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THE EFFECTIVENESS OF LEGAL AND ENFORCEMENT FRAMEWORK IN FIGHTING ADVANCE FEE FRAUD AND MONEY LAUNDERING ACTIVITIES

BY

DR. MUHAMMED TAWFIQ LADAN

Head of Department of Public Law,

Faculty of Law, Ahmadu Bello University,

 Zaria, Nigeria.

A PAPER PRESENTED AT THE 3^RD NATIONAL SEMINAR ON ECONOMIC CRIMES: ON THE THEME: COMBATING ADVANCE FEE FRAUD AND MONEY LAUNDERING:-

A RENEWED APPROACH.

ORGANIZED BY THE FEDERAL GOVERNMENT OF NIGERIA THROUGH THE CENTRAL BANK OF NIGERIA, SECURITIES AND EXCHANGE COMMISSION ETC., ABUJA

DATE: 27 –29^TH JUNE 2004

VENUE:- SHEHU MUSA YAR’ADUA CENTRE,

ABUJA – NIGERIA.

Introduction

 Nigeria’s battle against the economic and financial crimes of Advance Fee Fraud and Money Laundering has been a long, multi-faceted and sophisticated one and is likely to continue because of the resource constraints and new challenges being posed by the fast developing and expanding information and communications technology industry in Nigeria^.1

 Many countries, groups or individuals targeted by advance fee fraudsters have implied, and on occasion openly stated that the Nigerian government connives or is in collaboration with, or at the very least acquiesces to the activities of these miscreants. The argument of such victims being that several government personalities lend their names, offices and communication facilities to fraudsters, and thereby gain from the illicit proceeds. Further argued, that government merely pays lip services to the fight against such crimes, as there have been no meaningful prosecution or convictions or recoveries in this respect.²

 On the other hand, Nigeria has over the years become a target for money launderers, partly because the country is cash-trapped and thus not in a strategic position to discriminate in the type of funds it accepts. Again the pressure exerted on money launderers by the developed economies meant that the operators, largely in organized criminal syndicate form, found developing nations like Nigeria very attractive for their business operations. Consequently, the financial institutions in the economy became, and still are the major primary vehicles for advance fee fraud and money laundering activities and are therefore, primarily targets for the prevention and control of such criminal activities.³

 As argued elsewhere, “there can be little doubt that the above mentioned crimes can seriously undermine the economic life and well-being of a nation. The immediate impact of these offences, whether perpetrated by individuals, groups or multinationals within or outside the jurisdiction, has been the progressive disruption of the national economy with the attendant impoverishing of the lives and economic well-being of the citizens. Such is the seriousness of these crimes.”⁴

It is against this background that this paper aims at realizing the following objectives:-

1.         To provide conceptual clarification of key terms: “Advance Fee fraud,” “Money Laundering”, “Effectiveness of Legal and Enforcement framework”;

2.         To identify the criteria for effectiveness of legal and enforcement frameworks in combating Advance Fee Fraud and Money Laundering.

3.         To appraise the good efforts at effective legal and enforcement frameworks in fighting Advance Fee Fraud and Money Laundering activities in Nigeia;

4.         To assess the strategies, achievements and challenges ahead in the renewed legal and enforcement frameworks in combating such crimes; and

5.         To conclude with some recommendations.

1.         CONCEPTUAL CLARIFICATION OF KEY TERMS:- Advance Fee Fraud”, “Money Laundering”, “Effectiveness of Legal and Enforcement frameworks”.

1.1       “Advance Fee Fraud”

The word “fraud” can be defined as the crime of gaining money or financial benefits by deceit or trickery; or is about deceiving people in an illegal or dishonest way for pecuniary advantage.⁵

An analysis of “Corporate fraud” in Nigeria shows that the most common types are^:6 insider dealings, market manipulation, false trading, market rigging, false representations and deceptive or misleading conduct in the capital market; foreign exchange malpractices, forgery of cheques, granting of unauthorized loans, posting of fictitious credits, suppression of cash/cheques and fraudulent fund transfer and withdrawal in the banking industry.

The major causes of corporate fraud in Nigeria include inadequate account opening procedures and un-reconciled accounts, insider dealings and breach of trust, especially by branch managers. Most frauds were observed to have been committed within the area of control of the banks and could not have been possible if good corporate governance and adequate/appropriate internal controls had been properly applied. Put differently, fraud in the banking sector is due largely to the unscrupulous circumvention of the systems by bank staff, either acting alone or in collusion with outsiders, rather than system failures.⁷

Among the various forms of corporate fraud especially in banks, computer fraud or electronic banking fraud has assumed an alarming dimension in the world of financial crime. Advances in computer technology and its application to banking operations has made it possible for criminals to divert funds electronically away from their rightful owners. E-banking fraud types that pose serious threat to banking business include:- Credit card fraud, identity theft and internet fraud, e.g. by hackers. E-banking fraud perpetrators come from every educational, geographical, racial, religious, gender and socio economic background. Contrary to popular belief, most fraudsters are not slinky, shady characters who perpetrate their crimes under the cover of night. Today e-fraudsters are often trained professionals who are good at what they do:- stealing money and assets from people. Although it has not yet become rampant in Nigeria, the potential for e-banking fraud remains high.⁸

The general effects of bank fraud include loss of funds and clients, loss of profit by the affected institutions, rising portfolio of non-performing loans arising from insider abuse, erosion of public confidence in the system and discouragement of the banking habit. Ultimately, it can translate into distress, thus undermining the central bank’s monetary management role and impairing savings, investment and economic growth.⁹ 

The cases of attempted fraud reported to the Nigeria Deposit Insurance Corporation (NDIC), in compliance with the provisions of the NDIC Act, was 471 involving the sum of N3.8 billion naira in 1997. The figure declined to 182 cases in 1999 while the amount rose to N7.4 billion naira by 1999. In 2001, the number of attempted frauds was 943 involving the sum of N11.2 billion naira. The actual losses, as reported, for 1997, 1999, and 2001 were N227 million naira, N2,731 million and N906 million naira respectively. It is more worrisome when bearing in mind under-reporting incidence, it  is further realised that out of the N11 billion naira attempted frauds in 2001, N10.5 billion (or 95%) came from only ten banks, an average of N1 billion naira for each of the ten banks as revealed by a finding. All categories of staff were involved in the reported fraud cases. Furthermore, in most of the banks especially the 33 banks in liquidation, insider abuse is perhaps the most significant that led to their failure. Many owners and directors abused or misused their privileged positions or breached their fiduciary duties by engaging in self-serving activities. The magnitude of fraud-tainted lending which became irrecoverable in most of the banks in liquidation shows that in a bank like Financial Merchant Bank Limited, all the loans in the bank were insider-related. In Group Merchant Bank, 80% of the loans were extended to Directors and in Credite Bank Limited the ratio was 76%. Although many of the directors found to be involved in the insider abuse have either been prosecuted or have being tried for such offences under the Failed Banks (Recovery of Debts) and Financial Malpractices Act of 1994, the menance remains an issue of serious concern in the industry.¹⁰

Precisely, the term “Advance Fee Fraud” is a fraudulent process of enticing a victim with a bogus business proposal, with a promise to transfer large sums of money, usually in foreign exchange, purported to be part of the proceeds of certain contracts, to the addressee’s bank account to be shared in some proportion between the parties. Sometimes, the victim is invited to Nigeria and accorded a red-carpet reception by the fraudsters who pose as high – ranking government officials in the Presidency, Central Bank of Nigeria, Nigerian National Petroleum Corporation or any other sensitive government agency.¹¹

Usually, the fraudsters invent bogus government committees purported to have cleared the payments and also engineer fake publications in the newspapers evidencing purported approvals to transfer non-existing funds. To consummate the transaction, the victim would be required to pay “advance fees” for such purposes as processing, licencing, registration, sign-on, audit, insurance, and for National Economic Recovery Fund, etc. It is instructive to note that the receipt of these “advance fees” is the real motive of the crime or scam.¹²

Advance Fee Fraud commonly known as “419” in Nigeria is an umbrella expression for multifaceted forms of fraudulent acquisition of property:- very imprecise in its popular connotation but sufficiently directional to exclude armed robbery, brigandage, burglary, piracy and the like.

Yet in law, reference to “419” is strictly to the technical offence of obtaining property by false pretence which is defined in section 419 of the Federal Criminal Code.¹³ This offence has existed since 1904 when the Criminal Code was introduced into Nigeria.¹⁴ Although there have continuously been numerous prosecutions and convictions for the offence nationwide, it did not gain the kind of notoriety which now attends it. Hitherto, offences of obtaining property by false pretences did not involve very large sums of money, they were mainly individual rather than organized or syndicated crimes, they had rarely any extra-territorial effect and the image of the country was not jeopardized. Today the position is radically different. Advance Fee Fraud or “419” has become an organized crime, has attained a very high level of sophistication, manifest in numerous varieties and has assumed international dimension causing as much international furore as drug trafficking by Nigerians. Consequently, the adequacy and efficacy of section 419 and related provisions in the Code to cope with the new dimension of the offence was questioned. For instance, the definition of this offence under the combined effect of sections 418 and 419 of the Code has some severe limitations which render it inadequate to meet all cases deserving of penal sanctions and especially the new forms the offence has assumed. Only things “capable of being stolen”¹⁵ can be the subject-matter of the offence. Land¹⁶ or an intangible thing such as a Job and other intangible benefits are out side its scope. Further, the false pretence must relate to a matter of fact past or present. A false representation of a future by means of which ownership in property is transferred is outside the scope of the offence unless there can be implied in it a representation of a present or past matter.¹⁷

Hence because of the technicalities involved in the application of section 419, many courts are not sure whether a particular set of facts amount to stealing or to obtaining by false pretences. Consequently, there are convictions for the wrong offences¹⁸, unnecessary appeals and in some cases guilty persons are set free.

            The allied offences under 419A¹⁹ and 419B additional to section 419 of the Code did not remedy any of the shortcomings mentioned above but merely addressed the issues of obtaining credit by fraud and fraudulent use of cheques to obtain property or credit.

            By 1977, there was a growing incidence of use of false cheques to obtain property and this became a matter of public concern. To meet this, the Dishonoured Cheques (Offences) Act²⁰ of 1977 was enacted prohibiting the obtaining of property or credit by means of a cheque which is dishonoured on presentation within three months of issue on the ground of insufficient funds. The punishment is imprisonment for two years without the option of a fine in the case of an individual or fine of not less than N5,000 naira in the case of a corporation.

            In response to the devastating effect of the new wave of frauds, the Federal Government promulgated the Advance Fee Fraud and other Related offences Decree (No. 13) of 1995 (now an Act). This Act seeks to encompass diverse aspects of the new wave of fraud, prescribes stiff penalties, takes the offences out of the ordinary courts of the land, relaxes rules of evidence and procedure and yet is dressed, in its main thrust, in section 419 garb.

1.2              “Money Laundering”

The word “Laundering” is used to describe the investment of profits or transfer of funds made from criminal activities or illegal sources into legitimate or legal business so that the original source becomes difficult to trace. So to “launder money” that has been obtained illegally means to process it through a legitimate business or to send it abroad to a foreign bank, so that nobody knows that it was illegally obtianed.²¹

The character of money laundering as both a transactional and highly professional crime has resulted in the formation of a global counter-force to confront it on universal level. In Nigeria, money laundering activities are not strange to us. The thinking is that a reasonable proportion of our national fortunes are laundered either within the system, or across the frontiers of the nation. Internally, there are activities which are indicative of existence of money laundering within our national economy. Incidences are also abound to establish across border laundering activities in Nigeria.²²

The sources of laundered money are numerous and differ from one country or jurisdiction to the other, both in type and  intensity.  However, generally, the sources of funds for money laundering include the proceeds of crimes arising from the following activities:- drug trafficking, embezzlement of public funds and other corrupt practices, advance fee fraud and allied offences in the corporate sector, illegal arms trade, computer fraud, currency counterfeiting, foreign exchange malpractices, prostitution, human trafficking, smuggling, tax evasion, illegal mining and oil bunkering.²³

Usually, money is laundered through financial institutions in a number of Jurisdictions exploiting varying degrees of loopholes in banking laws and regulations. In doing this,  the launderer seeks to render each isolated stage appear innocent to the financial institution in the process. It is widely held that the placement or first stage which involves the physical disposal of cash proceeds derived by the criminal from his illegal activity is the most critical in the money laundering process. Once the launderer passes that stage, the chances of his illicit money being detected are very slim. This explains why effective control of money laundering concentrates on this stage. The regulatory effort in this respect is essentially designed nor only to make it much more difficult for money launderers to introduce money into the financial system, rather it is also to facilitate the identification and tracking of  such illegal money that may have managed to penetrate the system.²⁴

1.3       “EFFECTIVENESS OF LEGAL AND ENFORCMENT FRAME WORK”

The word “effectiveness” refers to something that works well and produces the results that were intended.²⁵

The word “legal” is used to describe things that relate to law; an action or situation that is allowed or required by law; that which is lawful or conforms to the law; or capable of being recognised by law; or an action or situation that is proper and sufficient in law.²⁶

The term “enforcement” means ensuring that a law or decision or rule authoritatively laid down is obeyed, usually by punishing people who do not obey it; or by imposing any appropriate civil or criminal sanctions.²⁷

Hence the expression “effectiveness of legal and enforcement framework” refers to a set of criteria that seeks to ensure that an action or situation that is lawful or required by law takes effect.

2.0              CRITERIA FOR EFFECTIVENESS

“Effectiveness” can only be measured by reference to the extent to which a national enforcement mechanism/institution positively addresses the devastating effect of economic and financial crimes on the national economy and the well-being of individuals and groups in a given society. This therefore permits the following “effectiveness factors” to be identified as generally applicable:- independence, defined Jurisdiction and adequate powers, accessibility, cooperation, operational efficiency, and accountability.²⁸

2.1       INDEPENDENCE

            An effective national institution will be one which is capable of acting independently of government, of party politics and of all other entities and situations which may be in a position to affect its work. Hence such an institution must enjoy independence through the following:- (a) legal and operational autonomy; (b) financial autonomy; (c) appointment and dismissal procedures; and (d) composition.²⁹

2.2              DEFINED JURISDICTION³⁰

An effective national mechanism/institution will possess clearly defined subject-matter jurisdiction. Such jurisdiction will usually be set out in its founding legislation. Jurisdiction can be ascertained, at least partially, from functions. However, while they are generally indicative, it will not always be possible to ascertain the true nature of an institution’s subject-matter jurisdiction solely from an examination of its functions. Jurisdiction involves also consideration of the precise legislative basis of specific functions.

