NIGERIA: 2003-2004 INTERNATIONAL NARCOTICS CONTROL

UNCLAS SECTION 01 OF 04 ABUJA 002193

SIPDIS

STATE FOR INL
ALSO FOR AF/W
JUSTICE FOR OIA AND AFMLS
TREASURY FOR FINCEN

E.O. 12958: N/A
TAGS: SNAR KCRM EFIN NI
SUBJECT: NIGERIA: 2003-2004 INTERNATIONAL NARCOTICS CONTROL
STRATEGY REPORT (INCSR) PART II FINANCIAL CRIMES AND MONEY
LAUNDERING

Ref: STATE 328024

The following is Post's submission for part II INCSR for
Nigeria

Nigeria.


--------------------------



Nigeria is Africa's largest democracy and a hub for money
laundering and other financial crimes not only for the West
African sub-region but also increasingly for the entire
continent. Individuals and criminal organizations have taken
advantage of the country's location, weak laws, systemic
corruption, lack of enforcement, and poor economic
conditions to strengthen their ability to perpetrate all
manner of financial crimes at home and abroad. Their
success in avoiding prosecution has led to an increase in
financial crimes of all types, including bank fraud, advance
fee fraud, and money laundering. Despite the determined
efforts of the government to counter years of rampant
corruption, Transparency International still ranks Nigeria
as the second most corrupt country in the World.

Nigerian Advance Fee Fraud is one of the most lucrative
financial crimes committed by Nigerians. This type of fraud
is referred to internationally as "Four-One-Nine-Scams,"
(419 is the Nigerians penal code's section on fraud). The
gist of a "419" scam is to convince victims that they will
receive an exorbitant return for providing a relatively
modest payment of a fictitious fee in advance. Businesses
and individuals around the world have been and continue to
be targeted by these "get rich quick" offers. These scams
often go beyond confidence games; violence against the fraud
victims has also occurred. Some evidence exists that
narcotics traffickers have utilized 419 Scams to fund their
illicit smuggling efforts.

In December 2002, the National Assembly passed three key
pieces of anti-money laundering legislation: an amendment
to the 1995 Money Laundering Act, that extends the scope of
the law's coverage beyond the proceeds of drug trafficking
to the proceeds of all crimes; an amendment to the 1991
Banking and Other Financial Institutions (BOFI) Act that
expands coverage of the law to stock brokerage firms and
foreign currency exchange facilities and gives the Central
Bank of Nigeria greater power to deny banks licenses and to
freeze suspicious accounts; and the new Financial Crimes
Commission Act that creates a central law enforcement body
to coordinate anti-money laundering operations and
information sharing. The Economic and Financial Crimes
Commission (EFCC), created by the December legislation, was
formally constituted in April 2003 to investigate and
prosecute all forms of economic crimes, advance fee fraud
(419) and other financial sabotage against the country. In
November 2003, President Obasanjo presented bills on money
laundering and economic crimes to the Senate for
consideration. The bills would repeal the Money Laundering
Act 2003 and the Economic and Financial Crimes
(Establishment) Act 2002 in order to strengthen them against
these crimes and to get Nigeria de-listed from the Financial
Action Task Force (FATF) list of Non-Cooperative Countries
or Territories (NCCT). Nigeria recently inaugurated a 15-
member panel, chaired by the National Security Advisor, to
check advance-fee fraud and allied crimes via the Internet.

The National Drug Law Enforcement Agency (NDLEA) and the
Money Laundering Surveillance Unit (MLSU) of the Central
Bank of Nigeria will continue to play a role in fighting
money laundering, but will have the lead only where money
laundering is connected to proceeds of drug trafficking.

The EFCC recently set up a Financial Intelligence Unit (FIU)
and has since May 2003, recovered or seized assets valued at
over 31 billion Naira (US219 million dollars) from various
fraudsters inside and outside of Nigeria and more than one
billion Naira (approximately US7 million dollars) from a
syndicate that included highly placed government officials
defrauding the Federal Inland Revenue Service (FIRS).
Several influential individuals have been arrested and are
currently incarcerated awaiting trial and numerous
properties and personal possessions have been confiscated.
In an effort to expedite the trial process, the Commission
has been assigned two high court judges in Lagos and two in
Abuja to hear all cases involving financial crimes. This
has resulted in an aggressive campaign to combat "419" and
other economic crimes in Nigeria and has served as notice
for some that the country is serious about sanitizing its
image as a corrupt nation. We encourage the Government of
Nigeria to adequately fund all agencies involved in
combating economic crimes making them less susceptible to
corruption.

