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‘Banks can do better in tackling financial crimes’

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The Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) is committed to fighting corruption, terrorism financing and money laundering across the ECOWAS sub region. The agency has established functional financial intelligence units in all ECOWAS member-states and strengthened financial institutions to report suspicious transactions to regulators. GIABA’s Head in Nigeria, Timothy Melaye, speaks with COLLINS NWEZE on the enormous threats posed by money laundering and terrorism financing to the economy, security and social life in the ECOWAS region and globally.

Can you tell us some of the steps the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) has taken to tackle money laundering across the West African sub-region?

The GIABA as an organisation has been working assiduously to cover all aspects relating to fight against money laundering and terrorist financing. Basically, we are working with all stakeholders and in doing that, we have initiated a lot of programmes that are very different from the level of stakeholders. We are working, as you are aware, with journalists and we think these poeple are veritable tools to pass information in terms of awareness reasons and agenda settings.

We are also working with the civil society organisations. We have established network of civil society organisations that are working in this area to raise awareness as well, and to confront and advocate in the areas of money laundering and terrorist financing. We have specific trainings for law enforcement agencies, the Customs, the Police, the Economic and Financial Crimes Commissions (EFCC) and border agencies across the region. We are training them to  address the gap within their area.

Are there further steps you are taking in that direction?

We did not stop there. We also have specific training for financial institutions, all the banks compliance officers. We have specific annual trainings for them in terms of what they need to do, for instance, in raising what we call the Suspicious Transaction Reports (STRs) for them to know when to submit those reports. We also have what we call Currency Transaction Reports (CTRs). These reports are raised by banks on suspicious activities of individuals and are submitted to Financial Intelligence Unit. Asides the bank, we have looked at the judiciary, just in August last year, we took Court of Appeal Judges and Justices of Supreme Court of member state to United States in Washington, for them to have first-hand experience of what other jurisdictions are doing. Well, this is the second round of that.

 Money laundering and terrorist financing, do they really pose a threat to ECOWAS countries?

Yes, money laundering and terrorist financing pose not only a threat, but are enormous threats, enormous challenges to the economy, to security, to social life in this region and globally. You will notice, for instance, no one needs explanation to know that terrorism is a major threat. You saw the number of lives that were lost in the northeast of Nigeria, in Mali, in Niger, even down to Burkina Faso and in Cote d’Ivoire. All these activities are of terrorist. Without funding it is impossible for them to execute their prospect. They use cars to operate, those cars were purchased with money.

So, if we do not deal with terrorist financing, we cannot deal with fight against terrorism itself. You will see the dearth of facilities and infrastructure in the region, some of them can be directly attributed to the activities of economic crime and financial crimes. We must fight money laundering, we must fight terrorist financing to have a sane society in this region and globally.

Financial institutions have been blamed for aiding these malpractices. Now, don’t you see them as a setback to this fight?

Yes, financial institutions will continue to be partners, that does not mean they are adequately doing what they should do, but they have improved overtime. The level of knowledge within the financial institutions across the region has greatly increased from what it used to be. Now, there is functional financial intelligence unit in all member states of ECOWAS. Therefore, they have also received capacity to collect, analyse and disseminate intelligence from financial information or suspicious transaction that come to them and banks have been strengthened to do that.

So, we have moved away from where we were, we are not yet where we want to be, but we are progressing. I will say financial institutions have made tremendous efforts and contributions in terms of the activities that are going on. That does not mean there are no bad eggs, that does not mean there are no institutions that are still covering up for criminals. But it is just that the system is having a self-check. If any criminal activity is conducted and researched or investigated  and you find a financial institution… for instance, if you get a man who is corrupt arrested and you find out that he has some money and by the time the money got to the bank, the financial institution did not file suspicious transaction report, which they supposed to file, that bank can be sanctioned.

If you look at our recent histories you will find that in the United States (US) that HSBC was fined $1.9 billion. In our region, hardly will any bank survive that kind of fine; fines will escalate in this region, sanctions will be proportionate, will be dissuasive and will be appropriate for the crime and if that increases and continues that way, there will be no incentive for any financial institution to hide or not to comply again.

There are countries that are not implementing the Financial Action Task Force (FATF) recommendations. What are the implications for such countries? And secondly, can a country implement all the 40 recommendations?