An institution with a broad or vaguely defined subject-matter jurisdiction will often be less strong and less effective than one which operates within identifiable limits. The possibility of straying from its central purpose or of being persuaded to take up less important tasks will  always be greater for the institution which lacks a clearly defined mandate.

It may be the case that the subject-matter jurisdiction of a national institution will at times overlap with the Jurisdiction of another entity. It is necessary to ensure that such technical conflicts do not obstruct the effectiveness of either body. Clarity of purpose during pre-establishment process is the easiest way to prevent conflicts between similar institutions. The purpose of a new national institution is to perform tasks which cannot be or are not being performed by others. The new institution should therefore be structured in such a way as to complement existing bodies, not to compete with them. Hence inter-agency referral is another way of strengthening complementarity as are the development and maintenance of good communications between similar institutions. Such cooperation may be encouraged by a provision in the founding legislation of an institution mandating it to establish and maintain a close contact with similar bodies in order to promote common policies and avoid conflict in cases of overlapping jurisdiction.

Power, in this context, refers to the ability of a national institution to perform a certain act or to compel such performance by an individual or other entity. Power must be enforceable. The powers of a national institution should be established by law. Provision should also be made for the imposition of legal or administrative sanctions when the free exercise of a national institution’s powers is obstructed.

It is not useful to set out a list of basic or even minimum powers with which a national institution should be vested. Power can only ever relate to purpose. For a national institution, excessive powers may be as damaging as insufficient powers. A national institution must be granted powers to permit the effective discharge of its responsibilities. In the first instance, an evaluation of the adequacy of a national institution’s powers should be made with reference to the functions which it was established to perform.

2.4       Accessibility³¹

An effective national institution will be one which is readily accessible to the individuals, groups and institutions or sector of the economy it is established to protect or whose interest it exists to promote. Accessibility cannot be achieved solely through structural measures but will be influenced by all aspects of an institution’s organization and procedure. An institution which is perceived as responsible and effective and which has the public trust will automatically enhance its own accessibility. An insittuion which devotes attention to cultivating relationships with individual or group clients and with other relevant institutions and departments will be similarly well regarded.

The following practical matters should also be taken into account when attempting to improve accessibility:- (i) awareness of the institution; (ii) physical accessibility to its constituency; (iii) and accessibility through representative composition.

2.3              Cooperation and Collaboration³²

Establishing and strengthening cooperative and collaborative relationships with a wide range of relevant national institutions and intergovernmental organisations as well as groups will reinforce an institution’s own initiatives, thereby enhancing its overall effectiveness.

2.5       Operational Efficiency³³

A national institution, like any other organisation, must take care to ensure that its methods of work are as efficient and effective as possible. Operational efficiency touches all aspects of an institution’s procedures, from the recruitment and selection of personnel, to the development of working methods and rules of procedure, to the implementation of regular performance reviews.

It is evident that, regardless of its specific responsibilities, a national institution will have certain fundamental requirements ranging from adequate human, technical, material and financial resources to working methods, review and evaluation of its activities.

2.6       Accountability³⁴

A national institution is not an end in itself and can only be as strong or as humble as its achievements. Institutional effectiveness requires the development of a system of accountability based on specific, ascertainable goals.

In accordance with its legislative basis, a national institution will invariably be legally and financially accountable to the legislature or/and Government. This aspect of accountability is most usually dealt with through reporting obligations. In view of their essential link with accountability, reporting requirements should be specified in the founding legislation of the institution and include as much detail as possible on the following points:- frequency of reports; possibility of submitting ad hoc, special reports; issues to be reported on; and procedure for examining reports.

Transparency, through publication and dissemination of reports, will inevitably enhance an institution’s external credibility.³⁵

In addition to the above mentioned general effectiveness factors are the following specific factors in the context of financial crimes like Advance Fee Fraud and Money Laundering.

First, the effectiveness of a legal framework is largely determined by:- (a) the relevancy and currency of the scope of coverage or range of issues that constitute the crime in question, both principal and allied; (b) the availability of provisions for the identification, tracing or tracking, investigation of crimes, and prosecution of offenders; (c) and the availability or provision of appropriate and/or adequate penal sanctions that fit the crime in question.³⁶

Second, on effective enforcement framework or strategy must include the following critical components in both the founding legislation and its method of work:- (a) provision for confiscation or seizure of proceeds of such financial crimes;³⁷ (b) provision for forfeiture ofproperty;³⁸ (c) provision for extradible offence(s)/extradition³⁹; (d) provision for mutual legal aid in criminal matters,⁴⁰ and (e) provision for institutional capacity to enforce or monitor compliance, or coordinate enforcement strategies aimed at combating Advance Fee Fraud and Money Laundering activities.⁴¹ This capacity that is human, technical, material and financial in nature and scope, is determined by the general effectiveness factors earlier analysed.

3.         Appraisal of a good effort at effective legal framework in combating Advance Fee Fraud in Nigeria.

            As earlier indicated, the lack of adequacy and currency of section 419 and related provisions in the Criminal Code to cope with the new wave of frauds in Nigeria resulted in the promulgation of the Advance Fee Fraud and Other Related Offences Decree (No. 13) of 1995 (now an Act). An appraisal of this Act is the objective of this part of the paper.

            Section 1(1) of the decree deals with the offence of obtaining property by false pretences. It provides as follows:-

            1(1) Notwithstanding anything contained in any other enactment or law, any person who by any false pretence, and with intent to defraud-

a)                  obtains from any  other person, in Nigeria or in any other country for himself or any other person; or

b)                  induces any other person, in Nigeria or in any other country, to deliver to any person,

any property, whether or not the property is obtained or its delivery is induced through the medium of a contract induced  by the false pretence, is guilty of an offence under this Decree.

(2)        A person who by false pretence, and with intent to defraud, induces any other person, in Nigeria or in any other country, to confer a benefit on him or on any other person by doing or permitting a thing to be done on the understanding that the benefit has been or will be paid for is guilty of an offence under this Decree.

(3)        A person who is guilty of an offence under subsection (1) or (2) of this section is liable on conviction to imprisonment for a term of not less than 10 years without the option of a fine.”

A false pretence is defined in Section 23 as follows:

“23. In this Decree, unless the context otherwise requires ‘false pretence’ means a representation, whether deliberate or reckless, made by word, in writing or by conduct, of a matter of fact or law, either past or present, which representation is false in fact or law, and which the person making it knows to be false or does not believe to be true.

            The offences in section 1(1) is largely similar to the offence of false pretences under section 419 of the Criminal Code. The distinction between “obtaining” and “including delivery” remains. A charge which alleges “obtaining” will fail if the evidence shows that the false pretence was designed to induce delivery of property to another.⁴² As with section 419 the offences relates to the acquisition of ownership by false pretences. If only possession is transferred as a result of the pretence, the offence may be stealing.⁴³ It is likely that arguments may persist as to whether what was obtained was ownership or possession and the accused may seek an avenue of escape through such technicality. It is suggested that a definition should be introduced to the effect that a person is deemed to obtain property or to induce delivery of property not only when he obtains or induces transfer of ownership but also when he obtains or induces transfer of possession or control of the property.⁴⁴

            While the subject matter of the offence in section 419 of the Criminal Code is restricted to “anything capable of being stolen”, there is no such restriction in section 1(1). It refers merely to “property”. Anything whatsoever which is the property of someone can be the subject matter of a charge under section 1(1). Things which are capable of being stolen are defined in section 382 of the Code.

            Inanimate things must be movable to qualify as things capable of being stolen. If they are immovable they become capable of being stolen as soon as they become movable. Section 1(1) avoids all of this. Land and things attached intangible property such as stored information.

            The extension of the offence to cases where a “benefit” is conferred is very welcome.⁴⁵ The Code offence deals mainly with the transfer of material things. However, an unnecessary avenue of escape for culprits is introduced by the requirement of an “understanding that the benefit has been or will be paid for.” If a person by a false pretence and with intent to defraud induces another to cover a benefit on him, that is conduct deserving punishment. The provision should have stopped there. The understanding as to payment which is made an element of the offence and should be proved, means that there can be no conviction unless this element is proved. D, in Nigeria writes to the Nigeria High Commissioner in London pretending that he is a Nigerian ambassador in an East African country intending to visit London for a few days and request car facility on arrival. As a result, a chauffeur driven car is made available to him which he uses for some days. Here D has by false pretences and with intent to defraud⁴⁶ secured a benefit. This is surely a criminal act deserving punishment. But since there is no understanding as to payment for the benefit, D cannot be convicted. Furthermore, this requirement is likely to give rise to unnecessary argument as to what constitutes payment. It is submitted that the requirement as to payment serves only a negative purpose and should be repealed.

            The definition of false pretence now includes a representation as to a matter of law. This will not be of  frequent occurrence but the provisions is very useful to catch those who swindle by misrepresenting the law. It is regrettable that a false pretence is still confined to a past or present matter. A false pretence as to a future matter is excluded. This is one of the major weaknesses of the section 419 offence. There are instances of future representation which deserve punishment because there was never an intention to fulfil the promise which is only part of the fraudulent scheme. Therefore, if a person deceitfully undertakes to do what he never intends to do, this should be within the offence.

As Bowen L.J. Observed in Edgington v. Fitzmaurice⁴⁷

“There must be a misstatement of an existing fact; but the state of a man’s mind is as much a fact as the state of his digestion. It is true that it is very difficult to prove what the state of man’s mind at a particular time is, but if it can be ascertained it is as much a fact as anything else. A misrepresentation as to the state of a man’s mind is, therefore, a misstatement of fact.⁴⁸

            The offence of cheating under section 230 of the Penal Code covers scope of both sections 419 and 421 of the Criminal Code. The relevant part of section 320 punishes “whoever by deceiving any person…” etc; and the deceit may take the form of a false representation as to future conduct.⁴⁹ Likewise “deception” for the purpose of the offence of obtaining property by deception in English law is defined to include “a deception as to the present intentions of the person using the deception or any other person.”⁵⁰ This is a more effective way of catching swindlers. There is no fear of penalising a mere breach of contract or promise as long as an intention to defraud must be proved.

            The provision that the false pretence may be deliberate or reckless is very welcome. A person should be liable not only when he deliberately makes a misrepresentation but also when he makes a misrepresentation knowing that it may or may not be true.

Fraudulent Invitations

            Section 4 of the Decree deals with fraudulent invitations which constitute one of the methods used by tricksters to bring their victims into Nigeria.  A person commits an offence under the section if by false pretence and with intent to defraud any other person he invites or induces that person or any other person to visit Nigeria for any purpose connected with the commission of an offence under the Decree. The offence is punishable with imprisonment for a term not less than 7 years without the option of a fine. The exact scope of the provision is not too clear but it seems that the full offence is committed both where the invitee visits Nigeria in response to the invitation and where he does not.

Attempts

It is provided in section 5 that where a false pretence which constitutes an offence under the Decree is contained in a letter or other document, it is sufficient in a charge of an attempt to commit an offence under the Decree to prove that the letter or document was received by the person to whom the false pretence was directed.⁵¹ Section 5 (2) provides that notwithstanding anything to the contrary in any other law, every act done or omission made by any person to facilitate the commission by him of an offence under the Decree constitutes an attempt to commit the offence. This is effect ousts the test of attempt in section 4 of the Criminal Code and cuts out argument as to whether the accused’s acts are merely preparatory. Preparatory acts constitute attempts under the Decree but only if done by the person designing the offence. If a preparatory act is done by an aider, section 7 of the Criminal Code and section 8 of the Decree will apply.

It is also provided in section 6 that a person in possession of a letter containing a false pretence “which constitutes an offence”⁵² under the Decree is guilty of an attempt to commit an offence under the Decree if he knows or ought to know, having regard to the circumstances of the case, that the letter contains a false pretence. The section cannot mean that any person who is knowingly in possession of such a fraudulent letter is automatically guilty of attempt. If it were so, possession for an innocent purpose e.g. as an exhibit, will be penalised. It must be confined to persons in possession with a view to furthering an offence.

To punish for attempt a person who does not know the content of the letter but who merely ought to have known it, does not seem right. An attempt implies a purpose to commit the full offence.⁵⁸ A man cannot properly be said to be attempting to commit an offence if he does not in fact intend to commit it.  Blameworthy ignorance of the criminal content of a letter may be punished as something else but not as attempt to commit the offence to which the letter tends.

Other Fraud Related Offences

The Decree deals with some other fraud offences which are currently of high incidence. Section 2(a) makes it an offence for anyone with intent to defraud, to represent himself as capable of producing currency note from paper or other material by washing, dipping, or treating with any substance. Section 2(b) deals with persons who, with intent to defraud, represent themselves as having the power to double money through scientific means, invocation of juju or other invisible entity or anything whatsoever. Section 2(c) punishes any person, other than the Central Bank or Nigeria, who prints, makes or issues any currency note or presents himself as capable of doing so. The punishment in each case is imprisonment for a term not less than 5 years without the option of a fine.

Laundering of Proceeds of Prohibited Acts.

