EFCC Advises against Passage of Money Laundering Bill, 2016


After an intensive examination of the Money Laundering (Prevention and Prohibition) Bill, 2016, the Economic and Financial Crimes Commission (EFCC) believes it has too many easy escape routes for money launderers. Besides, the EFCC says it weakens enforcement, and should not be passed into law, reports Bennett Oghifo

The Economic and Financial Crimes Commission (EFCC) wants the National Assembly to dump the Money Laundering (Prevention and Prohibition) Bill, 2016 in favour of the
Money Laundering (Prohibition) ACT, 2011, which is presently in force.
The Money Laundering (Prohibition) ACT, 2011 “provides for the repeal of the Money Laundering Act 2004 and enactment of Money Laundering (Prohibition) Act, 2011; makes comprehensive provisions to prohibit the financing of terrorism, the laundering of the proceeds of a crime, or an illegal act; and provides appropriate penalties and expands the scope of supervisory and regulatory authorities so as to address the challenges faced in the implementation of the anti-money laundering regime in Nigeria.”

The EFCC said the ACT is comprehensive and more effective than the content of the Money Laundering (Prevention and Prohibition) Bill, 2016’, which it does not want the legislators to pass into Law. They said the Bill was counter-productive and that they believe, it sought to protect criminals by giving them easy escape routes.
These comments and observations, among others, on the Bill are in the Commission’s presentation, ‘The Position of the Economic and Financial Crimes Commission (EFCC) on the Money Laundering (Prevention and Prohibition) Bill, 2016’, which it made after a meeting convened by the Senate leader with major stakeholders in the Anti-Money Laundering/Countering the Financing of Terrorism, recently.

Easy escape routes for money launderers
According to the EFCC, the bill provides many escape routes for money launderers, saying “for instance Clause 2(2) makes it an offence for a person to conceal, disguise, convert, transfers or remove ‘from Nigeria’ any property which he knows or ought reasonably to have known or suspects that the property has a criminal origin. The implication is that once such property is not moved outside Nigeria, then no offence is committed. This clearly creates an escape route for money launderers by arming them with a defence in the event of prosecution.”
EFCC said, “Clause 4 (1) also makes it an offence for a person to acquire, use or have possession of any property which he knows or ought reasonably to know or suspects that such property has a criminal origin. However, section 4(2) (b) makes an exception when he acquired, used or had possession of the property for adequate consideration. This provision implies that once you pay the full price for such property, then it is not a crime even if you knew that it is the proceeds of crime. This comment also applies to section 4(3).”

Weakening enforcement
The Commission’s position is also that several clauses in the Bill would weaken the enforcement regime. “A good example is clause 2(3) which exempts a person who conceals, disguises, converts, transfers or removes from Nigeria property which he knows or suspects to have a criminal origin if he makes a report or intended to make a report but has justifiable reasons for not doing so. This will go to weaken the enforcement regime.
“Clause 12(2) (c) removes the obligation of a person to make a report if he has a “justifiable reason” which makes reporting discretionary.”

Bottlenecks in the fight against money laundering
The bill, the EFCC said creates “unnecessary bottlenecks in the fight against money laundering, saying they couldn’t understand why Section 5 (4)(b) should make an exception to an untrained employee, who fails to report knowledge or suspicion of money laundering, as it is fundamental that ignorance of the law is not an excuse. Moreover, one should not hold himself out as being capable to do a job without the requisite skills or he should be held accountable to established standards for the given profession.”

Consent to legalise illegality
The commission is dissatisfied with the provision that permits a superior officer to order an illegal action without defining what such action should be. It said, “The purport of section 9(1) is that consent can be given by a person authorised by the Director of the Nigerian Financial Intelligence Centre to do a prohibited act.  Moreover, what is a prohibited Act is not defined by the Bill.”

Functions of the Attorney General in the bill
The EFCC also queried clause 13 (1), which provides: “The Attorney General ‘may’ by regulations prescribe the form and manner in which a report …”
The Commission said the phrase “may” gives the Attorney General the discretion to make or not to make regulations. “This means that the obligation to report is not applicable if there is no regulation. This is very worrisome in the light of the importance of the reporting obligations in the regime.
“Given the Attorney-General’s dual role as Attorney General and Minister of Justice, this Section gives him the room to adjust the law to suit the government in power.”

Challenges for the prosecution
They said Clause 14 (2) provides that Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs) are competent, ‘but not compellable’, to give evidence in criminal proceedings arising from the report which they make under the Bill. The resultant effect is that there would be challenges in the successful prosecution of money laundering related offences.
“Moreover, this provision is contrary to the provisions of the Evidence Act as the issue of competency and compellability of witnesses are settled principles of a law under the evidence Act and judicial authorities.
“Clause 14 which seeks to provide protection for persons making reports under the Bill, may likely stifle or jeopardise prosecution of money laundering offences in the country, although the need to protect witnesses (persons and institutions) that make reports that aid investigation and prosecution of money laundering offences is well appreciated.”

