Getting Ready for FATF Evaluation


With an unmet deadline last November, 2019 offers fresh insights, opportunities for Nigeria to meet requirements for and provide the legal framework for the nation’s guaranteed financial autonomy under the mutual evaluation policy. Will Nigeria meet the conditions necessary for undertaking the second round this year? Adedayo Adejobi examines the country’s readiness

When compliance professionals, industry stakeholders, financial institution regulators and technology experts converged on Lagos at the Association of Compliance Chief of Banks in Nigeria (ACCOBIN’s) 2019 Chief Compliance Officers retreat recently , it was to set a tone for conversations around digital revolution; Revolutionising the Compliance Function in Nigerian Banks. What seemed to be the overriding point of interest aside digital and technological innovations, was the question of assessing Nigeria’s readiness for the second round of the Financial Action Task Force (FATF) mutual evaluation slated for the months of September and October this year.

Periodically, countries all over the world must undergo mutual evaluation. The purpose of the mutual evaluation is to assess how each country has implemented the recommendations and the principles on fighting money laundering, terrorist financing and the proliferation of weapons of mass destruction all over the world.

With that in view, Nigeria was supposed to undergo the second round of mutual evaluation two years ago, but because of certain technical details it wasn’t armed with, it asked for extension of time to enable it meet the requirements.

This time around, Nigeria cannot, but face the reality of the mutual evaluation exercise. Even though Nigeria presently has an observer status, it has applied for full membership of the Financial Action Task Force (FATF). And so, its membership ultimately relies on how well it performs during the mutual evaluation slated for later this year.

It is crucially important that Nigeria performs very well, as its success would be benchmarked against the FATF 40 recommendations.

Exploring the genesis and trajectory of Nigeria’s loss at clinching the coveted statutory global standards, during the Abacha regime, Nigeria was offered membership on a platter of gold, but turned it down because the late military ruler, Muhammed Sani Abacha didn’t even understand the significance and its unique essence to Nigeria’s global ranking and the health of its financial institutions.

Unfortunately, last year when Nigeria was supposed to have the mutual evaluation, it requested for extension on grounds of unpreparedness.

Amongst all countries in West Africa, Nigeria is supposed to be the first country to have completed this exercise and clinched its full membership status, because, it undoubtedly was the first to have its first round in 2007.

For a country like Nigeria, which midwifed Ghana’s Financial Intelligent Unit (FIU), the latter is presently ahead of the country, as it has successfully done its mutual evaluation in October 2016.

GIABA, the body saddled with the responsibility to conduct the mutual evaluation exercise, came to Nigeria in March this year, with a view to kick-starting the process, but Nigeria came up with excuses and couldn’t host them.

With that in the basket, it is worthy of note that there are complications that have arisen as a result of Nigeria’s seeming laid back and procrastinating demeanour towards this professional certification gap.

Nigeria, the sleeping giant of Africa, is presently out of the EDMOND group, an Association of the financial Intelligence Unit all over the world.

Following reports by the media, Nigeria’s financial intelligence Unit has been indicted for not running a course according to international standards.

Secondly, Nigeria’s’ Financial Intelligence Unit (NFIU) does not have legal framework and financial autonomy. These, amongst a myriad of gaps, are what the global Association of the Financial Intelligence Unit, want Nigeria to guarantee. With a deadline approaching, the country is saddled with the burden to make sure it provides the legal framework and guarantee financial autonomy before November.

The big question on the lips of all and sundry is that, is Nigeria ready, willing to meet this fast-approaching deadline set to hold in September and October. Is this feasible? No one knows. Stakeholders are somewhat jittery, not knowing the fate of Nigeria, whilst the financial sector seems to be hanging in the balance.

The GIABA team which represents the FATF was in Nigeria last week trying to go round all the stakeholders to be sure they could find a common ground. The stakeholders no doubt need to quickly put themselves and its house in order.

With a house once divided against itself, a major stumbling block in the way of Nigeria’s Readiness for FATF Mutual Evaluation, is the offshoot of the dramatic opposition and face-off between the National Assembly and the Economic and Financial Crimes Commission (EFCC) on this issue. Have they really sheathed the sword? Can it be said that the Nigerian Financial Intelligence Unit is truly self-governing under the Central Bank of Nigeria? Does the National Assembly believe in the need for a stand-alone Financial Intelligence Unit (FIU) or one that is a compromised?