            Section 7 deals with laundering of the proceeds of unlawful activities under the Decree.⁵⁴ A person who conducts or attempts to conduct a financial transaction which involves the proceeds of a “specified unlawful activity,⁵⁵ with intent to promote the carrying on of such activity or to conceal or disguise the nature, location, source, ownership or control of the proceeds of such activity or to avoid a lawful transaction under Nigerian law is guilty of an offence if he knows or ought to have known⁵⁶ that the property involved in the transaction represents proceeds of some form of activity prohibited by the Decreee.⁵⁷

 The punishment for this offence is, in the case of a financial institution or corporate body, a fine of N1 million. If it is unable to pay the fine its assets to the value of the fine shall be confiscated and forfeited to the federal government. A director, secretary or other officer of the financial institution or body corporate or any other person who is guilty of this offence is liable to imprisonment for not less than 10 years without the option of a fine.⁵⁸

These severe punishments are not justifiable in cases where liability arises merely because the offender “ought to have known” that he (it) was dealing with the proceeds of an unlawful activity. In such a case, there is liability merely for negligence. The prescription of minimum punishments makes it impossible for the degree of negligence involved to be reflected in the sentence imposed by tribunal. There surely is a moral distinction between the conduct of a person who knowingly aids in laundering fraud  money and one who does so negligently, the offender might have been deceived as to the quality of money being dealt with in circumstances where a prudent businessman would have seen through the deception. In such a case, a severe penalty is imposed for imprudence, not for wilfully laundering dirtymoney.⁵⁹ It is suggested that this offence should be confined to persons who have knowledge of the quality of the money they deal with. If there should be liability for negligence, a separate offence is required which does not carry a fixed minimum penalty.

Transportation of Monetary Instruments or Funds

It is an offence under section 7(3)⁶⁰ for a person to transport or attempt to transport monetary instrument or funds from a place in Nigeria to or through a place outside Nigeria and vice versa with intent to promote the carrying on of a specified unlawful activity; or with intent (where the monetary) instruments or funds represent the proceeds of an offence under the Decree) to conceal or disguise the nature, location, source, ownership of the monetary instruments or funds to avoid a lawful transaction under Nigerian law. It must be proved, however, that the offender knew or ought to have known, having regard to the circumstances that the monetary instruments represent the proceeds of an unlawful activity as well as the purpose of the transaction.

The punishment for this offence is a fine of N500,000 or twice the value of the monetary instruments or funds involved whichever is higher, or imprisonment for not less than 10 years or both such fine and imprisonment.⁶¹

Other Features of the Decree

Use of Premises

Section 33 makes it an offence punishable with imprisonment for not less than 5 years and without the option of a fine for an occupier or person concerned in the management of premise to cause or knowingly permit it to be used for doing what constitutes an offence under the Decree.

Conspiracy, Aiding, Incitement, Attempts etc.

            Those who conspire to commit an offence under the Decree, or who aid, abet, counsel, procure, incite or induce the commission of such offence as well as those who attempt or are accessory to the offence are liable to the same punishment prescribed for the offence.⁶²

Conviction for Alternative Offence

            The power to convict for alternative offences is contained in section 9. Where the full offence is charged but the evidence establishes an attempt and vice versa, the tribunal may convict for the offence proved. Quite often the evidence led on a charge of obtaining by false pretence discloses the offence of stealing and not false pretences e.g. as in a situation when the offender converted to his own use property meant for another person. In such a case there may be a conviction for stealing by virtue of section 173 of the Criminal Procedure Act.⁶³ If this situation were to arise on a trial for obtaining by false pretences under the Decree, section 173 will not enable the tribunal trying the charge to convict for stealing (or receiving if proved). This is because section 173 applies only to offences in the Criminal Code and it refers specifically to the relevant sections (sections 390, 419, 421 and 427) which are subject to alternative convictions inter se. There is need, therefore, to extend the scope of section 9 to cover relevant alternative offences for which convictions may be made under the Decree. A general provision in this regard is suggested.

Liability of Bodies Corporate

            Section 10 deals with the liability of bodies corporate and those acting for them, in the now familiar language which imposes liability on the corporation and the office if it is shown that the offence was committed on the instigation or with the connivance or is attributable to any neglect of the officer. The liability of both parties arises only “where practicable.”  A good safeguard for fairness.

            Worthy of special note is section 10 (2) which provides that where a body corporate is convicted of an offence under the Decree, the tribunal may order that it be wound up and all its assets and properties forfeited to the federal government.

Trial by Tribunal

            Offences under the Decree are triable by a tribunal constituted under the Special Tribunal (Miscellaneous Offences) Decree.⁶⁴  The tribunal is not subject to any order of certiorari, mandamus and prohibition of any High Court or any other court order.⁶⁵  Prosecution for offences is by the Federal Attorney General or such officer of the Federal or State Ministry o f Justice as he may authorise.  If the tribunal so directs or the Inspector General of Police so requests, he may authorise any legal practitioner in Nigeria (including a legal practitioner in the Nigeria Police Force) to undertake the prosecution or assist therein.⁶⁶

            By section 19, an accused person who is absent from Nigeria may be tried and convicted in his absence.  An order made by the tribunal may, if expedient, be executed on the convicted person but a sentence of imprisonment shall commence when he returns to Nigeria.

Bail

            Bail is not available in respect of offences punishable with imprisonment without the option of a fine.  However, in such a case the tribunal may grant bail for a sum equal to that involved in the offence if the accused (a)  deposits half the amount in the tribunal as security for bail; (b)  provides surety for the balance of the amount; and hands over his passport to the tribunal for the duration of the bail.⁶⁷

            The restriction on bail probably follows the recommendation of the police who complained that releasing arrested fraudsters on bail often frustrated or hindered police investigation and efforts to bring from abroad, foreigners who are key witnesses.  This “they did by faxing or phoning threat messages to such foreigners vowing to organise kidnappers to seize and kill them on arrival in Nigeria.⁶⁸

Possession of Pecuniary Resources Unaccounted For

In a trial by the tribunal, the fact that the accused has pecuniary resources or property for which he cannot satisfactorily account and which is disproportionate to his known sources of income or that he had at or about the time of the alleged offence obtained an accretion in his pecuniary resources or property for which he cannot satisfactorily account may be taken into consideration by the tribunal as corroborating the evidence of a witness.⁶⁹

Evidence

No witness at a trial for an offence under the Decree shall be presumed unworthy of credit for the reason only that he participated in the commission of the offence.⁷⁰  The tribunal may compel one or more of the persons charged before it to give evidence as a witness and if he refuses to be sworn or to answer lawful questions, he may be dealt with in the same manner as a High Court would deal with the case.⁷¹

Control of Offender’s Property

If at any stage of a trial, the tribunal is satisfied that a prima facie case has been made out against the accused person, it may exercise control over his property movable or immovable by prohibiting disposition of them, or assuming custody of them for their preservation pending the determination of the case.  It may also direct the stoppage of all outward payments from or operations or transaction in respect of, his bank account.⁷²

Restitution

A very useful provision in the Decree is the power to order restitution of property to the person defrauded.  By section 11, the tribunal shall, in addition to any other penalty imposed, order a convicted person to make restitution to the victim of the fraud as follows:  If the property involved is money, to pay to the victim an amount equal to the loss sustained by him.  And in any other case to return the property to the victim or pay its value to him where the return of the property is impossible or impracticable.  A restitution order is enforceable by the victim or by the prosecutor on behalf of the victim in the same manner as a judgement in a civil action.

            This provision ensures that the convicted person does not retain his ill-gotten gains.  If the offender decamps and is tried in absent, his assets will be reached for reparation.  If the victim is a foreigner who does not come to Nigeria for the trial, the prosecutor may enforce the restitution order on his behalf.  In some manifestations of the 419 fraud , the victims, especially foreigners, are induced to part with their money for some purpose tainted with illegality and in such circumstances that ordinarily, the rule ex turpi causa no oritur actio would prevent recovery of the money parted with.  It is suggested that in such cases the federal government should be the beneficiary of restitution orders.

Right of Appeal

A person convicted of an offence under the Decree has a right of appeal within 21 days of the conviction or judgment to appeal to the Special Appeal Tribunal whose decision is final.⁵⁰

Finally, the Advance Fee Fraud and Other Related Offences Decree is a good effort to establish an effective legal framework for combating “419” and related frauds.  The appellation “419” has gained immense popularity as a reference to the offence and is likely to stick despite the more pointed and perhaps more dignifying title:-  “Advance Fee Fraud.” The offence of obtaining property by false pretences in section 410 of the Criminal Code is not abolished.  If the defects in section 419 are remedied, it remains appropriate for the small fish who should be taken to other courts.

            Some recommendations for reform have been made in the foregoing pages.  It is hoped that these will receive due consideration and if implemented, will help plug some of the holes in the Decree.

            In his address at the inauguration of the National Committee on Corruption and Other Economic Crimes, the Honourable Attorney-General and Minister of Justice (April 3, 1989) observed that:

“In our acquisitive society, many people are rated in terms of what they own and not what they are.  Social climbing based on illicit wealth is not frowned upon.  Public office is regarded as a vehicle for acquiring wealth and unbridled affluenced and not as a merited avenue for rendering invaluable service to the Nation for our collective good.”

In the same vein, a well known commentator has admonished that:

“So long as society measures man’s worth by the degree of his material possessions, so long will men and women strive to get there by whatever means they can.”⁷⁴

            Nigerian society needs a very radical cleansing – a cleansing which makes people, especially those who have held public office account for their excess wealth or face the wrath of the law.  This will send the right message down the line that crime does not pay.

4.         APPRAISAL OF A GOOD EFFORT AT EFFECTIVE LEGAL

FRAMEWORK IN COMBATING MONEY LAUNDERING IN NIGERIA

1.         Introduction

            Hitherto, International attention had been focused on direct methods of eradicating the drug trade by perfecting the strategies of apprehending drug offenders.  Gradually, emphasis shifted to attacking the proceeds of the trade on the premise that if the offender is disgorged of his booty or if the criminal activity becomes expensive or less lucrative, it may eventually discourage such conduct.  One crucial component of this approach is to complicate or block avenues of laundering these proceeds.⁷⁵

            Aside from viewing the fight against money-laundering as a fight against drug trafficking, there is the added consideration that the proceeds of illegal activity especially the enormous size of proceeds generated from drug trafficking may discourage or frustrate legitimate business enterprise, corrupt the financial system⁷⁶ and ultimately the socio-political system.

            Out of the above, a twin track solution to the problem of money laundering has gradually emerged.  On the one hand, it calls for the strengthening of the criminal law since it is widely acknowledged that the principal burden must be carried by invoking penal means.  On the other hand, it is now recognised that the financial system can and must play an effective preventive role. In relation to each, however, it is accepted that national initiatives on their own would be insufficient.  This is so because the laundering of proceeds of crime is truly an international phenomenon.  No longer are operations limited to the country in which the illicit money is generated.  On the contrary, the transborder movement of money is now a prominent feature of laundering operations.⁷⁷

            This part of paper will, in the course of its critical analysis of some salient provisions of Decree 3 of 1995, examine the scope of the offence of money laundering in Nigeria and the preventative strategies outline in the same decree.  An examination of the role, techniques and effective ways of controlling money laundering process will further be carried out.

2.         Role and Techniques of Money Laundering

            Reliance on cash as the central medium of exchange gives rise to at least three common factors:-  (a) drug dealers need to conceal the true ownership and origin of the money (b)  they need to control the money; (c) and they need to change the form of the money.⁷⁸  This is what gives the money laundering process its crucial role. It can be summarised as the conversion of illicit cash to another asset, the concealment of the true source or ownership of the illegally acquired proceeds, and the creation of the perception of legitimacy of source and ownership.⁷⁹

            In their efforts to achieve these goals, money launderers make use of a wide variety of techniques.  Those most frequently mentioned in Interpol circles include:-  currency smuggling, the conversion of cash into negotiable instruments, the creative use of facilities offered by tax and financial havens; the establishment and use of front or shell companies, the use of currency exchanges and brokerage houses, the creation of false or inflated invoices, the use of casinos and other gambling enterprises, the use of credit cards obtained from tax haven banks, the use of facilities provided by underground or parallel banking systems, and resort to cash purchases, diverse, complex, subtle and secret.”  What can be said with a degree of certainty, however, is that the transnational movement of funds often plays a role in these transactions.

            It is evident that Nigeria has become notorious as a transit port for the drug trade.  Nigerian couriers and their counterparts abroad are believed to engage in substantial money laundering activities.  For example, a Nigerian trafficker after disposing of his consignment of drugs abroad may purchase cars at some used car markets in Europe where large cash transaction would not raise any eyebrows, bring the cars into Nigeria and sell them off.⁸⁰ Alternatively, cash can be brought physically into Nigeria and then sold in the autonomous or black markets.  The smart then repatriate the funds through the banking system.  With the proceeds and considerable profits, he can open letters of credit or legitimate or sham business transactions in order to transfer the funds abroad.

            The reasons why most developing economies such as Nigeria have, over the years, become more attractive targets for money laundering techniques are obvious.  First, many of these economies are cash strapped and can hardly realistically be discriminating in the type of funds they accept into their economies.  Second, as the major financial centres tighten their regulations on money laundering and enter into treaties to stem the same in the well-known havens, attention is shifted to these lesser known countries.  Third, deregulation of many of these economies, in obedience to the imperatives of structural adjustment policies⁸¹ and the need to attract foreign investment has meant relaxation of foreign exchange regulations and other restrictions in their financial laws and fiscal policies.⁸²  Some developing countries such as Nigeria may well be even more attractive targets considering that in addition to the above mentioned features, the country’s foreign exchange earnings are substantial and this may facilitate transfer of the proceeds of drug trafficking abroad through financial institutions.

3.         Nature and Scope of the Offences created by Decree No.3, 1995

            Offences created by the Decree could be divided into three.  The first are offences referred to as money laundering offences.  The second are offences that aid or abet the commission of money laundering offences or which prevent the detection of money laundering by individuals, directors, employees of casinos and financial institutions. The third are the liabilities of corporate bodies such as casinos and financial institutions which are used or which conspired to be used to commit money laundering offences.

(a)        Money Laundering offences.