Retroactive provision
They said clause 15 (4)(C) is unconstitutional, as it is retroactive, and that on cash payments, Clause 16 (1) “Body corporate” is not mentioned and that only “person” is mentioned with regard to transactions above prescribed limits; “thereby, absolving it of the obligation to be bound by the prescribed limit and this would consequently allow money laundering to thrive.
“Moreover clause 16 (2) does not limit FIs and NDFIs from doing a transaction above the prescribed limit but only places a duty on financial institution or  NDFI to report when a transaction was done in excess of the prescribed limit within the prescribed period.”

Reference to non-existing bodies
The bill, the EFCC said made reference to non-existing bodies, explaining that clause 17(1) refers to “Centre” which is non-existent in Nigeria.
“S.18 (5), (6), (7) and (10) (b) make mention of a non-existent agency, non-existent legislation and non-existent government account.
“Proceeds of Crimes Recovery and Management Agency are not in existence in Nigeria. S.18(5),(6) and (7); Confiscated and Forfeited Asset Account is non-existent in Nigeria. S.18(10)(b); Proceeds of Crimes Act is not an existing legislation in Nigeria. S.18(10)(b).”

Conflict with other existing legislation
According to the commission, section18 (5), (6) and (7) are in conflict with the EFCC Act Section 7(2), stating, “It seeks to divest EFCC of its powers to cause investigation into economic and financial crime offences and by extension attempting to transfer the statutory power to an unknown and non-existent agency – Proceeds of Crimes Recovery and Management Agency.”

Weakening of the Customer Due Diligence Regime
The bill, they said weakens the customer’s due diligence (CDD) regime, explaining that “Clause 24 (1) and (2) implies that if a customer conducts a transaction with a Financial Institution or Designated Non-Financial Institution below the prescribed limit, the bank is not obligated to conduct CDD, this is a fundamental flaw that will encourage money laundering and terrorism financing.”

They argued that clause 30 (2) and (3) relating to numbered and anonymous accounts have been overtaken with the introduction of the BVN policy by the CBN. On conflicts with FATF recommendations, the Commission presented Clause 32 (3) on SHELL BANKS which states: “…or such a longer period as may be directed by the Director-General of the Centre…”
Thus, the Agency said, “Extending the period for termination of the relationship with a shell bank beyond fourteen days is grossly unnecessary and leaves room for negligence and money laundering activities. The Bill also recognises relating with a shell bank instead of prohibiting same and is contrary to FATF Recommendations and international best practices.”

Bureau for Money Laundering Control
The EFCC is also concerned about the proposed establishment of a new agency to fight money laundering. It said “Clauses 35 to 49 of the Bill seek to establish an agency known as the Bureau for Money Laundering Control which will be a body corporate, with its own staff and advisory board that will be responsible for the supervision of designated non-financial businesses and professions in their compliance with the Bill and relevant regulations.
“However, the work the agency is proposed to do is already being done effectively and efficiently by the Special Control Unit against Money Laundering (SCUML) (which the Bill seeks to dissolve in clause 49). Worthy of note is the fact that it has not been shown in any way that the SCUML has been ineffective in its functions to warrant its dissolution and the setting up of another agency to carry out its functions.”

Definition of terms
They said definitions of terms in the Bill appear restrictive and sometimes ambiguous. “For instance Clause 27 (5) definition of politically exposed persons (PEPs) is not exhaustive. This definition falls short of internationally accepted standard as prescribed by the FATF. Clause 50 (2) (D) is unclear.
“The definitions of “account holder” “cash”, “estate agent” are not exhaustive.
“The definition of “estate agent” “Financial Institution” quite is confusing and this is a very key definition that ought to be apt. The definition of money laundering investigation in clause 13 (6) is too narrow and restrictive because investigation can be initiated by other law enforcement Agencies and may not be restricted to intelligence enquiries by the non-existing Centre.
“The definition of Shell Banks is not exhaustive and does not meet the FATF standard.
“Clause 17 (5) defines money service businesses (MSBs) in Schedule 2 in very broad terms. It is not in consonance with the international standard definition of MSBs.
“The Person referred to in Clause 12 as “the person at the risk of prosecution” is not defined in the Bill.”

Cross references
They said the bill is riddled with complex web of cross references.

EFCC’s mandate
The EFCC is the agency charged with the responsibility for the enforcement of all Economic and Financial Crimes laws and also the designated Financial Intelligence Unit (FIU) in Nigeria. It is unarguable that the Commission is a major stakeholder in the Anti- Money Laundering/Countering the Financing of Terrorism regime. In addition, the Commission is also the co-ordinating agency for the enforcement of anti- money laundering/countering the financing of terrorism in Nigeria by virtue of Section 7 (2) (a) of the Economic and Financial Crimes Commission Establishment Act 2004.