Address to Bank Chief

Address to Bank Chief Executives
By
Mallam Nuhu Ribadu
Executive ChairmanEconomic & Financial Crimes Commission (EFCC)

Introduction
I wish to cease this opportunity to thank you all for honouring our invitation to this important meeting at such a short notice and to also welcome you to the official headquarters of the Economic & Financial Crimes Commission (EFCC). Furthermore, I wish to congratulate you all for successfully piloting your various institutions through the house cleansing recapitalization and consolidation exercise of the Central Bank of Nigeria (CBN). We fully supported this initiative because of the low ebb into which banking had sunk. It is however, instructive to note that the emerging banking environment will certainly pose fresh challenges especially as you begin to aggressively resource for international business opportunities in order to meet the expectations of your shareholders, the banking public and other stakeholders. From our end, the enforcement of the provisions of the Money Laundering (Prohibition) Act, 2004 is paramount. Under Section 7(2) of the EFCC (Establishment) Act, 2004, the Commission is “…the co-ordinating agency for the enforcement of the provisions of – (a) the Money Laundering Act 2004; ….and (f) any other law or regulation relating to economic and financial crimes…” We take this responsibility very seriously. It brings to the fore the issue of compliance to the money laundering laws of our country. Bust first, let me address the issue of Nigeria on the Financial Action Task Force (FATF) list of Non-Cooperative Countries & Territories (NCCTs).

Nigeria in the FATF List of NCCTs
As you all know, Nigeria was placed on the FATF list of NCCTs in July 2001 because of identified deficiencies in the country’s Anti-Money Laundering/ Countering Financing of Terrorism (AML/CFT) regime. The FATF threatened countermeasures against Nigeria if by 31st October, 2002 the country did not engage it in constructive and sustained dialogue. We have since November 2001 taken practical steps to address most of the issues raised by the FATF. The establishment of the EFCC was in fact informed by pressure from the FATF. The country has since submitted an AML/CFT Strategy/Implementation Plan to the FATF and this have been accepted. The Task Force have in the past several months monitored the implementation of our Strategy Plan and will be meeting in February 2006 to consider constituting an Evaluation Team that will undertake an On-site Examination of the country’s AML/CFT programme. As a major stakeholder in this, we all have to be very ready.

The Financial Intelligence Unit (FIU) Connection
A pre-condition for removal from the FATF list of NCCTs is the establishment of a Financial Intelligence Unit. The FATF does not prescribe FIU model for any country. The professional recommendation is to locate it with the principal agency responsible for enforcing money laundering laws in a country. This is exactly what we have done. Ours is domiciled in the EFCC. In October 2003, I constituted a 10-man Inter-Agency Technical Committee made up of officials from the CBN, the Nigeria Deposit Insurance Corporation (NDIC), law enforcement representatives, and the public sector to prepare a comprehensive Implementation Plan for the establishment of the Nigerian Financial Intelligence Unit (NFIU). That Committee met for about a year, visited four other jurisdictions to understudy the workings of their FIUs and eventually submitted its Report in June, 2004. Preliminary institutional framework for the take-off of the NFIU was put together in the last quarter of 2004. The NFIU became operational in January 2005 and it has since served as the official source of all FIU-type records from Nigeria to the FATF.

FATF FIU-type Records
FATF FIU-type records include STRs received from financial and designated non-financial institutions, the analysis process for transitioning STRs to intelligence packages, the number of money laundering investigations, prosecutions and convictions, the feedback mechanism existing between the NFIU, law enforcement agencies, regulatory/supervisory bodies, and other stakeholders, and a number of other records required by the FATF. The NFIU is the first in the West African Sub-region and it has been admitted into the Egmont Group of Financial Intelligence Units as an Observer. We are currently processing the NFIU into full membership of the Egmont Group. Our relationship with the Egmont Group has greatly assisted us in collaborating with other FIUs around the world for the purpose of investigating and prosecuting money laundering cases.








Areas of Concern
Our experiences show that there is a pressing need for all banks to develop programmes on Politically Exposed Persons (PEPs) along the lines recommended by the FATF. Your ICT deployment must include proprietary applications to assist in flagging potential money laundering transactions and enabling you meet compliance obligations as is the custom in all other parts of the world. You must undertake proper vetting of your employees and implement a continuous monitoring regime especially on changes in their lifestyle. All banking transactions must take cognizance of basic KYC, KYB and CDD principles. We associate ourselves completely with the contents of the code of corporate governance and the framework for risk-based supervision of banks recently released by the CBN. You must also not forget your obligation to make CTR & STR renditions to the NFIU. It will be necessary to spend some money educating your staff and the banking public about these obligations because we plan to make it a level playing ground for all banks in the country.

FIU Is Expensive
Establishing a fully functional and operational FIU is a very expensive venture. Those familiar with the duties of typical FIUs will agree with me. First, it is ICT driven with state of the art technology together with all the costs associated with the ever changing nature of technology. Secondly, it has to meet certain minimum international standards because of the requirement of a seamless inter-exchange of intelligence information among all FIUs around the world. The Commission have since implemented a basic STR Reporting System in addition to conducting several pilots designed to automate the receipt and analysis of the enormous financial data from all reporting entities. As we move into the post recapitalization and consolidation era, it has become imperative to quickly deploy a very robust STR Reporting System for the NFIU in order to better position the financial sector, especially banks, to be more competitive internationally. Needless to add that this will facilitate the application of efficient business risk models to better manage your assets and liabilities.

Funding the STR Reporting System for the NFIU
Given our estimate for this project, we would wish to request for a voluntary contribution of at least N20 million each paid into an account with the CBN and administered from there to fund this. We plan to share with you the IT Architecture of the proposed STR Reporting System for the NFIU and to secure your buy-in. We are very ready. I have a full-blown team eager to take questions on all the specifics of this project.

Thank you very much.