            Nigeria is one of the countries, outside the Financial Action Task Force countries,⁸³ which have specific laundering offence.  The offence is first created by section 13 (1) of the National Drug Law Enforcement Agency  Decree No. 48 of 1989.  Under the section, it is an offence to knowingly or intentionally launder funds acquired through illegal activities.⁸⁴ Also made specifically punishable is the transportation of illegality acquired funds or monetary instruments (with knowledge of their sources) and the transportation of monetary instruments or money as a laundering stratagem.⁸⁵  But the main provision of the NDLEA Decree on money laundering (section13) has been repealed by the Money Laundering Decree.⁸⁶  The pertinent question, therefore, is whether the repeal is really necessary. From the drafting point of view, section 13 is a better piece of legislation.  Essential terms have been defined which are not defined in the 1995 Decree.  For instance, terms such as “financial transaction”,  “Money instruments”, “property” etc., have been defined in the section while the new Decree has not defined any of them.  With the repeal of section 13 it means the definitions would no longer be available in defining the terms in the new Decree.  Rather than repeal the section, one would have preferred a situation in which it is required to be read as one with the provisions of the new Decree.  Alternatively, most of the provisions can be re-enacted in an amendment to the new Decree.

            Section 14 of the 1995 Money Laundering Decree⁸⁷ makes it an offence for any person to convert or transfer resources or property derived directly or indirectly from illicit trade in drugs or psychotropic substances with the intention of concealing or disguising the illicit origin of the resources or property.  Any person found guilty of the offence is liable to between 15 and 25 years imprisonment.  A person is also guilty of a money laundering offence if he aids any person involved in the illicit traffic of narcotic drugs or psychotropic substances to evade the legal consequences of his action.  Penalty on conviction is also an imprisonment for a period of between 15 and 25 years.⁸⁸

            It is also an offence for a person to collaborate in concealing or disguising the genuine nature, origin, location, disposition, movement or ownership of the resources, property or rights to the property derived directly or indirectly from illicit traffic in narcotic drugs or psychotropic substances.  The penalty on conviction is also a jail term of between 15 and 25 years.⁸⁹

            From the above provisions of section 14 (1), it is clear that both the owner of the illicit drug money and person that knowingly aids or assists him in passing such money through legitimate banking channels is liable to be prosecuted for money laundering.

            It should be noted that a person may still be liable for any of the offences stated above even though the various acts that constituted the offences were committed in different countries.⁹⁰  This provision⁹¹ is of very great significance giving the fact that the illicit drug trade and the huge money generated from it actually take place outside the geographical expression called Nigeria.  Moreover, since the illicit drug trade is dominated by international cartels based in Asia and America, it is very essential that any Nigerian legislation on money laundering must take cognisance of those facts in order to succeed.  The problem, however, is that most of the drug related funds like most other ill-gotten wealth are deposited in tax-free havens with secret banking codes which do not allow for the revelation of the identity of the owner or source of funds as being required of Nigerian banks under the Decree.  Without the co-operation of the foreign banks or money authorities, it would be difficult if not impossible for the Nigerian authorities to decide whether the money being transferred into a Nigerian customer’s local account was drug related or not.

(b)       Offences by Directors and Employees of Financial Institutions

            Section 15 of Decree No. 3 of 1995 outlines the various offences that directors and employees of financial institutions are capable of committing under the Decree.  Thus, a director or employer of financial institution who warns or in any other way intimates the owner of the funds involved in the transaction referred to in section 10 of the Decree about the report he is required to make or the action taken on it has committed an offence under the Decree.  Such director or employee will therefore be liable on conviction to a term of between 15 and 25 years imprisonment if he refrains from making the report required under section 10 of the Decree.⁹²

            Furthermore, a director or employee of a financial institution who destroys or removes a register or record required by the Decree to be kept is guilty of an offence and will be liable on conviction to a jail term of between 15 and 25 years.⁹³

            A jail term of between 15 and 25 years also awaits a director or an employee who carries out or attempts to carry out under false identity any of the transaction specified in sections 1 to 5 of the Decree.⁹⁴ It is also an offence for a director or an employee to make or accept cash payments greater than the amount authorised under the Decree.⁹⁵  Penalty for breach of the offence is a fine not less than N250,000 or more than N1 million.  Alternatively, the accused may be liable on conviction to an imprisonment for a period of between 15 and 25 years.  Such person can also be liable to both such fine and  imprisonment.⁹⁶

            Furthermore, a director or an employee who fails to report an international transfer of funds or securities required to be reported under the Decree is also guilty of an offence which is punishable with a term of between 15 and 25 years or a fine of between N250,000 and N1 million, or to both fine and imprisonment.⁹⁷

            The contravention of any of the provisions of sections 2,3,4,5 or 10 of the decree by a director or employee of a bureau de change, casino or financial institution renders the person liable on conviction to between 15 and 25 years imprisonment or to a fine of between N250,000 and N1 million, or to both fine and imprisonment.⁹⁸

            In addition to any sentence or fine that may be imposed on convicted person under the section, he may further be banned permanently or for a period of 5 years from exercising the profession which provided the opportunity for the offence to be committed.⁹⁹

            Section 16 of the Decree makes it an offence to conspire with, aid, abet or counsel any person to commit an offence. It is also an offence under the section to attempt to commit or be an accessory to an act or offence, or to incite, procure or induce any other person by any means whatsoever to commit an offence under the Decree.  The penalty for the commission of any of the offences is prescribed for the particular offence the offender conspired, aided, incited or attempted to do so.

            The obstruction of the Agency i.e. the NDLEA or any authorised officer of the Agency in the exercise of the powers conferred on the Agency by the Decree is an offence.  Section 20 prescribed an imprisonment for a term of between 10 and 15 years for a person convicted of the offence.

(c)        Offences by Financial institutions and Other Corporate Bodies

            Where a bureau de change, casino, lending establishment, financial institution or any other body corporate commits and offence by making or accepting cash payments greater than the amount authorised under the Decree or by failing to report an international transfer of funds or securities required to be reported under the Decree, section 15 (2)(b) (ii) provide that such corporate is to be liable to a fine of between N250,000 and N1 million.

            Section 17 of the Decree provides that if an offence committed by a corporate body is proved to have been committed on the instigation or with the connivance or  attributable to any neglect on the part of a director or any officer of the company, then such person as well as the body corporate will be liable for the offence. The section further provides that the court may order the Decree and directs  the forfeiture or its assets to the Federal Government.

            Furthermore, section 20 provides that a financial institution found guilty of wilfully obstructing the Agency or any authorised officer of the Agency in the exercise of any of the powers conferred on the Agency by the Decree will be liable to a fine of N1 million.

NO PROTECTION FOR BANKS AND BANKERS

While banks and bankers will be severely punished for any infraction of the provision of the Decree under sections 14-18, it is uncertain if such banks and the Directors, Managers and other employees are immune from tortious and civil liability for losses and damages arising from any sets of commission or omission with regard to the customers accounts and with regard to the compliance or non-compliance with the provision of the Decree. Support for the above view is found in the curious provision of section 15(5) of the Decree which provides as follows:-

            “When, as a result of the serious oversight or a flaw in the internal control procedures, a financial institution or person designated in section 10, or a bureau de change, or casino fails to meet any of the obligations imposed on it by this Decree, the disciplinary authority responsible for the institution, casino, bureau de change or the person’s profession may take such action as is in conformity with its professional administrative regulations as it may deem necessary.”

            What the above means is that banks and bankers have no protection from criminal, civil, tortuous or even professional liability even when it is shown that they failed to comply with the provision of the Decree as a result of a serious oversight, or a flaw in the internal control procedures’ of the bank. It is also doubtful if an erring bank and its officials can take refuge under the protective provisions of section 21 of the Decree¹⁰⁰ which provides as follows: Notwithstanding the provisions of any law to the contrary, no civil proceeding shall lie or be instituted in any court or tribunal for or on account of or in respect of any act, matter or thing done or purported to be done under or pursuant to this Decree and if such proceedings are instituted before or after the commencement of this Decree, the proceedings shall oblate, be discharged and made void.”

            It is interesting that this protection provision of section 21 also literally ousts the jurisdiction of any court or tribunal in respect of any civil proceedings arising from or on account of or in respect of any act, matter or thing done or purported to be done under or pursuant to this decree. After a cursory reading of section 21 one is tempted to think that banks and bankers who submit routine reports on their customers banking affairs to the NDLEA and  C.B.N. will be protected from civil litigation even where they are guilty of a serious oversight or there is a flaw in their internal control system.” However, from the wordings of subsection (5) of section 15, it is apparent that banks and their employee are not covered by section 21. This, in effect, means section 21 is meant to protect only officials of the NDLEA and may be CBN.  This is so because all the offences created under section 14 to 17 of the Decree appeared to be geared specifically against banks and their employees.  In fact section 15 of the Decree specifically refers to financial institutions and their staff while section 7 provides, inter alia, that where an offence under the Decree which has been committed by a body corporate is proved to have been committed on the instigation or with the connivance of or attributable to any neglect on the part of a director, manager or other similar officer of the body corporate, or any person purporting to act in such capacity, he as well as the body corporate, where practicable, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

            From the above account it is submitted that the protection offered under section 21 only applies to the NDLEA and its officials and all acts of omission and commission that they commit during the investigation and prosecution of cases arising from the NDLEA and the Money Laundering Decrees.

            The situation of the banks and their employees are further compounded since from the provisions of subsection (1) of section 17 quoted above, any director, manager, secretary or other similar officer of such body corporate or any person purporting to act in any such capacity may also be deemed to be guilty of that offence even where it is attributable to any negligence on their part.  In such a case, the bank official cannot also be protected by the provisions of the bank’s Articles of Association excluding such officials from liability arising from their performance of their official duties.

            From the above account it is apparent that the Decree is a minefield for every bank and its employee who unfortunately have nowhere to hide or to seek succour. In fact subsection (5) of section 15 of the Decree also provides for professional sanction against any such institution and its employee.  How can a financial institution be expected to play such key roles in the enforcement of the Decree if no provisions are made for the financial, technical and juridical implications of their roles as informants, investigators and NDLEA spooks prescribed under the Decree?¹⁰¹

5.         STRATEGIES FOR PREVENTION OF MONEY LAUNDERING IN NIGERIA

            The Decree¹⁰² makes provision for the prevention of money laundering by, among other things:-

a)                  Limiting the amount of cash payments that can be made or accepted;

b)                  Regulating over-the-counter exchange transactions;

c)                  Providing for the proper identification of customers;

d)                 Empowering financial institutions to place special surveillance of certain transactions;

e)                  Providing for mandatory disclosure (of transactions lodgement or transfer of funds) by financial institutions and

f)                   Empowering the NDLEA to place surveillance on certain bank accounts.

(a)        Limitation of the Amount of Cash Payments

            The Decree puts a lot of burden upon banks in the detection and prevention of illicit drug money laundering.  For example the Decree in its section 1 provides that:-

“Except in a transaction through a financial institution no person shall make or accept cash payment of a sum greater than (a) N250,000, or its equivalent in the case of an individual (b) 2 million or its equivalent in the case of a body corporate.”

            The objective of this provision is clearly to prevent large quantities of cash from being laundered through purchases of precious metals, precious stone, works of art, luxury goods, cars, boats, air crafts, businesses, buildings, etc. or through investments in lawful companies or shell companies.  It is now an acceptable fact that the bulk of payments and receipts for drugs and other illicit transactions are done in cash.  By placing a cap on the amount that can be paid or received in cash, it is hoped that this will help in stemming the tide of cash movements in this area.  Although it is likely to create a lot of inconvenience for legitimate business transactions in a cash economy such as ours, perhaps the introduction of this measure will help in cultivating the culture of using the financial system and plastic money for most transactions.  However, one is not unaware of the dangers inherent in over reliance on cheques and other similar means of effecting payment for transactions, as the incidence of forgery is likely to increase through, in most cases, the connivance of officials of financial institutions.

            Be that as it may, the way the provision is drafted has greatly detracted from its potency.  For instance, the currency being referred to in paragraph (b) is not stated.  Thus as it is, the provision is meaningless.  Reference is merely to the figure “2 million.”  But “2 million” what? This is particularly relevant when it is read with what follows i.e. “or its equivalent”.  Equivalent in what? Any particular currency in mind?

            Another problem with the above provision is that it is only the banking industry that is saddled with the Herculean task of sifting illicit drug money from untainted or less tainted money.

(b)       Regulation of Over-The Counter Exchange Transaction

Section 3 of the Decree requires a person whose usual business is the carrying out of over-the-counter exchange transaction to submit to the Central Bank a declaration of his activity before starting his business.  He is also required to identify his customer and record every transaction involving a sum in excess of 100,000 dollars or its equivalent.  The record of such transactions must be in chronological order indicating the name and address of each customer and contained in a register numbered and initialled by an officer authorised by the Central Bank for that purpose.

The Decree provides no clue as to what transaction will be regarded as being over-the-counter.  However, the explanatory note to Article 3 of the Model Law on Money Laundering describes such transactions to be exchange operations conducted by financial establishments by changing cash in one currency into another currency without supporting documents.  In many countries, over- the counter exchange transactions are transactions commonly undertaken by bureau de change except that in Nigeria, this may include the activities of some individual Nigerians and non-Nigerian residents at the Wapa house in Kano, Bristol Hotel and several streets in Lagos and other urban centres.

It is also difficult to comprehend why this sum is fixed at 100,000 U.S. dollars.  The effect is that no identification is required and no record need be kept when a person walks into a bureau de change with 100,00 dollars cash for it to be changed into naira. Indeed, this arbitrarily high sum may unwittingly render the entire law ineffective.¹⁰³

Again, the term “authentic document” in the above provision has not been defined.  What identifying document is authentic, is left to be guessed by the bureau de change operator and this could be any form of document as long as it has the customer’s photograph on it.

But notes to the Model Law’s Article 3 has attempted a definition of authentic document” to include “identity card, passport and driving licence”.  We may adopt these documents.

(c)        Proper Identification of customers

            An important objective of the Decree is to assist the banks in sniffing out the bad guys and corporate bodies that deal in illicit drug money, and to put an end to the anonymity of financial operations which is regarded as the main smoke screen employed by drug traffickers to move funds and other forms of capital from one jurisdiction to the other.  Thus the Decree requires, under section 5, that the financial institution shall verify its customer’s identity and address before opening an account for such customer and that the customer must furnish official documentary proof of his identity as well as his photograph.  Most banks already required these from customers prior to the promulgation of the Decree.  Similarly, the customer must also furnish to the bank the originals of receipts issued within the previous three months by public utilities.