The following responses are keyed to the questions in
reftel.



18. Nigeria is considered an important regional financial
center. Lagos, the former capitol, is the New York of
Nigeria. It is the hub of all manner of financial crimes,
including bank fraud, advance fee (419) fraud and money
laundering.


19. Money laundering is not primarily related to narcotics
proceeds but rather to the proceeds of public corruption.
According to reports from Central Bank of Nigeria (CBN) and
the National Insurance Cooperation of Nigeria (NICON), bank
fraud is on the increase. Numerous banks have been closed
due to rules violations and misappropriation.


20. Criminal proceeds laundered in Nigeria are from domestic
criminal activity.


21. Nigeria does have a significant black market for
smuggled goods and although items have been linked to
individuals connected with financial crimes, the funding of
these goods are not believed to be from narcotics or other
illicit proceeds.


22. Money Laundering occurs in all areas of financial
activities.(example: Government officials deposit agency
funds in preferred banks sometimes for a fee)


23. There is no evidence that narco-traffickers or any other
particular group controls money-laundering proceeds in
Nigeria. Nigeria has pockets of criminal activity but not
organized in our definition of criminal organizations, i.e.
mafia, cartel etc.


24. Neither the Nigerian government nor any senior
government officials are known to encourage, facilitate or
engage in laundering the proceeds from illegal drug
transactions, from other serious crimes or from terrorist
financing as a matter of government policy or practice. To
the contrary, the Obasanjo administration has gone out of
its way to project an image of being serious about stamping
out corruption and other crimes that affect the image of the
country.


25. It is possible for financial institutions to engage in
illegal currency transactions involving international
narcotics trafficking proceeds that include U.S. currency
but post has no direct knowledge of any particular
occurrences. The Nigeria National Assembly recently passed
money laundering and financial and economic crime
legislation strengthening previous legislation in both
areas.


26. Money laundering is a criminal offense under Nigerian
law. The Money Laundering Prohibition Act 2003 signed May
22, 2003 and the new Economic and Financial Crimes Act 2002
were recently appealed and new Money Laundering and Economic
Crime Bills recently passed the National Assembly and have
been forwarded to the President for signature.


27. The money laundering law applies to proceeds of all
financial crimes. It also covers stock brokerage firms and
foreign currency exchange facilities. It also gives the CBN
greater powers to deny banks licenses and freeze suspicious
accounts.


28. Banks and Financial Institutions are required to
identify customers whenever transactions exceed the
threshold amount of $5,000 or its equivalent. A report must
be filed even if the transaction was not accepted.


29. Banks are required to retain record of significant
transactions for five years.


30. Suspicious transactions must be reported when they
occur.


31. Since money-laundering laws require banks to report
suspicious transactions, they are in turn, protected by that
law.


32. There are no secrecy laws dealing with financial
activity in Nigeria.


33. Individuals are required to declare currency of $10,000
or equivalent when entering Nigeria.


34. See 33.


35. Banks risk losing their license to operate and bank
officers are subject to prosecution for failure to take
actions to identify and combat money-laundering activity.


36. Nigeria's money laundering law of May 2003 applies to
exchange houses and other financial institutions. New
legislation recently passed in the National Assembly is
designed to close the loopholes in casinos, insurance
companies, hotels and individuals not covered under previous
legislation.


37. There is one case currently before the Nigerian courts
involving money laundering.


38. The anti-money laundering law created the EFCC that has
made numerous high-profile arrests of persons suspected of
financial crimes. Public opinion has been very favorable
and the banks are very receptive since many have been hurt
by fraudulent activity in the past.



39. The Economic and Financial Crimes Commission
(Establishment) Act 2002, which passed on December 15, 2002,
criminalizes the financing and participation in terrorism.
Any person who commits an offense under the Act is liable on
conviction to imprisonment for life. "Offenses relating to
Terrorism"
a. a person who willfully provides or collects by any
means, directly or indirectly, any money by any other person
with intent that the money shall be used for any act of
terrorism, commits an offense under this Act and is liable
on conviction to imprisonment for life.
b. Any person who commits or attempts to commit a
terrorist act or participates in or facilitates the
commission of a terrorist act, commits an offense under this
Act and is liable on conviction to imprisonment for life.
c. Any person who makes funds, financial assets or
economic resources or financial or other related services
available for use of any other person to commit or attempt
to commit, facilitate or participate in the commission of a
terrorist act is liable on conviction to imprisonment for
life.



40. The jurisdiction has the authority to identify, freeze,
and seize terrorist finance-related assets, and circulate
the list of individuals and entities that have been included
in the UN 1267 Sanctions Committee Consolidated list.


