The Money Laundering (Prohibition) Act, 2011 (MLA), as amended, is the pre-eminent legislative framework for combating money laundering in Nigeria. Apart from this statute (as amended in 2012) however, at least a couple of subsidiary legislations are also applicable. These are the Federal Ministry of Industry, Trade and Investment (Designation of Non-Financial Institutions and other Related Matters) Regulations of 2013 and 2016, respectively.
But, first, what is Money laundering?. According to Wikipedia, “It is the conversion or transfer of property; the concealment or disguising of the nature of the proceeds; the acquisition, possession or use of property, knowing that these are derived from criminal activity; or participating in or assisting the movement of funds to make the proceeds appear legitimate. Money obtained from certain crimes, such as drug trafficking is “dirty” and needs to be “cleaned” to appear to have been derived from legal activities, so that banks and other financial institutions will deal with it without suspicion”.
Constitutional and Statutory Overview of Money Laundering in Nigeria
Nigeria’s federal structure means that our Constitution has divided lawmaking powers between the National Assembly and State Houses of Assembly, in Section 4(2)-(3) & 4(6)-(7)(a) respectively. The implication of this was expounded in DOHERTY v BALEWA (1961)2 NSCC 248 @ 252 where the Supreme Court held that: “The Federal Parliament can legislate for the Federation only on those matters in respect of which it is specifically empowered to legislate under the Constitution”. This was amplified in TOGUN v OPUTA (2001)16 NWLR pt. 740 pg. 597 @ 644, where the Court of Appeal held that: “Nigeria is a Federal Republic with a Constitution in which the legislative powers of the National Assembly and the State Houses of Assembly, are clearly defined. We have the Exclusive and the Concurrent Lists, in which the National Assembly could legislate. This leaves the State Houses of Assembly to legislate exclusively on residual matters, not included in either the Exclusive or Concurrent Lists”.
Who Can Regulate Money Laundering in Nigeria?
This is the critical question, having regard to the aforesaid division of legislative powers under the Constitution. The MLA and its amendment were enacted by the National Assembly. The question is: where did the Assembly derive the powers to enact them? Is it contained in either the Exclusive Legislative List or the Concurrent Legislative List of the 1999 Constitution? The answer to this question necessitates a review of the aforesaid Legislative Lists contained in the Second Schedule Constitution – juxtaposing them with the provisions of the MLA. Starting with the latter, I believe that the following provisions thereof are problematic:-
– Section 1: which places a cap of (N5 million and N10 million) on cash payments to or from individuals or bodies corporate respectively – except through what the Act calls a financial institution as defined in Section 25 thereof;
– Section 15 of the Act which formally prohibits money laundering in Nigeria, and specifies the four different ways in which it can be committed in relation to any fund or property (which is) the proceeds of an ‘unlawful act’ as defined under the Act;
– Section 25 which defines “Designated Non-Financial Institution” as, inter alia, “dealers in jewellery, cars, luxury goods, hotels, casinos and supermarkets”.
Apart from the foregoing, some key words used in the MLA are “transaction”, “fund” and”cash payment”; of the three, only ‘transaction’ is defined in the Act (in Section 25 thereof). Is the National Assembly competent to enact these provisions by reference to any clause in either the Exclusive or concurrent Legislative Lists of the Constitution? I believe the answer will depend on the meanings of “currency and legal tender” used in Item 15 of the Exclusive Legislative List of the Constitution. To arrive at a definitive answer, however, I believe we have to juxtapose with the provisions of Item 62 of the Exclusive Legislative List of the Constitution, which empowers the Assembly to regulate “trade and commerce, and, in particular –
(a) Trade and commerce between Nigeria and other countries, including import of commodities into and export of commodities from Nigeria, and trade and commerce between the States;
(b) establishment of a purchasing authority with power to acquire for export or sale in world markets, such agricultural produce as may be designed by the National Assembly;
(c) inspection of produce to be exported from Nigeria, and the enforcement of grades and standards of quality in respect of produce so inspected;
(d) establishment of a body to enforce standard of goods and commodities offered for sale;
(e) control of the prices of goods and commodities designated by the National Assembly as essential goods or commodities; and
(f) registration of business names”.