            The requirement for official document bearing a customer’s name and photograph be referring to a Nigerian passport, driving licence or the proposed National Identity Scheme.  However, the requirement for official receipts issued within three months appear ambiguous since not every person transacts official business every three months.  The existing requirement for current tax clearance certificate should, however, suffice.

            The additional requirement under section 5 (4) for a power of attorney-granted to a manager, employee or assignee to open or operate an account is the only innovation in the Decree as banks had routinely required all the other documents as part of their account opening documentation for corporate customers.

            It is submitted that the requirement of section 5(7) of the Decree that a bank can inquire from a nominal customer the true identity of its principal militates against the customary banking norms of confidentiality and secrecy.¹⁰⁴

            A casual customer in section 5 is not also defined in the Decree, but is appears that he is someone who does business with a financial institution on an irregular basis or one whose only relationship with the financial institution is the particular transaction.  For instance, any person who neither has an account nor has any business relationship with a bank could walk into a bank to obtain a bank certified cheque or bank draft as long as he could pay cash in consideration.

(d)       Special Surveillance of Certain Transactions

            Section 6(1) of the Decree¹⁰⁵ is to the effect that where a transaction involves N500,000 in the case of an individual or N2 million in the case of a corporate body irrespective of whether it relates to the laundering of drug money is unjustifiably complex or appears to have no economic or lawful objective, then the financial institution shall enquire from the customer as to the origin and destination of the funds, the aim of the transaction and the identity of the beneficiary.

            Sub-section 2 of section 6, however, requires that where the financial institution decides to carry out the transaction it shall:

“(a)      Draw up a written report containing all relevant information on the matters

mentioned in paragraphs (a) (b) and (c) of section 6(1) together with the identity of the principal and where applicable of the beneficiary or beneficiaries;

(b)        Take appropriate action to prevent the laundering of drug money, and

(c)        Send a copy of the report and action taken to the report and action taken to the Central Bank.

            Surely, it is necessary for financial institutions to be extra-vigilant where transactions are of unusual complexity, involve movement of huge sums of money and are apparently without economic justification or lawful objective.  However, in adapting the relevant provisions of the Model Law,¹⁰⁶ the Decree has omitted very vital provisions.

            In the first place, the Decree is silent on what will constitute “unusual or unjustified complexity”.  It appears that conditions of unusual  or unjustified complexity can be inferred by reference to the type or nature of the transaction and apparent goal.  The Model Law has provided us with a guide as to what to (be on the) look out for in gauging the unusual or complex nature of a transaction and the illegitimacy of its goal.  These are inter alia:- (a)  Large and currency exchange operations using cash. (b) Opening of an account at a branch far removed from the person’s domicile or workplace, or the opening of several accounts at different branches.  (c) The operation of an account essentially to transfer large sums to or from foreign countries, when the person’s or company’s activities do not appear to justify such movements. (d) The purchase or sale of security for large sums, for no obvious purpose. (e) Loan request secured by deposit certificates issued by a foreign bank or by assets that are of unknown origin or are incompatible with the person’s apparent lifestyle.

            Second, the Decree is silent as to what is the appropriate action to be taken by a financial institution in order to prevent the laundering of drug money. The following notes on Article 8 of the Model law is helpful as to what action a financial institution should take:- “Depending on the answer given, the financial institution will either (a) suspect a laundering operation, and is then required to report it to the authorities in accordance with the provisions of title  ii, or (b) convinced that the operation is illicit but without suspecting the laundering of drug money, in which case it should preferably refuse to execute it or (c) decide to go through with the operation, giving it the benefit of the doubt, in which case the institution must make a written report.

(a)        Mandatory Disclosure by Financial Institutions

            Under section 10(1) of the Decree, any single transaction, lodgement or transfer of funds in excess of N500,000 in the case of an individual, or in excess of N2 million if it is a corporate body, is required to be disclosed and reported to the NDLEA within seven days of that transaction. This provision is applicable to both financial institutions as well as casinos. Section 10(2) provides that a person other than a financial institution or a casino can voluntarily give such information of the lodgement, transfer or any transaction in excess of N500,000 or N2 million as the case may be to the NDLEA.

            The above is one of the most sweeping provisions of the Decree. It is suspected that this section is a horrible adaptation of Articles 12 to 15 of the Model Law. Rather than help in tidying up the earlier provisions, this section has unwittingly created a monster that will be difficult, if not impossible, to tame.

            The Model Law¹⁰⁷ requires merely the mandatory disclosure by financial institutions and others who, in the exercise of their profession, carry out, supervise or advise on operations involving transborder movement of capital, where they suspect that the sums involved in the transaction in the transaction derive from illicit traffic in narcotic drugs or psychotropic substances. It will be seen here that mandatory disclosure or reporting is limited to transborder transaction (i.e. moment capital) and there is even no specification of any minimum amount. The operative part of the provision is that there must exist a suspicion that the funds derive from illicit traffic in drug.

            Section 10, as it is drafted, will require mandatory disclosure and reporting for all transactions (domestic and transborder) as long as the sum involved in a single transaction passes the threshold sum of N500,000 for individuals and N2 million for corporate bodies. It is also not a requirement that there should exist a suspicion that the funds derive from drug trafficking. In other words, all transactions (including those known to be legitimate and untainted) must be disclosed and reported upon. Surely this result could not have been intended.

            Section 10 (3) of the Decree requires the NDLEA to acknowledge the receipt of any disclosure, report or information from a financial institution. By section 10 (4), the acknowledgment must be issued within the time allowed for the carrying out of a transaction. Thus if it is a cheque lodgement and happens to be issued on a Lagos bank, then both the disclosure and the acknowledgement must occur within 5 working days. An acknowledgement may be accompanied by a “stop notice” deferring the transaction for a period not exceeding 72 hours. A financial institution is expected to comply with the “stop notice” and defer the transaction. An acknowledgement of receipt without an accompanying “stop notice” is presumptive that the financial institution may execute the transaction.¹⁰⁸

            If it is not immediately possible to determine the origin of the funds within the period of stoppage, the Chairman of the Miscellaneous Offences Tribunal may under subsection (6) of section 10, at the request of the NDLEA, order that the funds, accounts or securities referred to in the report be blocked. However, if the financial insitution has not received the order to block the transaction after the expiration of the stop notice, the financial institutions is permitted to carry out the transaction.

(f)        Surveillance of Bank Accounts, etc, by NDLEA

            Finally, section 12 of the decree demolishes whatever remains of banking secrecy and confidentiality by providing that the NDLEA in its onslaught against illicit drug trafficking and money laundering can place any bank account under surveillance, place any telephone line under surveillance or tap such, have access to any computer system and obtain communication of any authentic instrument or private contract, together with all bank, financial and commercial records. Subsection (2) of section 12 further stipulates that banking secrecy cannot be invoked as a reason for not co-operating with the NDLEA in the performance and enforcement of its power under the section.

6.         Negative Effect of the Decree on Banking Culture

            From the extensive provisions of sections 6, 10, 12 and 14 of the Decree, it is apparent that all existing banking rules and norms based upon mutual confidentiality and secrecy as well as contract have been thrown overboard. Usually, a bank owes its customer the duty of secrecy or confidence whereby details of his account and transaction conducted through such must be kept secret from unauthorised persons. This confidentiality rule forms the bedrock of modern banking practice in the leading cases of Tourner v. National Provincial and Union Bank of England.¹⁰⁹ Bankers L.J. summarised the duty as follows:

This duty is a legal one arising out of contract. It is not absolute but qualified. It is not possible to frame any exhaustive definition of the duty. The most that can be done is to classify the qualifications and indicate its limits.¹¹⁰

            The qualification to the banker’s duty of secrecy or confidence can therefore be classified into four as follows:

a)                  where disclosure is under compulsion by law. E.g., court order or legislative requirement.

b)                  When there is a duty to the public to disclose, e.g., where it is reasonably necessary for protecting the bank or persons interested or the public against fraud or crime.

c)                  Where the interest of the bank required disclosure; and

d)                 Where the disclosure is made by express or implied consent of the customer.

While it is accepted that legal provision can make specific exceptions to the rule on secrecy, it is submitted that the sweeping provisions of section 6, 10, 12 and 14 of the Decree which compel banks to routinely investigate and report on their customer’s bank transactions where the amounts involved are over N500,000 for individuals and N2 million for companies, is to say the least a negation of all banking rules on confidentiality. From the provisions of section 9 of the Decree in particular, it will appear that bankers are being recruited into informants or agents of the NDLEA.

The existing law no doubt provides for exceptions to the rule on banking secrecy, nevertheless the sweeping provisions of section 6 on special surveillance of certain transactions, section 8 on the communication of all customer records to the CBN and NDLEA and of section 10 on mandatory disclosure,  do not constitute any exception to the rule on banking secrecy but now seem to make such exposure the rule rather than the exception. The major problem however is that these sweeping powers granted the banks can be subject to serious abuse by both the NDLEA operatives and the bankers themselves.

In view of the above problem, it is the considered opinion of this writer that all provisions on the mandatory reporting of lodgement of funds over N500,000 in case of individuals and of N2 million in case of companies should be made discretionary, and such decision to report to the CBN  or NDLEA should only be taken after the banks top management have received periodic reports on such lodgement over a period of time say six months. If adopted this suggestion will not only reduce the paperwork on such transactions but also will ensure greater certainty while eliminating the risk of possible abuse as mentioned above. Above all, it will restore banking confidence and maintain the rule that invasion of banking secrecy is the exception rather than the rule.

Secondly, the provisions of N2 million and above for corporate bodies must be reported will drive funds away from the banking industry. For example, large long term depositors even from genuine business transactions will weigh the advantages of the reporting requirements before making any such deposits. The resultant effect will be the drying up of such deposits. This, in the long term, may exacerbate the growing distress in the banking system. In fact, the inconvenience of a depositor waiting for 72 hours for a bank to obtain a clearance under the provision of section 10 (1) of the Decree and the possibility of a blocking order on the account pending investigation is enough disincentive to even legitimate fund owners from placing such with the banking system.

In order to ensure that the provisions of this Decree do not unwittingly signal the death knell of the banking industry, it is hereby suggested that any stoppage or blocking order should only be made in very exceptional proven cases where the objective is to prevent the movement of the funds. It is also suggested that such orders should only be made upon the concurrence of the Central bank Director of Banking Supervision.

Further, the requirement under section 9 of the Decree that bank and other financial institutions shall develop programmes to combat the laundering of drug money and designate compliance officers at its managerial level in their headquarters at each branch and local office etc is another unnecessary imposition of what should normally be an NDLEA function on the banks. For example, who is to bear the additional cost of recruiting and training personnel required under this section? Is the NDLEA going to pay for all these from its budget? Imagine the number of banks and their branches! When you add community banks, mortgage banks, bureau de change and finance companies, then you can imagine the enormity of the problem. Obviously, the NDLEA should devise suitable programmes for banks and their employees to increase their general awareness in detecting drug money laundering. But it is submitted that NDLEA with all its wide powers of surveillance and telephone tapping under section 12should be able to make a prima facie case on any suspected drug money launderer and afterwards, obtain the necessary information from the bank rather than converting the banks into another branch of the NDLEA for mutual assistance on a reciprocal basis. However, in the past few years, Nigeria has entered into several of such treaties both on the bilateral and multilateral levels. Most of these have been agreements mainly on drug abuse and trafficking but all these have substantial provisions on money laundering activities. These agreements include.

1)                  Mutual Assistance in Criminal Maters within the Commonwealth.

2)                  United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic substance (1989).

3)                  Agreement between the Government of Nigeria and Government of the United Kingdom concerning the investigation and prosecution of crime and the confiscation of the proceeds of crime, 1989

4)                  Treaty between the Government of Nigeria and the USA on Mutual Legal Assistance in Criminal Matters, 1989.

5)                  Memorandum of Understanding between the Government of Nigeria and the Government of the USA – 1990.

6)                  Extradition Treaty between the Republics of Benin, Ghana, Togo and Nigeria 1984.

(a)        Confiscation of Proceeds

            A critical part of any enforcement strategy designed to impact on the financial aspects of drug trafficking is the provision for the confiscation of the profits derived from this form of criminal activity. In recent years, a significant number of countries (Nigeria inclusive) have enacted legislation towards this end.¹¹¹ A number of considerations of both principle and expediency favour such an approach. Stripping the criminal of the profits made from criminal activities is increasingly being seen as an effective way to combat crime as well as a means of doing justice by restoring the criminal to the position he was (in) prior to carrying out these crimes. It was, therefore decided by the drafters of the 1988 U.N. Convention that Article 5 would address both the measures to be taken at the national level and the necessary mechanism to give effect to international co-operation in this area. Accordingly, Article 5 of the Convention requires each member nation to enact domestic forfeiture legislation enabling the nation in question to identify, trace, seize, freeze and forfeit property or proceeds located in the requested nation, which were derived from, or used in drug trafficking and drug money laundering in violation of the laws of the requesting country.