On the other side of the divide, EFCC once held that if they took out the FIU, as done last year, it will effectively affect the template. From the time it’s been domiciled at the Central Bank of Nigeria till date, has it affected its autonomy? Does the commission still insist on its standpoint which it premises would still work? The question which begs answer is: Have they, and if not, how would both parties would resolve their differences amicably?

Not forgetting that there are still critical issues yet unaddressed, meeting conditions for FATT 40 recommendations, and Nigeria’s level of preparedness, which hangs on the fringe of uncertainty.

Giving an insight on what Nigeria needs to do to qualify, Managing Director, DataPro Limited, Abimbola Adeseyoju, gave this submission, “ensuring success at the mutual evaluation, Nigeria must meet a minimum standard.” “The way countries are scored is simple. Should Nigeria score above 80 in each of the estimates given, it means we are compliant. If we score between 60-80, we earn the LC rating. But if we score below 60, they give us PC, which is technically a re-sit. Should Nigeria score below 40, we earn an SC, which is not non-compliant. For us to be fully admitted, we must demonstrate and score at least LC.’’

From history, the last time Nigeria participated, it scored half, meaning there is room for serious work to be done in preparation. At this point where lack of coordination seems to have taken centrestage, the National Assembly needs to pass the necessary laws because there is still need to pass a lot of amendments to make sure Nigeria meets the conditions.

More worrisome is the presidency’s lack of understanding the enormity of the problems ahead. Without its proper understanding, it cannot provide leadership to technical issues bordering on, but not limited to money laundering, terrorism financing, as this would in turn adversely affect Nigeria negatively on the global stage.

Nigeria didn’t seem to understand the importance up until now, that’s why South Africa was offered the opportunity and it latched on to it, to become compliant and a member.

Speaking on the unique essence of this exercise and its attendant implications, Adeseyoju stated that, should Nigeria fail to qualify for this mutual evaluation exercise, one offered on a platter of gold, and which gets more difficult by the year, ”it would affect the banks, foreign direct investment and the country’s reputation worldwide in terms of corruption index and transparency.”

With so much at stake, and most crucially Nigeria’s long-etched good name, the National Assembly and the Economic and Financial Crimes Commission (EFCC) and regulators, are left with no other choice than to bury personal interests, so that Nigeria could present a common front.

The membership and mutual evaluation would require Nigeria to demonstrate it is implementing all the measures agreed at the international level, and that all Nigerian banks are implementing all its designated financial institutions are implementing so that the level of acceptance of our financial institutions could be higher.

With these attendant issues unresolved, it becomes difficult for Nigeria to qualify on many fronts. Most significantly is the National risk assessment report, one which has not been done.

Without the result of the National risk assessment been released, the country can’t even start the mutual evaluation because the national risk assessment needs to be read to know how the nation has classified all its institutions.

The principle of the risk-based approach is the need to put commensurate resources to where the risks are higher. Unfortunately, at the moment, Nigeria’s seems to be focusing on people that will not hurt it, and looking the other way on those stealing the common patrimony of the country. This does not show any form of preparedness.

Being the biggest country in Africa, most strategic and one accused of committing virtually every high risk crime, and a with a clearer understanding beyond with compelling reasons, as to why Nigeria preparedness to domesticate these principles, mutual evaluation and most importantly gain membership into the comity of nations as recommended by the Egmont Group.

With 35 countries deciding the fate of the world including Nigeria’s, whilst there are almost 200 countries in the United Nation, the country, which is presently an observer nation, needs to demonstrate readiness, technical compliance, effectiveness and the willingness to abide by those global principles.

With 2018 gone, and September and October 2019 of the mutual evaluation year looking very active for compliance in Nigeria, the preparation has started.

With the preparation seeing Nigeria put in structures, there is the need to sensitise Nigerians on the unique essence of and need for compliance. Now is the time and it’s not negotiable on grounds of sentiment. The big questions yet unanswered remains: Is Nigeria ready for FATF Mutual Evaluation?

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