Is Nigeria Winning the War Against Currency Trafficking?

13 Jan 2013

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EFCC Chairman, Ibrahim Lamorde

As operatives of the Economic and Financial Crimes Commission (EFCC) continue to haunt currency traffickers at the nation’s airports, economic watchers say it is a matter of time for the impact of currency trafficking to start manifesting in the economy, especially in the manufacturing sector, as proceeds of the illegal business are emerging as slush funds for smugglers, reports Festus Akanbi

There are concerns in recent times that the rising cases of currency trafficking in Nigeria will deal more blows to the nation’s economy in general and the manufacturing sector in particular. Economic affairs commentators who raised the alarm said as more foreign exchange is smuggled out of the country, almost on a daily basis, the Nigerian money market is the immediate casualty as the criminal activity is capable of draining the nation’s stock of foreign exchange.

They described the sustained relative stability in the foreign exchange market and the rising fortune of the nation’s foreign reserves as temporary if the illegal fund transfer is not checked, given the attendant pressure, which currency trafficking will bring to the system.

Era of Smuggling
Another worry is the fact that some of the smuggled hard currencies are used to fund importation of banned goods and items in the country. This is against the backdrop of the Nigerian Customs Service’s seeming loss of the battle against smuggling.  It is therefore feared that some of these items are purchased in foreign lands through illegal fund transfer in view of the difficulty in accessing funds for such banned goods through conventional banks.

The immediate fallout of this kind of unrestrained smuggling is dumping and the attendant crowding of local manufacturers in Nigeria. Today, banned goods like used tyres, some age grades of vehicles, textiles, cement and other essential commodities easily find their ways into the Nigerian market despite the efforts of the Customs service.

Analysts said with the noose tightened on banks, it is very unlikely if any of the money deposit banks could fund such illegal businesses. A report by the World Bank on the level of illegal imports into Nigeria says on the average, goods worth $5 billion (N750 billion) are smuggled into the country from the Republic of Benin alone on a yearly basis.

Besides, the report published in 2010 said up to 15 per cent of Nigeria‘s total imports are smuggled into the country through Benin.
The report, which incorporates some aspects of other West African countries‘ trade trends, said, “There is enough evidence that over $400 million or more than one quarter of the current revenues collected by the Nigerian Customs Service could be collected on top of the current revenues, if the trade restriction would be adjusted to the current practices (for a limited number of products) in the sub-region.”
The report is entitled- “How Nigeria‘s Trade Policy Facilitates Unofficial Trade and Impacts Negatively Nigeria‘s Customs Efficiency and Economy.” Two leading experts of the World Bank, Gaël Raballand and Edmond Mjekiqi both of the African Transport Unit authored the report.

The report, which is believed to have informed recent lifting of the ban on the importation of some classes of goods into the country, stressed that opening Nigerian borders to imports would raise revenue generated by the Customs from import tariffs by as much as $400 million.

Cash Limit
Instructively, travellers leaving Nigeria are statutorily required to declare cash in excess of $10,000. However, under the provision of the Money Laundering Act, the onus is on the person making the declaration to explain the source of the excess cash and the reason for the export. But commentators said several million of foreign currencies are moved in and out of the country on a daily basis by people whose activities cannot pass the test of the regulatory authorities, were they ready to submit themselves for examination.

A source from the banking industry admitted that the involvement of bank officials in the shady deals was one of the factors sustaining cash trafficking in Nigeria.

For instance, in December 2009, a manager with the now defunct Bank PHB, Mrs. Emem Etuk, was apprehended at the Lagos airport with about $3 million, which she claimed was sourced from a Bureau De Change. She was alleged to also be the account officer for Akwa Ibom State Government’s account with the bank.

According to data sourced from the Economic and Financial Crimes Commission (EFCC), currency smuggling has been on the increase since September last year, with a higher percentage of arrests made at the Mallam Aminu Kano International Airport Kano, as most of the suspects were heading for Dubai, in the United Arab Emirate.

EFCC believed that “Globally, bulk cash smuggling is usually associated with proceeds of crime, where illegitimately earned funds are processed outside the banking system”.

According to an economist Henry Boyo, the more recent series of arrests confirm that currency smuggling and money laundering are still thriving businesses in Nigeria. He noted that the CBN was not decisive enough in its bid to effectively nip the operations of currency traffickers in the bud, saying the apex bank’s policies, ironically, liberally fund the foreign exchange sources for currency traffickers, smugglers and money launderers.

“The truth, of course, is that the huge sums of money trafficked were most certainly purchased from the various BDCs, to whom the CBN regularly disburses hundreds of millions of dollars every month! Indeed, liberal market dollar supply was one of the policy support instruments demanded by the IMF and the London and Paris Credit Clubs before Nigeria’s controversial debt exit, which fleeced over $12bn from our tattered pockets in 2006, in the name of debt relief,” he argued.