            In compliance with the above terms of the Convention, the Federal Government of Nigeria enacted the NDLEA Degree No. 48 of 1989 and charged the NDLEA with the responsibility, among other things, for adoption of measures to identify, trace, freeze, confiscate or seize proceeds derived from drug related offences of property whose value corresponds to such proceeds,¹¹² for strengthening and enhancing effective legal means for international cooperation in criminal matters for combating illicit drug trade¹¹³ and money laundering activities.¹¹⁴ The Decree also has elaborate provisions as to forfeiture of property¹¹⁵  which includes, inter alia, any real or personal property resulting from violation of any provision of the Decree; all narcotic drugs, all raw materials, products, equipments and instrumentalities of conveyance, etc are subject to forfeiture. This is so even where such property represents the proceeds of an offence under the laws of a foreign state.¹¹⁶

            The Agreement between the Government of Nigeria and that of the U.K. concerning the investigation and prosecution of crime,¹¹⁷ has a comprehensive section on tracing, seizure and forfeiture of proceeds of drug related money laundering activities. Article 13 (1) of the Agreement provides generally for the tracing of the proceeds of criminal activities. A requesting country may seek assistance in identifying, locating and assessing the value of property  believed to be within the territory of the requested country. A party may seek assistance from the other in enforcing the confiscation orders made as a result of the conviction of drug offenders, in the requesting party’s jurisdiction. All relevant documents relating to the conviction and a description of the property in relation to which assistance is sought must accompany such request. In order to ensure that a confiscation order is not in vain. Article 14 allows a requesting party to apply to the requested party for assistance in restraining property which is liable to confiscation, for the purpose of ensuring that it would be available for confiscation should such an order be given.¹¹⁸

(b)       Extradition

            Although there has been almost universal recognition that illicit drug trafficking offences are extraditable offences, narcotics related money laundering is a new criminal offence for many countries and has not been traditionally recognised as an extraditable offence. The Universal recognition of narcotics related money laundering as an extraditable offences is one of the most important aspects of Article 6 of the 1988 U.N. Convention. Because all parties are obligated to establish Article 3 (1) (b) (i) and 9ii) offences as criminal offences in their domestic law, (i.e. it is an offence to knowingly convert or transfer property acquired through illicit drug related activities and to knowingly conceal or disguise the nature location, source, ownership or movement of any property derived from illicit drug related activity), any requirements of dual criminality, that is that the offence is criminal in both jurisdictions in a party’s extradition law should be met. In fact, Article 6(2) of the convention states:-

Each of the offences (under Article 3 (1) (b) shall be deemed to be included as an extraditable offence in any extradition treaty existing between parties. The Parties undertake to include such offences as extraditable offences in every extradition treaty to be concluded between them.

            In Nigeria, all offences relating to drug abuse or trafficking under sections 10-12 of the NDLEA Decree No. 48 of 1989, and offences relating to money laundering under section 14 of Decree No. 3 of 1995 are extraditable offences.¹¹⁹

            In 1984, an extradition treaty between Benin, Ghana, Togo and Nigeria was signed. The treaty sealed a gaping loopholes in organised efforts at policing drug trafficking along the West African Coast. The quadripartite agreement, like section 4of Nigeria’s Extradition (Amendment) Decree No. 4 of 1988, had described an extraditable offence as any criminal offence punishable by imprisonment for 2 years or more. This blanket provision includes drug related offences because they have always attracted sentences over two years imprisonment.

            With the increasing use of African countries and ports as safe passages and transit ports, more regional Co-operation in extradition and other forms of legal assistance are certainly called for.

(c)        Mutual Legal Assistance in Criminal Matters

            Especially in criminal matters, mutual legal assistance is a fundamental feature of the legal control of illicit drug trafficking and money laundering activities.

            The final aspect of the 1988 U.N. Convention which requires special mention is contained in Article 7 and relates to the provision of mutual legal assistance in relation to serious drug trafficking offences. To that end, Article 7 (1)  provides that:- the Parties shall afford one another, pursuant to this article, the widest measure of mutual legal assistance in investigations, prosecutions and judicial proceedings in relation to criminal offences established in accordance with Article 3(1).”

            Nigeria swiftly implemented the provisions of the treaty it entered with the Commonwealth nations relating to Mutual Assistance in Criminal Matters¹²⁰ by the enactment of the Mutual Assistance in Criminal Matters within the Commonwealth (Enactment and Enforcement) Decree No. 13 of 1988. The forms of assistance which may be mutually rendered under the Decree include:- identifying or locating criminal offenders, service of relevant documents, examination of witnesses, search and seizure of assets, facilitation of the  personal appearance of witnesses before a court etc, effecting temporary transfer of persons in custody to enable them appear as witnesses, securing the production of official or judicial records and tracing, seizure and forfeiting the proceeds of criminal activities.¹²¹ These provisions are likely to be of even greater use when the NDLEA seeks to act in exercise of its special powers to conduct investigations on any person whose lifestyle and extent of the properties reasonably appear to the agency to go beyond his ostensible source of income.¹²²

            Generally, the provisions on contents for request for mutual assistance under paragraph 13 of the Scheme relating to Mutual Assistance in Criminal Matters within the Commonwealth are straight forward and appear easy to the nature of the assistance requested, specifying the nature of the criminal matter concerned, the identify of the accused summary of the facts of the accusations, the stage reached in the proceedings and any data fixed for further steps in the proceedings.

            There can be no doubt that these mutual assistance treaties provide a very fertile area of cooperation in the fight against illicit drug trafficking and drug related money laundering activities. Indeed the global nature of drug related money laundering offences have made the internationalisation of criminal procedures and penal measures virtually obligatory.¹²³

            Finally, while the ideals behind the promulgation of Decree No. 3 of 1995 are laudable and every citizen of this country (who decry the injustice innocent travellers are subject to at airports all over the world and who believe in a drug free society) should give the authorities all the support that is required.

            It is our belief that for the battle against drug related money laundering to succeed, it would require the cooperation, understanding and protection of the financial community. Effective, long lasting battle against drug related money laundering requires painstaking investigation, deployment of sophisticated gadgets and certainly not with guns and batons. In this area of money laundering, success will require that the law, as it presently stands, should be modified and accompanied with expertly drafted guidelines. In any case, the NDLEA  and the financial community should be partners and enemies in this war. Finally, it will be apparent that in the area of drug – related money laundering, the landscapes of international cooperation has been radically and positively transformed.

5.                  The Post 1995 Renewed legal and Enforcement frameworks in combating Advance fee Fraud and Money laundering Activities in Nigeria.

This part of the paper aims at appraising the renewed approach in combating advance fee fraud and money laundering activities in Nigeria which took place between the periods of April 2002 and April 2004.

5.1       The Economic and Financial Crimes Commission Act 2002:- Legal mandate, enforcement strategies, achievements and challenges.

The Economic and Financial Crimes Commission (EFCC) was created in December 2002 through the Act of the National Assembly. The Commission began operation in April 2003 when its board was inaugurated. The Commission is however charged with the following responsibilities:

*    Investigation of all financial crimes such as Advance Fee Fraud (otherwise known as 419), money laundering, counterfeiting, Illegal charge transfers, Futures Market fraud, Fraudulent Encashment or Fraudulent diversion of funds, Contract Scam, Forgery of financial instruments, Insurance of dud cheques etc

·       Coordination and enforcement of all economic and financial crimes law enforcement functions conferred on any other person or authority.

·       Adoption of measures to identify, trace, freeze, confiscate, or seize proceeds derived from terrorist activities, economic and financial crimes related offences, or the properties, the value of which correspond to such proceeds.

·       Adoption of measures to eradicate and prevent the commission of economic and financial crimes with a view to identifying individuals, corporate bodies or groups involved.

·       Facilitation and rapid exchange of scientific and technical information and the conduct of operations geared towards the eradication of economic and financial crimes.

·       Determination of the extent of financial loss and such other losses by government, private individuals or organisations.

·       Collaboration with government bodies within and outside Nigeria in carrying out the functions wholly or in part analogous with those of the commission.

The EFCC is also empowered to enforce the following laws

·                     Money Laundering Act 1995

·                     The Advance Fee Fraud and Other Related Offences Act 1995

·                     The Failed Banks (Recovery of Debts) and Financial Malpractices in banks Act 1994 as amended.

·                     The bank and Other Financial Institutions Act, 1995 as amended

·                     Miscellaneous Offences Act (Cap 410 LFN)

·                     Any other Law or regulation relating to economic and financial crimes.

NATURE OF ECONOMIC AND FINANCIAL CRIMES

            Section 40 of the Act establishing the Economic and Financial Crimes Commission defines “economic crimes” as: the non-violent criminal and illicit activity committed with the objective of earning wealth either individually or in a group or organized manner thereby violating existing legislation governing the economic activities of government and its administration and includes any form of fraud, narcotics drug trafficking, money laundering, embezzlement, bribery, looting and any form of corrupt practices, illegal arms deal, smuggling, human trafficking and child labour, oil bunkering and illegal mining, tax evasion, foreign exchange malpractices including counterfeiting of currency, theft of intellectual property and piracy, open market abuse, dumping of toxic wastes and prohibited goods, etc.

            Financial crimes cover a multitude of offences ranging from fraud to money laundering and to financial malpractices by individuals and financial institutions. It also includes obtaining by false pretence – popularly know as Advance Fee Fraud (419), and money laundering which is a generic term used to describe the process by which criminals disguise the original ownership and control of the proceeds of criminal conduct by making such proceeds appear to have been derived from a legitimate source.

            Financial malpractices also include offences committed by financial activities like round tripping; grant of unsecured loans or overdraft facilities, reckless activities, which cause the collapse of banks etc.

            It is in the realization of the heinous nature of these crimes, the devastating effects these crimes blemish on Nigeria and Nigerians, the fruitless efforts made in the past albeit without much sincerity of purpose, that the Economic and Financial Crimes Commission was conceived to combat and reduce the degree of the perpetration to the bearest minimum level.

Enforcement strategies by the Commission

            In the words of the Executive Chairman of the EFCC, the Commission’s enforcement strategies since inception include:- investigation, arrest and detention of suspects, arraignment and prosecution of suspects, confiscation and seizure of properties, freezing of accounts and deportation of accused persons.¹²⁴

8.         ACHIEVEMENTS AND CHALLENGES

            According to the Executive chairman of EFCC:- “One of our greatest achievements therefore apart from bringing over forty cases to court is the sensitisation of the nation on the arrival of a new dawn to fight these crimes. In our words and deeds, it is very clear to all and sundry that there is a new agency on a sanitization mission without fear or favour. To date, the commission has arrested over 200 fraudsters and seized properties and monies worth over 200 million dollars from 419 suspects both here and abroad. We are also very happy to report that partly due to the intervention of the commission in the banking sector, the distress syndrome is gradually being reversed as debtors are paying back and fraudsters have taken to their heels. The EFCC, though still a baby organization, is working hard to send a very loud and clear message across the globe that some things are changing in Nigeria and some business would no longer be run as usual.”¹²⁵

            The Executive Chairman also stated that for “the first time in the history of this country, some fraudsters are secretly paying back their victims as a result of their fear of our activities. Our dragnet is worldwide as we are investigating hundreds of cases especially relating to 419 and economic sabotage.  At the moment, we are investigating several cases of illegal oil bunkering where we are in custody of several suspects.  We are very happy that just in the last two months, we have succeeded in destabilizing these illegal oil bunkerers and we are going after them and we would smoke them out to face the full wrath of the law.  We have reduced this illegal oil bunkering by over 80 per cent where Nigeria was losing averagely 100,000 barrels of crude oil daily.  At the same token, we have also succeeded in bursting the syndicates that has been bleeding the Federal Inland Revenue Service (FIRS) of billions of Naira.  We have to date recovered over one billion Naira for the Federal Government and thereby increasing the revenue profile of the government.”¹²⁶

            Finally, the Executive chairman regarded as major challenges the following:-

*          “To be in the vanguard to change and reorient Nigerians’ attitude and in their way of doing things.  This entails leading by example.

·                     To reduce the extent of damage inflicted on the nation by the nefarious activities of economic and financial criminals.

·                     To rekindle hope in Nigerians that they can once again live and die with dignity and for Nigeria.

·                     To reduce economic and financial crimes to a tolerable level if not eradicated.

·                     Sending criminals to jail and as well as demystifying those big-time hitherto  untouchable kingpins and Queen pins and bring them to justice.

·                     Seize the properties and monies of convicted criminals thereby making crimes less attractive.

·                     Institutionalise the primacy of rule of law as respecter of no person no matter his or her position in the society.

·                     Establish a data bank of economic and financial crimes such that we can give reasonable estimates of the actual cost of these crimes to this nation. Unfortunately, as at today, there is no reliable data as there is very little co-ordination between all the relevant government agencies dealing with these crimes. We are therefore presently setting up a data bank (Financial Research Unit) specifically for documenting all financial and economies crimes.

·                     To redeem the national and international image of Nigeria hitherto perceived and  being treated as a nation of fraudsters and a lawless country.

With Almighty God on our side and the support of all the good people of Nigeria, we are confident that within a short period of  time, we would eradicate all economic and financial criminals from our streets and send them to jail. To this we are very determined and committed.”¹²⁷

5.2       The Money Laundering (Prohibition) Act 2004

            A few weeks ago, President Olusegun Obasanjo signed into law the Money Laundering (Prohibition) Act, 2004 recently passed by the national Assembly. The new Act provides for the repeal of the Money Laundering Act, (No. 7) of 2003; makes comprehensive provisions to prohibit the laundering of the proceeds of a crime or an illegal act; and provides appropriate penalties and expands the interpretation of financial institutions and scope of supervision of regulatory authorities  on money laundering activities, among other things.¹²⁸

            It is worth noting that the repealed 2003 Act had initially repealed the 1995 Money Laundering Decree (Act) for lack of adequacy of provisions on enforcement powers and coordinating strategies, among others.

            The 2004 Act was presented as a Bill to replace the 2003 Bill in view of the dissonance in the views of the President and the National Assembly on certain provisions of the 2003 Bill as presented by Obasanjo, but which the national Assembly tinkered with. Specifically, the National Assembly had increased the threshold for cash transactions from five hundred thousand naira to one million naira and two million naira to three million naira for individuals and corporate bodies, respectively.

            President Obasanjo had insisted on his specifications of five hundred thousand naira and two million naira respectively and in the 2004 Act, he had his way.¹²⁹ One would have thought that allowing corporate bodies to transact in cash for sums up to three million naira is not excessive considering the reality of a cash economy like ours. This view is in inspite of President Obasanjo’s argument that the purpose of the provision is to encourage transactions in financial institutions and discourage large cash transactions.

