and into less formal and less regulated 
non-financial areas such as real estate development, hospitality 
businesses, and casinos, or out of the country altogether.  Bello 
and Boleigha said local banks currently lack the technical and human 
capacity to counter money-laundering activities and to trace the 
origins of illicit funds.  For instance, banks could not trace the 
cash that changed hands in the Nigeria Delta from illegal oil 
bunkering, which could be laundered in legitimate businesses or be 
used abroad to purchase arms for the Delta conflict. According to 
Boleigha, the high cost of purchasing monitoring software 
discourages financial institutions from upgrading existing systems 
or procuring new ones.  He also said banks lack appropriate resource 
materials to train their staff on how to identify suspicious 
transactions, obtain information from customers, and file timely and 
accurate reports in accordance with the MLA's requirements. 
According to media report, on October 28, EFCC Chairman Farida 
Waziri said that while banks have been compliant with the NFIU's 
reporting requirements, they have submitted incomplete reports in 
 
LAGOS 00000448  002 OF 002 
 
 
most cases.  Bello and Boleigha requested USG assistance in training 
compliance officers and providing training resource materials. 
 
No Protection for Whistle Blowing 
--------------------------------- 
 
¶5. (SBU) The CCCOBIN executives expressed concerns about the lack of 
protection for whistleblowers in the industry. Bello recounted 
stories of customers contacting and threatening bank management as 
little as one day after they were reported to the EFCC.  While the 
law provides for the punishment of EFCC officials who leak sensitive 
reporting information, no mechanism has been set in place to protect 
bankers from customers who trace the origin of their arrest or 
indictment, Bello emphasized.  Boleigha said banks are torn between 
customer satisfaction and following compliance procedures because 
most customers do not understand or appreciate the need for extra 
paperwork and documentation. To support the banks, the CBN and NFIU 
could issue public directives clearly listing laws and regulations, 
proffered Boleigha. 
 
Trawlers Association Says Banks "Complicit" in Piracy 
--------------------------------------------- -------- 
 
¶6. (SBU) Margaret Orakwusi, President of the Nigerian Trawlers 
Owners Association, told EconOff October 28 that the banks either 
were ineffective in countering or directly complicit in the 
facilitation of illicit money transfers through the system. (Note: 
Nigerian fishing trawlers have been hard hit by piracy, and the 
Trawlers Association purportedly had made ransom payments in recent 
months. (Ref A) End Note) Orakwusi said ransom payments (sums 
undisclosed) made in several separate piracy incidents were 
deposited in cash into accounts at three large local banks. 
According to Orakwusi, the bank tellers did not inquire as to the 
source and purpose of the large deposit as required by the MLA.  She 
had also heard stories of young bankers going directly to the 
militants and pirates to collect deposit money.  She contended that 
bankers are under intense pressure to increase their deposit 
portfolios, and, as a result, may be complicit in handling illicit 
monies. 
 
¶7. (SBU) Comment: Enforcement mechanisms, including safeguards for 
whistleblowers, are missing in the Nigerian anti-money laundering 
framework.  Lacking real support from the Nigerian regulatory 
authorities, local commercial banks need technical and human 
capacity assistance to improve and institutionalize their internal 
compliance systems.  Despite the MLA, our contacts suspect that 
money from illicit sources may be deposited in or transacted through 
most, if not all, the 24 banks in Nigeria's system.  The Federal 
Bureau of Investigation Legal Attache, based in ConGen Lagos, is 
tentatively planning a 2009 joint training course for both Nigerian 
law enforcement agencies and major Nigerian commercial banks 
regarding anti-money laundering and other topics. End Comment. 
 
¶8. (U) This cable has been cleared by Embassy Abuja. 
Blair