41. No terrorist finance-related assets have been identified
by the GON.
42.Nigeria recognizes the existence and use of indigenous
alternative remittance systems such as moneychangers and has
established a requirement for registration with the CBN
according to prescribed criteria.


43. According to the EFCC, this is not yet a problem in
Nigeria.


44. Nigeria is a party to the 1999 International Convention.

OFFSHORE FINANCIAL CENTERS
45-48. Not Applicable, Nigeria has no offshore banking
system.

INTERNATIONAL COOPERATION


49. Nigeria and the U.S. signed a Mutual Legal Assistance
Treaty (MLAT) in 1989, which was ratified by the U.S. in


2001. The instrument of ratification was signed in January


2003.


50. N/A


51. USG personnel as well as those of other governments have
access to documents and records involving investigations of
all criminal activity.


52. Nigeria has demonstrated a willingness to cooperate with
all USG law enforcement agencies in the investigations of
all types of crimes.


53. Nigeria is a party to the UN Drug Convention and has
passed legislation that adheres to international money
laundering standards. Nigeria's EFCC, constituted in April
2003, recently set up a Financial Intelligence Unit (FIU).
Legislation to strengthen the laws was passed by the
National Assembly in December 2003.


54. Yes, frequent exchanges of information have taken place
with USG law enforcement agencies but on-site examinations
are done through host country contacts.


55. Nigeria has been very cooperative with the U.S.,
especially during extradition proceedings, resulting in the
extradition to the U.S. of an individual for financial
fraud. Two additional cases are pending on which the GON
has been extremely cooperative with U.S. law enforcement
authorities.


56. Since 1999, the USG and GON have enjoyed excellent
cooperation on many fronts. Post knows of no instances
where Nigeria has refused to cooperate with a foreign
government or the USG.


57. Nigeria has signed bi-lateral agreements for exchange of
information on money laundering with South Africa, United
Kingdom, and all Commonwealth and Economic Community of West
African States (ECOWAS) countries.


58. Nigeria and the U.S. signed a bi-lateral Letter of
Agreement (LOA) in July 2002 for narcotics and law
enforcement assistance. That agreement has been amended
four times to expand assistance in various area of law
enforcement. The instrument of ratification for the Mutual
Legal Assistance Treaty (MLAT) was signed in January 2003.

ASSET FORFEITURE AND SEIZURE LEGISLATION


59. (N/A)


60. Asset forfeiture is covered under the Economic and
Financial Crimes Commission (Establishment) Act 2002.


61. The EFCC Act has provisions for sharing of proceeds of
seized assets.
62.Adequate provisions exist in current laws but the
resources for enforcement are limited.


63. N/A


64. According to Nigeria's money laundering legislation,
anything related to the crime is liable to seizure.


65. Any business involved in the commission of a crime is
liable for seizure under Nigeria's money laundering law.


66. Proceeds of seized assets go to the Federal Government.


67. Working with FATF, Nigeria took great strides to ensure
that traffickers could not take advantage of money
laundering laws. The bill currently being forwarded to the
President for signature should close any remaining
loopholes.


68. Yes, the law applies equally to civil and criminal
forfeitures.
69.Enforcement is limited for drug-related seizures since
most of the drug seizures are small and involve couriers
transiting Nigeria's international airports, however, the
EFCC has made numerous seizures involving financial fraud.


70. The National Drug Law Enforcement Agency (NDLEA) and the
Economic and Financial Crimes Commission (EFCC) and the
Nigerian Police Force (NPF) in some cases are responsible
for tracing and seizing assets.


71. The EFCC Act gives police powers to the Commission.


72. Since May 2003, the EFCC has seized assets valued over
$200,000,000.
73.The EFCC didn't exist until April of 2003 and no
estimates are available for the time period prior to their
existence.


74. The MLAT and improved relations between Nigeria and the
U.S. has ensured cooperation on many issues. Bank accounts
have been frozen in response to request from the USG.


75. Yes, in the investigative process, Nigeria uses all
available information to pursue the perpetrators of
financial crimes.


76. Nigeria is engaged with South Africa, United Kingdom and
ECOWAS on agreements to enhance its fight against financial
fraud.


77. Public and political response have been very positive to
the efforts of the EFCC.


78. Banks are very supportive and cooperative with the law
enforcement agencies responsible for money laundering and
financial crime prevention. They recognize the benefits to
be gained.


79. EFCC revealed that some threats have been made but no
attempts to carry out any threats or retaliation for
enforcing the economic crime laws.

ROBERTS