            The President further submitted that such increase would not be accepted by the Financial Action Task force of the international community (FATF)¹³⁰ But one wonders whether Nigeian officials moved FATF to consider the dollar equivalent of three million naira. From my calculation, using N136 naira benchmark to one dollar, it is about 23,000 US dollars. Not too much for a company (not an individual) to carry about, in a cash economy. For an individual, I think  that N500,000 naira, as allowed in the Act, is too much for one person to carry about. The other area, which the National Assembly and the President disagreed on, lies in sections 2 and 5 where the national Assembly increased the threshold of the sum where a financial institution or a non-financial institution would raise eyebrows about a transaction and make a report of it from 5,000 U.S. dollars to 10,000 U.S. dollars.  The President was correct and expectedly, his view prevailed in the 2004 Act.¹³¹

            The 2004 Act also enlarged the provisions of the 2003 repealed Bill in that more bodies were identified as financial institutions for purposes of the Act, and non-financial institutions whose business involves cash transitions were brought within the purview of the Act and the Minister in charge of commerce, or the Economic and financial Crimes Commission, Securities and Exchange commission, National Insurance Commission, National Drug law Enforcement Agency or the Central Bank of Nigeria can designate any business as a non-financial institutions for purposes of the Act.¹³²

            This provision seems to create an anarchical scenario. A better provision should have been that the minister of commerce, in consultation with these agencies, would designate any business non-financial institution for purposes of the Act, more so when it is the minister of commerce who is empowered to make regulations for the guidance of the non-financial institutions, by virtue of section 5 (4).

            In analysing the 2004 Act, it is observed that in section 2, it is not clear who shall make the report the section talks about.  For a better appreciation, the section reads:- (1) A transfer to or from a foreign country of funds or securities of a sum exceeding  10,000 U.S. dollars or its equivalent by any person or corporate body shall be reported to the Central Bank of Nigeria (CBN) and/or Securities and Exchange Commission (SEC).  Nowhere in the Act is reference made to this section to elucidate who shall make the report.

            In contrast, subsection (3) of the same section reads:-  The Nigerian Customs Service shall report any declaration pursuant to section 12 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995 to the CBN thus making it clear who shall make this kind of report.

            If we compare section 10 of the Act, it is clearly incumbent on a financial institution or a designated non-financial institution to report to the EFCC or NDLEA within 7 days of any transaction, lodgement or transfer of funds in excess of one million naira or its equivalent for individuals and five million naira or its equivalent for corporate bodies.  Any person other than a financial institution or a designated non-financial institution can volunteer such information,  this is an express provision of responsibility.  If section 2 is left as it is, may create a loophole, which smart attorneys can exploit.

            The provision of section 3 on the identification of customers is very important and financial institutions should be closely monitored for compliance.  This is because banks especially harass customers by opening accounts for them, even when these so-called customers are unwilling or unaware of the action of the bank, in the bank’s effort to secure as many customers as possible to stay afloat in the cut-throat competition environment of the banking industry. 

            My worry, however, on the implementability of section 3(2) (b) is its requirement that an individual should provide proof of his address, by presenting to the financial institution the originals of receipts issued within the previous three months by public utilities.  It is conceded that this provision is an ingenious way of getting Nigerians to begin to pay for public utilities like NEPA, NITEL and water bills but it is presumptive that every prospective bank customer has valid residences which makes me wonder what proof a squatter or a hanger on can provide.  It seems to me that the provision did not consider that in cities, most unemployed people stay at sufferance in the houses of uncles, aunts, siblings or friends and receipts of bills for public utilities are written in the names of bonafide occupants (if they pay at all).  A further provision where a letter of guarantee or of good standing by one who attaches proof of payment of bills for his public utilities is presented by one who cannot show any public utilities receipts should have taken care of this worry.

            Further, what meaning can be ascribed to the term ‘casual customer’ as used in section 3(5) of the Act.  The interpretation should have defined who a casual customer is, section 12(1) (b) permits the EFCC, NDLEA, and the CBN to tap the telephone line of a suspected person or institution.  That is a controversial provision because in private persons, it may seem a violation of section 37 of the 1999 Constitution which guarantees right to private and family life.  But if we look at section 45 of the same constitution, a restriction and derogation from section 37 is placed and allowed, although such derogation can only be done in the interest of defence, public safety, order, morality or health, or for the purpose of protecting the rights and freedoms of other persons.  And money laundering activities infringe on the right and freedoms of other persons.

            The penalty provided in section 15 whereby the minimum fine that can be imposed by the court is x250,000 naira both on a corporate or an individual is, to my mind, not fair.  Although there is no ceiling for the maximum punishment for a corporate body, while that of an individual is one million naira, the minimum fine for a corporate body should have been the maximum for the individual person, to wit, one million, in addition to other punishments like suspension, revocation or withdrawal of licences provided elsewhere in the Act.

            It seems that section 15 (2) (5) which provides for professional discipline in addition to the penalties prescribed in the Act puts the compliance officers created by section 9(1) (a) of the Act in a difficult dilemma, especially if they are junior officers, say in a situation where the management of the financial institution is in league with the launderer or his principal. The Nigerian employment environment is hopeless and any compliance officer who flouts management order to handle a certain transaction in a certain way may have his job on the line with little or no comfort.  There should have been a provision of indemnity for the compliance officer from sack for aiding by the provision of the Act, or if sacked, and where he can prove that his sack was because of his compliance with the Act, the court should accept such proof as conclusive proof of wrongful dismissal and impose exemplary damages and award in favour of the plaintiff.

            Section 18 (2) which provides that where a body corporate is convicted of an offence under the Act, the court may order that the corporate body shall thereupon and without any further assurances, but for such order, be wound up and all its assets and properties forfeited to the Federal Government is  too harsh. The other punishments provided as fine to be paid in bulk, suspension, revocation or withdrawal of licence are deterrent and punitive enough.

            Although the object of the Act is to limit the use of cash in business and private transactions and discourage the laundering of proceeds of criminal or illegal engagements, and encourage transactions in the financial institutions, it seems to me that an aggressive public enlightenment programme should be embarked upon because, as stated earlier, ours is a cash economy.

            In all, the Act is welcome and necessary as it would regulate transactions in cash and securities in the Nigerian economy and such development conduces to the healthy growth of the economy.  It is expected that FATF of the international community will begin the process of delisting Nigeria from the non-cooperative countries and territories.

5.3       The Economic and Financial Crimes Commission (Establishment) Act, 2004

            The new EFCC Act 2004 seeks to repeal the EFCC (Establishment) Act 2002, and for other matters connected therewith.  The Act further provides for the establishment of the EFCC charged with the responsibility for the enforcement of all economic and financial crimes laws, among other things.

            In terms of structure, the EFCC Act, 2004 is divided into seven parts of 47 sections and has a schedule that is also divided into forms A on confidential report and B on Freezing order.

            In terms of contents, Part one of the Act deals with the establishment of the EFCC, its composition, tenure of office, vacancy in membership and standing orders.  The 2004 Act has introduced a new/ additional subsection (2) of section 1 to the effect that:-

The Commission:- (a) shall be a body corporate with perpetual succession and a common seal, (b) may sue and be sued in its purpose of property (whether movable or immorable).  (c) is the designated financial intelligence Unit (FIU) in Nigeria, which is charged with the responsibility of co-ordinating the various institutions involved in the fight against money laundering and enforcement of all laws dealing with economic and financial crimes in Nigeria.

            The 2004 Act has also introduced a new/additional subsection (a) (iii) to section 2(1) dealing with composition of the commission to the effect that, “a chairman, who shall – possesses not less than 15 years cognate experience.” It further provides for a  new/additional sub clause (f) to the same section to the effect that the composition shall include:- “The Registrar-General of the Corporate Affairs Commission or his representative.” Furthermore, the new Act added or modified to the list of composition the following:

(h)               the Managing Director, Nigeria Deposit Insurance Corporation or his representative:

(n)               the Inspector- General of Police or his representative;

(o)               added “Law” to the list of:- “four eminent Nigerians with cognate experience in any of the following, that is, finance, banking, law or accounting”;

(p)               changed the title of Director-General to “the secretary” of the Commission;

(3) created new/additional subsection (3)to section two: “The Chairman and members of the Commission other than ex-officio members shall be appointed by the President and the appointment shall be subject to confirmation of the Senate.

The Act provides for a new section 5:- “The Commission may make standing orders regulating its proceedings or those of any of its committees”.

            Part Two deals with the functions of the Commission and the new Act provides for two new/additional functions under section 6:- “(l) the collection of all reports relating to suspicious financial transactions, analyse and disseminate to all relevant Government agencies;” (m):- “taking charge of, supervising, controlling, co-ordinating all the responsibilities, functions and activities relating to the current investigation and prosecution of all offences connected with or relating to economic and financial crimes:

            On the special powers of the Commission under section 7 (1), the new Act provides for a new/additional phrase under (a):- “cause investigations to be conducted as to whether any person, corporate body or organisation has committed an offence under this Act or other law relating to economic and financial crimes;”

            The Act reworded clause (b) of the same section 7(1):- “cause investigations to be conducted into the properties of any person in it appears to the commission that the person’s life style and extent of the properties are not justified by his source of income.”

            The Act then added to section 7 (2) (f) the phrase:- “any other law or regulation relating to economic and financial crimes, including the criminal Code and Penal Code.”

            Part three of the Act, 2004 deals with the appointment of secretary and other staff of the Commission. The act provides for a new/additional  subsection (5) to section 8:- “For the purpose of carrying out or enforcing the provisions of this Act, all officers of the Commission involved in the enforcement of the provisions of this Act shall have the same powers, authorities and privileges (including power to bear arms) as are given by law to members of the Nigeria Police.”

            Under section 11 dealing with training programme, the Act provides for a new/additional clause

(g) :- “Legal prosecution and defence.”

            Part four of the Act deals with offences relating to financial malpractices and the following has been effected:-

*       newly raised the amount of fine from the initial N50,000 naira to N500,000 naira under section 14 (1) (b).

*       Reworded section 15(1) and re-subtitled under the same section of the 2002 Act from Offences relating to public officers to “offences relating to false information” under Section 16(1) of the 2004 Act.

*       Reviewed downward the penalty under the old section 15(2) of the 2002 Act from not less than 15 and not more than 25 years to “…. Not less than two years and not more than 3 years”; it then added a new proviso under section 16(2) of the 2004 Act:- … provided that where the offender is a public officer the penalty shall be imprisonment for a term not less than 3 years and not more than 5 years.”

In respect of retention of proceeds of a criminal conduct under section 17, the 2004 Act reworded and reviewed the penalty prescribed under the old section 16(b) of 2002 Act, both downward and upward:- “Commits an offence and is liable on conviction to imprisonment for a term not less than 3 years or to a fine equivalent to 100 per cent of the value of the proceeds of the economic or financial crime or to both such imprisonment and fine” – under section 17(b), as opposed to the old section 16(b) that refers to not less than 5 years or to a fine equivalent to 5 times the value of the proceeds of the criminal conduct.

For the offences in relation to economic and financial crimes and penalties, section 18(2) of the 2004 Act reviewed downward the penalty to “a term not less than two years and not exceeding three years,” as opposed to the old section 17(2), 2002 Act that refers to a term not less than 15 years and not exceeding 25 years.

In  respect of Jurisdiction and special powers of court, the 2004 Act provides for a new/additional provisions under section 19(2):-

(b)               “to ensure that all matters brought before the court by the Commission against any person, body or authority shall be conducted with dispatch and given accelerated hearing;

(c)                “to adopt all legal measures necessary to avoid unnecessary delays and abuse in the conduct of matters brought by the commission before it or against any person, body or authority.”

Additional provisions provided under section 19 are:- “(3) the Chief Judge of the Federal High Court or a High Court of a state or the High Court of the Federal Capital Territory Abuja, as the case may be, shall by order under his hand, designate a court or Judge or such number of courts or judges as he shall deem appropriate to hear and determine all cases under this Act or other related offences arising under this Act.”

“(4) A court or Judge so designated shall give such matters priority over other matters pending before it.”

            Part Five deals with disclosure of assets and properties, as well as forfeiture of assets of arrested persons for offences under this Act. The old section 279(4) of 2002 Act which refers to the General and Assets investigation unit, has been replaced with the new/additional provision under section 27(4) of the 2004 Act:-

“Whenever the assets and properties of any person arrested under this Act are Attached, the Legal and Prosecution Unit shall apply to the Court for an interim forfeiture order under the provisions of this Act.”

            The 2004 Act further provides for a new/additional subsection (5) to section 27 on Schedule:- the Chairman of the Commission shall have powers to make such changes or modifications to the Declaration of assets Form A of the Schedule to this Act as may become necessary in order to give effect to the provisions of this Act.”

            Part six deals with financial provisions or funds, accounts, audit and annual report of the Commission. The 2004 Act provides for a new/additional subsection (4) to section 35:- “A sum equivalent to 30 percent  of the proceeds of forfeited assets from convicts shall be payable to the commission to enhance its law enforcement activities.

            Part seven deals with miscellaneous provisions relating to the power to receive information without hindrance etc; protecting informants and information, etc and penalty for false information; appeals against interlocutory rulings; immunities; legal representation, etc., general savings; repeal of EFCC Act No. 5 of 2002; savings, interpretation and short title.

            As opposed to not more than 5 years imprisonment or to a fine of N20,000 naira or to both, the 2004 Act provides for an upward review of the penalty of fine under section 38 (2) (b):- “… for a term not exceeding five years or to a fine not below the sum of N500,000….”

            Further, the old section 39 (1) of the 2002 Act has been deleted in respect of the power of the Attorney-General of the Federation to make rules or regulations with respect to the exercise of any of the duties, functions or powers of the commission under this Act.

            In place of the old provisions, the 2004 Act now provides for a new/additional provision under section 39 relating to protecting informants and information, etc and penalty for false information.

            Further, the 2004 Act has also provided for the following new/additional provisions relating to appeals against interlocutory ruling under section 41; respecting legal representation and consent of the Attorney General for every prosecution under section 42; and the EFCC Act No. 5, 2002 stands repealed by virtue of section 44 of the 2004 Act.

            Finally, it is evident from the above that the new EFCC 2004 Act has made bold attempts to provide for a renewed approach with vigour, adequacy of powers, greater clarity and sense of purpose as well as recognition of cooperative and collaborative strategies with other relevant agencies for effective combat of economic and financial crimes like Advance Fee Fraud and Money laundering.