Harvests of Arrests
On September 27, 2012, one Abubakar Sheriff Tijani, a suspected bulk cash smuggler, carrying $7,049.444 was intercepted by EFCC operatives at the Murtala Mohammed International Airport, Ikeja, Lagos en route Dubai, United Arab Emirates.

Three days later, one Alhaji Tasiu Ilu Kura was arrested by operatives of the commission with $700,000 (about N112m) at the Mallam Aminu Kano International Airport, Kano on September 30. The suspect who hails from Kura Local Government in Kano State was also on his way to Dubai, United Arab Emirates.

On October 17, 2012 another suspect, Idris Hamza, was arrested with $27,000.00 at the Aminu Kano International Airport, Kano but he declared only $3,000.00.

Also, on the same day, one Umar Musa Kibiya was picked up at the Aminu Kano International Airport, Kano, for false declaration of fund and illegal possession of $80,000 concealed in his bag. He claimed he was on a business trip to Dubai but only declared $40,000.00.

Another dimension was brought into the illegal deal when three people including one Adetula Akinyele, a security guard with the Federal Airports Authority of Nigeria, (FAAN), Ifeanyi Uramah and Emmanuel Nnanna were intercepted by EFCC operatives on October, 21, 2012 with $1.4million at the Murtala Mohammed International Airport, Lagos.

Luck also ran out on Hyginus Ezedimbu, who was caught at the Nnamdi Azikiwe International Airport, Abuja on November 3 as he prepared to board an Ethiopian Airline on his way to China. He was caught with $50,000 but he declared $49,971. Apart from under declaring the money in his possession, Ezedimbu could also not explain the ownership of the money, nor was he able to produce the receipt with which he purportedly purchased the forex from a Bureau De Change operator Musa Adamu.

One of the biggest catches of the commission was one Abdulrasheed Ibrahim who met his waterloo on November 7 as he prepared to board a Dubai, United Arab Emirates bound Ethiopian Airline. A total of $188, 858 was found on him. He had declared the sum of $45,000 only for a search on him to reveal additional $143, 858. Further search revealed that he was carrying 40 British Pounds and 5753grams of solid gold worth N34, 518,000.

The EFFC list also showed that one Nkem Sebastian was arrested on September 29, 2012 at the Murtala Mohammed International Airport on his way to China through Dubai with $288, 000. He had declared only $200,000 and claims he was carrying the money for one Konga, for distribution to unnamed recipients in China The list also showed that the Nigerian local currency was not spared as one Prince Oteh Emenike was arrested on September 22, 2012 with N996, 000 as he prepared to board an Ethiopian Airline flight to China from the Murtala Mohammed Airport in Lagos. He claimed he was to deliver the money to some traders in China.

This dimension lends credence to the suspicion that the money is being used for importation of banned commodities. This is because, textile products, especially from China have flooded the Nigerian market in recent times.

Foreign nationals were also involved in the currency trafficking as the EFCC operatives nabbed two Lebanese, Hassan Rmaiti and Talal Hammoud, at MMA, Lagos on November 26, 2012 for bulk cash smuggling to the tune of $2,073,160. While Hassan Rmaiti was arrested with $1,971,920, Talal Hammond was arrested with $101,240.00.

Another smuggler who tried to use Mallam Aminu Airport Kano for his nefarious activities, Bashir Abdu was arrested en-route Dubai aboard Egypt Air. He failed to declare the $130,000 on him. He only declared the gold bars with him and 30, 000 Saudi Riyals.
Incidentally, such arrests are not uncommon. For example, later in October 2010, a Nigerian family was also apprehended at a London airport with over £500,000. In a statement on November 3, 2010, the Central Bank of Nigeria noted that the “CBN had been inundated with complaints from foreign countries that some Nigerian travellers indulge in cross-border transportation of large sums of foreign currencies in cash, and that the Nigerian Customs Service’s returns show that large amounts of up to $3 million cash had been taken out of Nigeria by individuals in single trips.”

BDC as Conduit Pipes
Analysts maintained that the recent arrests by EFCC suggest that the BDCs may have graduated from merely meeting the retail requirements of travellers to becoming hard-core suppliers of foreign exchange to major money launderers and smugglers.

Boyo said the CBN’s ill-advised liberal dollar allocations had become a supportive tool for national economic sabotage, adding that the motivation for money laundering and currency trafficking is facilitated by a free access to public sector dollars made available to the BDCs by the apex bank.

Tags: Business, Nigeria, Featured, Currency Trafficking

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