The FATF 40 recommendations are expected to be implemented by all member states and many countries have signed on to it and almost about 180 countries. So, any country that is not implementing should be sanctioned. Those sanctions are dissuasive enough for you not to comply. For instance, if a country is put on the list, public statement is issued on that country; so investors will not want to go there and corresponding banks of that particular country will not even be taken  serious.

No international transaction that anybody wants to do in that country will be effective, this is because the country is under one form of sanction or the other. So, no country will want to be sanctioned and countries are forced to comply because they want to avoid sanction. So, hardly will you find out any country that is a threat; that is not implementing. It is possible for countries to implement, but nobody is saying that you have the capacity and resources to implement all the 40 recommendations and the full standard that is expected, that is why we will have what we call the immediate outcomes.

There are 11 immediate outcomes and those ones are kind of essential areas and we have some that we consider. It is important for global security, so these are what we expect that each country will comply with. We will measure performance of evaluation based on the categories as we implement them and then each country is rewarded in terms of our own rating. Countries are rated based on that they are sanctioned.

What is Nigerian status in that category?

Nigeria’s mutual evaluation is on our website, the next one has not taken place yet.

But what is the last evaluation?

The reports are there and there are lots of recommendations that are involved, but the performance, I will tell you is not encouraging. The last one was long ago, it is a bit overtime because it was done in 2007 and the report came out in 2008. So, we are talking of about 10 years and things have changed drastically over that period of 10 years. It will be unjust for me to give you the result of Nigeria based on what happened 10 years ago. Over 10 years now, a lot of things and a lot of activities have taken place. A lot of identified gaps have been filled. The next one was supposed to commence last year or this year, but unfortunately it is not going to commence because Nigeria has applied for membership of FATF and that process has halted the evaluation pending when the FATF approves.

When is this application likely to take effect?

No fixed time. The application has been submitted to FATF. FATF has some process and procedures. Those processes are still undertaken, they were supposed to be in Nigeria last November, unfortunately that meeting has been shifted again because Nigeria has an issue with Edmond Group of FIUs and they wanted to see if this can be resolved before they can proceed with that process.

What advise do financial institutions give priority to at present?

According to the recommendations of the FATF, financial institutions are supposed to deal with two major issues, which concerns Customer Due Diligence and Know Your Customer. So, if they do that and they submit their own suspicious transactions report of foreign exchange, they maintain the fact that they need to identify their customers and do customer due diligence. If the banks can know their customers, they have addressed major challenges. And they submit their STRs as and when due, and they do not collude with criminals to hide resources, those are the expectations of the recommendations as they concern financial institutions.

GIABA has been in operation since 2000. Are there some major achievements that can be credited to it?

GIABA was established in 2000 by the authority of heads of states and governments of Economic Community of West Africa States (ECOWAS). But major operations started in 2005 and 2006. There were no major operations in the early years of operations,. But subsequently, GIABA has done quite well. For instance, when GIABA started operations, there were only two financial intelligence units in the region. Today, GIABA has helped all member states to have functional intelligence units. So, that is a major step taken.

GIABA grew from nowhere to become an associate member of FATF. GIABA competencies have brought it to do mutual evaluation of member states, which is usually done by FATF, the World Bank and International Monetary Fund (IMF). GIABA has trained accessory, built capacities to conduct evaluation of countries. GAIBA’s performance in the region has made non-ECOWAS members to start joining such Comoros Island, and Sao Tome and Principe. They left their own region and said, this is where they want to belong. GIABA has assisted in legislation drafting, review of legislative documents to support enactment of laws that are needed in the regions. We have identified sources, patterns and so on concerning terrorist financing in the region.

And it’s a specialised institution, and the Financial Action Task Force (FATF) regional body. The FATF is the global body responsible for building standards and recommendations to fight money laundering, terrorists financing and proliferation of small, light and weapons of mass destruction. Within the confine of this work, GIABA has a mandate to protect the economy and financial institutions of West African states from laundering of proceeds of crime and  to work with the FATF recommendations to ensure that terrorists financing is not happening within the region and by extension, across the world. That is the core mandate and responsibility of GIABA. Today in this region, we have raised consciousness about money laundering like no other organisation has done. This is why GIABA is considered as one of the champions of the ECOWAS region.