6.         Conclusion

            It is evident from the above analysis of the initial good efforts and the renewed approach in combating advance fee fraud and money laundering activities that the issue of economic and financial crimes in Nigeria is so widespread and deep-rooted that it cannot be fought by legislation alone. The moral tone of the society must also be raised by all and sundry. More serious efforts should be made to remove socio-economic injustices, imbalances and inequities in the society, alleviate the suffering of the people, provide job opportunities and the right atmosphere for genuine business and investment to thrive. A re-orientation in our sense of values is very necessary starting from the highest echelons of society downwards.

            Undoubtedly, the promulgation of the new Money Laundering Act 2004 and the new EFCC Act 2004 and spirited implementation of their provisions will introduce a more effective and radical change in the fight against advance fee fraud and money laundering activities in Nigeria.

NOTES AND REFERENCES

1.                  See generally, the Proceedings of the First National Seminar on Economic Crime in Nigeria: (26-29 August 2001), Published by the National Executive Committee, Central Bank of Nigeria and Securities and Exchange Commission, Abuja, Pp. 1-31

2.                  Ibid at Pp. 96-102

3.                  See Ladan, M.T., (1997):- “Prevention and Control of Money Laundering in Nigeria:- A critical  analysis of the money Laundering Decree No. 3 of 1995,” in Law in society Journal of A.B.U.,  Zaria, vol. 4, July 1997, Pp. 87-110.

4.                  Ladan, M.T., “Tracing, Recovery, Forfeiture and Disposal of Proceeds of Financial Crime:- The Nigerian perspective,” Pp. 2-3, in the Proceedings of the Second National Seminar on Economic Crimes in Nigeria, organised by the Central bank of Nigeria, Securities and Exchange Commission, Abuja, between July 21-24, 2002, Abuja, Shehu Yar’adua Centre, Abuja.

5.                  See Inchi, S.I., the Nigerian Law Dictionary, 1^st edn., (1996):- Tamaza Publ. Co., Zaria, at P. 142; See also Collins Cobuild Learner’s Dictionary (2000):- Harper Collins Publishers, Glasgow, U.K., at p. 442.

6.                  See Sanusi, J.O., Strategies for Eliminating Corporate Fraud in The Nigerian Economy, (2003):- A paper presented at a workshop on Corruption, Economic and Financial Crimes, Organised by the African Diaspora Initiative, at Hamdala Hotel, Kaduna, on December 2, 2003, at Pp. 3-5.

7.                  Ibid at Pp. 3-16.

8.                  See long, J.A.D., Electronic banking Fraud:- How Prepared is the Nigerian banking sub-sector (2002):- A paper presented at the 2^nd National Seminar on Economic Crime in Nigeria, supra note 4, at Pp. 1-10.

9.                  Sanusi, J.O., Supra note 6.

10.              Refer to Ogunleye, G.A., Fraud in the Banking Sector:- The unmanaged Distress Risk, (2002):- A paper presented at the Second National Seminar on Economic Crime in Nigeria, supra note 4, at pp. 13-18

11.              Sanusi, J.O., Supra note 6.

12.              Ibid at Pp. 9-10.

13.              Cap. 77 Laws of the Federation of Nigeria, 1990.

14.              The Code was introduced into Northern Nigeria in 1904 and was extended to the whole country in 1916.

15.              See section 382 of the Criminal Code.

16.              See Ojiko v. Inspector General of Police (1956) 1 F.S.C. 62.

17.              R v. Dent (1955) 2 All E.R. 306. See also Chief Superintendent of Police v. Ceesay (1956) 2 W. Af L.R. 87.

18.              See e.g. State v. Osuafor (1972) 2 E.C.S.C. L.R. 412;  Abasi v. C.O.P. (1965) NMLR 461.

19.              Section 419A was introduced by No. 84 of 1966. the offender cannot be arrested without warrant.

20.              Cap. 102 Laws of the Federation of Nigeria, 1990.

21.              Inchi supra at P. 193; and Collins supra note 5 at P. 619.

22.              See Ohanyere, A.N. 2002:- Strategies in combating Money Laundering in the Financial System, at pp. 1-4, supra note 4 (National Seminar on Economic Crime, 22 July 2002).

23.              Sanusi J.O., surpa note 6 at p.4.

24.              See Akanle O., The International Anti-Money Laundering Regime:- The Role of the Financial Action Task Force 92002):- 2^nd National Seminar on Economic Crime, supra note 4, at Pp. 1-7.

25.              See Collins, supra note 5 at p. 350

26.              Inchi at p. 195 and Collins at p. 626, supra note 5.

27.              Ibid at P. 198 and P. 362 respectively.

28.              See Ladan, M. T., “Good Governance and Human Rights Protection in Nigeria” (2001):- in Democracy and Democratisation in Nigeria (1999-2001):- eds. Jega et. al, Centre for Democratic Research and Training, Kano, at p. 144.

29.              Ibid.

30.              Ibid at P. 142-3

31.              Ibid at P. 146

32.              Ibid at Pp. 145-6

33.              Supra note 28 at P. 146.

34.              Ibid at Pp. 145-6

35.              Ibid at P. 142

36.              As earlier mentioned in this paper under item 1.1 in respect of the old legal regime.

37.              See Ladan M.T., supra note 3.

38.              Ladan M.T., supra note 4

39.              Supra note 3

40.              Ibid at Pp. 106-7

41.              See Section 6 of the Economic and Financial Crimes Commission (Establishment) Act, 2004.

42.              R. v. Ayewo(1975) N.R.N.L.R.; Adeyemi v. C.O.P.(1961) 1 All N.L.R.  (pt.2) 387.

43.              See Oshin v. Inspector General of Police (1961) 1 All N.L.R. 27; Okechukwu v. R (1964) 1 All N.L.R. 47.

44.              Cf s. 15(2) of the Theft Act 1968 (UK). It provides as follows: “For the purposes of this section, a person is to be treated as obtaining property if he obtains ownership, possession or control of it, and ‘obtain’ includes obtaining for another or enabling another to obtain or to retain.”

45.              S. 1(2)

46.              An intent to defraud is an intent to induce another by deceit to act to his detriment or contrary to what would otherwise be his duty. It is immaterial that there is no intention to cause pecuniary or economic loss – See Welham v. D. P.P. (1961) A.C. 103.

47.              (1885) 29 Ch. D 459.

48.              Ibid at P. 483

49.              See illustration (f) to s. 320. “A intentionally deceives Z into a belief that A means to repay any money that Z may lend to him and thereby dishonestly induces Z to lend him money. A not intending to repay it. A cheats.

50.              Theft Act 1968 s. 15(4).

51.              See generally on attempts, s. 4 C.C. Cf R v. Treacy (1971) A.C. 537.

52.              This should rightly read “which constitutes an element of an offence under the Decree.

53.              Cf. R v. Albert (1960) W.R.N.L.R. 31 (FSC); R. v. Eyo (1962) All N.L.R. 515. See R. v. Ejikeme (1944) 10 WACA 235.

54.              For money laundering generally, see Money Laundering Decree (No. 3)of 1995.

55.              This mean (i) any act or activity constituting an offence under thee Decree, (ii) with respect to a financial transaction occurring in whole or in part in Nigeria, an offence against the laws of a foreign nation involving obtaining property by fraud by whatever name called.

56.              See s. 7(5)(d).

57.              S. 7 (1) Section 7(1) needs redrafting.

58.              S. 7(2)

59.              This comment is relevant to other offences in the Decree which may be committed negligently. Can a person who does not know that he is dealing with dirty money rightly be held to have formed any of the prescribed intents?

60.              This provision needs redrafting for clarity.

61.              S. 7(4).

62.              S. 8.

63.              Cap. 80 L.F.N. 1990

64.              No. 20 of 1984, See Cap. 410 L.F.N.1990.

65.              S. 12

66.              S. 13

67.              S. 18

68.              See Daily Times, Thursday January 12, 1995.

69.              S. 14

70.              S. 21

71.              S. 22

72.              S. 16

73.              S. 15. The Special Appeal Tribunal is established under the Recovery of Public Property (Special Military Tribunal) Decree (No. 3) of l1984, See Cap L.F.N. 1990.

74.              Dan Agbese, Newswatch, November 9, 1972, P. 8.

75.              As Nadelmann has pointed out in a US context, a number of rationales support the view that going after the money” is the best way to tackle organised criminal activity of this kind. See Nadelmann, E., “Unlaundering Dirty Money Abroad: U.S. Foreign Policy and Financial Secrecy Jurisdiction (1986) 18 Inter American Law Review, P. 33 at 34.

76.              The Basle Committee on Banking Regulations and Supervisory Practices stated this in December 1988-Chap. V. document B, at 274. Membership of the Committee is drawn from the Central banks and supervisory authorities of Belgium, Canada, France, German, Italy, Japan, The Netherlands, Sweden, Switzerland, the U.K., The US.A. and Luxembourg. For an insight into the wider work of this body, see e.g., Hayward, “Prospects for International Cooperation by Bank Supervisor’(1990)24The International Lawyers 787.

77.              This explains the rationale behind the requirements of Article 5, 6 and 7 of the 1988 U.N. Vienna Convention, in December 1988:- (On extradition, of Proceeds and Mutual Legal Cooperation).

78.              On how drug trafficking is highly cash intensive – See O’ Brien, P. “Tracking Narco-Dollars:- the Evolution of a potent weapons in the drug war’ (1990) 21 inter-American Law Review, 637 at 643.

79.              See the provisions of section 14(1) of Decree No. 3 of 1995.

80.              See International Narcotics Control Strategy Report:- March 1, 1988 (US Depot.

81.              See Ladan M.T., ‘Drug abuse and Trafficking in Nigeria” in New Nigeria. Newspaper Kaduna, September 21, of 1992, p. 7.

82.              See the National behind the promulgation of the national Economic Emergency Powers Decree No. 22 of 1985 and how the Structural Adjustment measures were implemented through this Decree.

83.              This explains the objectives of the following economic regulatory laws:- Foreign Currency domiciliary Account Act Cap. 151 of 1990, Second Tier Foreign Exchange Market Decree 1986 and the Nigerian Enterprises Promotion Decree. 1987.

84.              These are:- the U.S. Japan, German, France, U.K. Italy and Canada.

85.              Section 13 (1) NDLEA Decree No. 48 of 1989.

86.              Subsection (3) of Section 13  of Decree No. 48 of 1989.

87.              See Section 22 of Decree No. 3 of 1985

88.              No. 3 of 1995.

89.              See Section 14 (1) (a) of Decree No. 3  1995.

90.              Section 14 (1) (b) of Decree 3 of 1995.

91.              See subsection (2) of section 14 of Decree No. 3 of 1995.

92.              Section 14 (2), ibid.

93.              See subsection 1 (a) of section 15, ibid.

94.              Section 15 (1) (b), ibid.

95.              Section 15 (1) (c), ibid

96.              Subsection (d) of section 15, ibid.

97.              Section 15 (1) (2) (b) (i), ibid

98.              Section 15 (1) (e) and 15 (2) (b) (i), ibid.

99.              Section 15 (1) (f) and 15 (2) (b) (i), ibid.

100.          Section 15 (3), ibid.

101.          No. 3 of 1995.

102.          See below for possible solutions to overcome highlighted problems under the Decree.

103.          No. 3 of 1995

104.          Notes to Articles 3 and 4 of the Model Law suggested 10,00 U.S. dollars or its equivalent as being the upper limit for over- the counter cash exchange transactions.

105.          See the leading case on this point- Torunier v. National Provincial and Union Bank of England (1924) 1 Kings Bench, 461.

106.          No. 3 of 1995.

107.          See Article 8 of the Model Law

108.          Article 12 of the Model Law.

109.          See subsection (5) of section 10 of Decree 3 of 1995.

110.          (1924) 1 K.B. page 461.

111.          On the nature and extent of this initiative, see generally, Gilmore, W., Combating International Drug Trafficking:- the 1988 United Nations Convention (1991).

112.          See sections 22-23 of the NDLEA Decree No. 48 of 1989 now Cap. 253 Laws of the Federation of Nigeria, 1990.

113.          See part I section 3 (c) Decree No. 48 of 1089

114.          Section 3 (o), ibid

115.          See section 12 Decree No. 3 of 1005.

116.          See generally sections 22 to 33 of Decree 48 of 1989.

117.          Section 22 (b) Decree 48 of 1989.

118.          The Agreement was signed in London in 1989.

119.          Also see Article 1 on the Scope of Assistance and Article 17 obliging contracting parties to assist each other relating to Forfeiture of Proceeds, etc.  Agreement between Nigeria and the U.S.A. on Mutual Legal Assistance in Criminal Matters, signed in Washington, 13 September, 1989.

120.          Under section 35 (1) of the NDLEA Decree No. 48 of 1989.

121.          For the contents of the Commonwealth Scheme relating to Mutual Assistance in Criminal Matters, see Maclearn, D. “Scheme for Mutual Assistance in Criminal Matters and the Control of Criminal activities within Africa, “a paper presented at the all Africa Law Ministers Conference, Abuja, 27-29^th November, 1989, pp. 4 to 22.

122.          See paragraphs 1 (3) and 13 to 27 of the Scheme relating to Mutual Assistance in Criminal Matters within the Commonwealth.

123.          See section 4 Decree  48 of 1989.

124.          See Ribadu, N., (2003) :- Economic and Financial Crimes Commission:-  Methods, Procedures and Challenges.  A paper presented at a workshop on corruption, Economic and Finance Crimes, organized by African Diaspora Initiative, Hamdala Hotel, Kaduna, December 2, 2003, at p. 10

125.          Ibid at p. 11

126.          Supra note 124 at p. 12

127.          Ibid at p. 13

128.          See Explanatory Memorandum of the Act, 2004

129.          Section 1 (a) – (b) of the Act, 2004.

130.          See Akanle, O., supra note 24

131.          Sections 2  and 5 of the Act, 2004.

132.          See section 24, ibid.

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