Identical provisions in Item 61 of the 1979 Constitution were construed by the Supreme Court in ATTORNEY-GENERAL OF OGUN STATE v ABERUAGBA (1985)1 NWLR pt. 3 pg. 395, where the court held that the trade and commerce power of the National Assembly is limited to sub-items (a) to (f) of that Item. In other words, that while international trade and commerce, as well as inter-State trade and commerce were exclusively reserved for the National Assembly (and, inferentially, criminal offences arising therefrom, vide Item 68 of Part 1 and Item 2(a) of Part III of the 2nd Schedule of the Constitution), trade and commerce within a State (as well as crimes arising therefrom) are Residual matters, reserved for the State Houses of Assembly.
I believe the implication of this decision – in so far as the provisions of the MLA can be construed as regulating trade and commerce – is that they (or, at least parts thereof) might be ultra vires the National Assembly, vide DOHERTY v BALEWA, supra. However, as previously stated, this depends on the proper construction or interpretation of Item 15 of the Exclusive Legislative List of the Constitution, specifically the words “currency and legal tender” used therein. Is regulating the amounts of cash which can be paid pursuant to a transaction outside a FI or DNFI, incidental or supplemental to the power of the National Assembly to regulate “currency and legal tender” within the contemplation of Item 68 of the Exclusive Legislative List of the Constitution? That is the key question.
To answer it, we may be guided by the definition of that phrase in “Federalism in Nigeria under the Presidential Constitution”, 2nd edition page 43, where Prof. Ben Nwabueze, SAN, opined that: “An incidental matter is one which is concomitant or attendant upon another, something which is an accompaniment or adjunct of another. The relation between the two is one of ancillary to a main matter; both must be closely connected to justify to inference that implying one is an incident of the other”.
Assuming – without conceding – that Item 15 of the Exclusive Legislative List empowers the National Assembly to control how much cash is paid in transactions outside so-called FIs and DNFIs, it is surely arguable that, for the foregoing reasons, I believe that these provisions are general, whilst those of Item 62 of the same List are special, the latter prevail, on the principle that special things derogate from general things: see ATT-GEN OF THE FED. v ABUBAKAR (2007) All FWLR pt. 375 pg. 405 @ 472E and 524, S.C.
I believe the referenced suspect clauses in the MLA (Sections 1, 15 and the inclusion of dealers in cars, jewellery, luxury goods, hotels, casinos and supermarkets within the definition of DNFIs in Section 25) means that, at the very least, the blue-pencil rule ought to be applied to remove them from the Act; thereafter, if whatever remains can stand, then they will survive. However, if they cannot stand on their own, the entire MLA ought to be invalidated: see ATT-GEN OF ABIA STATE v ATT-GEN OF THE FEDERATION (2002)5 S.C.M. 1.
I submit that the foregoing is also applicable to Section 15(6) of the Act: its purported categorisation of “any criminal act specified in (the) Act or any other law in Nigeria” as the predicate offences (or “unlawful act” to use the language of the Act) in relation to which one can be accused of money laundering under the Act, is obviously too sweeping, as some of those offences are clearly ultra vires the National Assembly.
Examples in this regard include murder, grievous bodily injury, theft, forgery, etc. None of these is a federal offence; I believe that for them to now acquire that character merely because a person is allegedly connected with “any fund or property” which constitutes the proceeds of those crimes, is simply far-fetched. Can they be justified even under Item 15 of the Exclusive Legislative List? I doubt it.
Suffice it to say that, in my view, the MLA is only applicable to Abuja, by virtue of the fact that the National Assembly legislates for the FCT; as for the 36 States, the Act is inapplicable and, it is up to their respective Houses of Assembly – if they so wish – to enact their own Money Laundering Laws, in much the same way that the Administration of Criminal Justice Act and the Child Rights Act are restricted to Abuja, but can be domesticated through separate municipal legislations enacted by the States.