What is the biggest challenge GIABA is facing within the ECOWAS sub-region?

There is no political will in the region. We need more political commitment from the leaders. That does not mean they are not committed, but they need more of it. More political commitment in terms of driving process from leadership position.  Secondly, resources can never be enough; the challenges are daunting. The training required is huge, and our region is seen as low capacity region. The more knowledge we are able to pass to others depends on how much resources are available to us. Also, this region does not have good and structured database. If you require some data or information, they are hardly available.

Are there other specific challenges you are facing in Nigeria now?

Of course everywhere you see issues of criminality, there are challenges. Not only in Nigeria, but eventually in most African countries; corruption is high, trafficking is high, drug related offences are also high. We are trying to work with all relevant agencies. For instance, GIABA provided technical assistance to EFCC in Nigeria, and this is part of things to strengthen their capabilities to carry out their duties and encourage the leadership to provide the political will.

How sincere are the various governments across the region about fighting corruption and terrorist financing?

Low political will is not synonymous with sincerity or in sincerity. Low political will is about commitment in terms of allocation of resources, manpower and other issues that are related to that. For instance, we want to see a situation whereby government allocates adequate manpower, resources and attention to key issues about fighting corruption, money laundering and terrorist financing as well as other offences of money laundering. Sometimes, physical presence of top government official in a relevant meeting may be a political will. If you have a meeting and you see the President of a country or minister that has power to take major decisions that are politically willed. Not necessarily talking about sincerity or insincerity, there are those who are not sincere. It is not my position to identify them now. But the truth is that we expect more commitment and allocation of resources and attention from those taking decisions.

Are there steps you are taking to help government achieve better tax compliance?

It is fine for any country in the region, which decides to pursue adequate payment of taxes. Citizens do not only have rights, they also have obligations. Some of such obligations are for them to pay their taxes, adequately and as at when due. And any process or policy of government that drive that process is a welcome development. FATF 40 recommendations have added tax evasion as one of predicate offences of money laundering. It is right for government to pursue proper tax payment for everyone to be able to pay adequate tax and have the voice as a taxpayer to make demand on public service.

And GIABA, as an institution, has always advocated that every predicate offence on money laundering should be pursued vigorously. And if government decides to pursue payment of taxes, I think it is a commendable effort and every hand should be on deck to support it and ensure that it succeeds. Those, who evade taxes should know they are committing crimes, and the crime that is committed should be paid for.

There seem not to be many convictions on money laundering and corruption. What is the problem?

I think that should be left for each of the country’s criminal justice system to address because conviction is not a product of whether they were arrested, it is a matter of criminal justice system. And criminal justice system starts with issues of identifying them, prosecuting and convictions. It is a chain of actions. And the fact that there are no convictions bothers GIABA. Therefore, in 2013, we supported some institutions in the region with financial capacity to strengthen capacity of investigators and persecutors by providing trainings for them.

We also trained judges to enable them understand the processes and procedures for them to be able to secure convictions. It is not just to secure convictions when people have not committed a crime. That will be unfair on the people. It is to secure convictions where crimes are committed. We are training law enforcement agencies. We are training investigators, prosecutors and judges, so that we can end up letting no criminal escape and those, who have not committed crimes, should of course, be set free.

What advice do you have for governments and businesses across the West African sub-region?

My sincere message to businesses is that they should do business with conscience. Let business you are doing add to the society and not to destroy the fabric of the society. If terrorists engage in activities and they kill people, they do not identify your race or age. Bomb does not know who is who. Anybody can be hit, anybody can die in the process. Therefore, whatever you are doing, do it with conscience. If you are a businessman, contractor, and you have contract to execute for a school, for education, hospitals and you are part of those, who corrupt and destroy the system, one way or the other, it will affect you or member of your family.

So, let us do business with conscience. And if you are a public office holder, or government official, do the right thing. I must insist that government in the region must be people-serving. The purpose of government is to serve the people. Government  must be people-serving and not self-serving. We want to encourage them to do that. We are seeing changes, we are seeing improvements, that must be enhanced, increased and we will see the best out of it. That is how we can better and best our society.

 

 

The post ‘Banks can do better in tackling financial crimes’ appeared first on The Nation Nigeria.

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