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Concealment of Illegally Obtained Assets in Nigeria: Revisiting the Role of the Churches in Money Laundering

Document Cited authorities 2 Cited in Related
Vincent
Published date01 February 2020
Date01 February 2020
Pages106-121
DOI10.3366/ajicl.2020.0304
INTRODUCTION

In the absence of a generic definition of financial crime, in several countries, the laws have provided several definitions of what constitutes financial crimes. For example, in Nigeria, the Economic and Financial Crime Commission (EFCC) Act1 provides a wide span of criminal activities which constitutes economic and financial crimes as follows:

[…] the non-violent criminal and illicit activity committed with the objectives of earning wealth illegally 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, narcotic drug trafficking, money laundering, embezzlement, bribery, looting and any form of corrupt malpractices, illegal arms dealing, smuggling, human trafficking and child labour, illegal 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.2

Similarly, the United States government defines money laundering as

The process of making illegally-gained proceeds (dirty money) [to] appear legal (clean). Typically, it involves three steps: placement, layering, and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the dirty money appears clean.3

 From the above definitions, it is important to point out that all the modes of criminal activities listed are tied to financial gains. It is therefore the focus of this article to explore the ways which the perpetrators adopt to conceal the proceeds and profits of their nefarious activities in Nigeria. Criminal skills are constantly evolving to cope with the speed and tidal waves of global knowledge in science, technology and literature.4 For example, the development of electronic banking has simplified the large and physical movement of cash across local and international frontiers. Economic and financial crimes are closely connected to growth in social, economic, legal and political dimension of any country. According to Okogbule5 and Kingston,6 money laundering is dictated by the desperate necessity to ‘hide the source and proprietary ownership of the assets; retain control of the assets; and, disguise and neutralise suspicion.’7 Money laundering is a method by which illegitimate properties8 which are the proceeds of crimes are transformed into deceptively legal possessions thereby hiding or masking the criminal origin of the properties

There are several sources of illicit assets, including unlawful drugs funds, armed robbery, prostitution, gaming, arms smuggling, proceeds of bribery and corruption, fraud, misappropriated public funds, diversion and conversion of public funds, advance fee fraud and procurement by false pretences.9 Walker10 writes writes that for several decades money has become one of the significant assets laundered globally. He also noted that corruptly acquired monies and narcotic drugs money account for more than half of the money laundered. In this regard, he advocates that money laundering can be minimised through the removal of some of the weaknesses in the regulatory processes. As a follow-up to this line of argument, Buscaglia and van Dijk11 suggest that ‘organized crime and corruption are shaped by the lack of strength of the control mechanisms of the State and civil society’.

Schneider12 suggests that the ways by which different countries define money laundering make it difficult for joint or multinational control. He explained that ‘almost differently in every country, the measures taken against it are different and vary from country to country’.13 He went further to lament ‘the lack of an approved international organisation responsible for the enforcement of uniform control of money laundering across national boundaries’.14 In the same direction of reasoning, Guiora and Field15 observe that the main problems challenging the operation of anti-money laundering measures is the complexity of the ‘informal value transfer systems’ or the ‘underground banking’ that are not in conformity with the regular banking procedures of many countries.

Buscaglia16 conducted empirical study on money laundering with data from 107 countries known for having high corruption rates and of poor governance infrastructure. The study found that legal and economic factors are key determining factors for the success and failure of the fight against organised crimes including concealment of criminally acquired assets. The study, thus, suggests there are inconsistencies in the data of various national statistics on criminally acquired assets, hence such data cannot be depended upon for policy formation. The study recommends the use of comparative independent data sources to cure the defects of official statistics, for example in the United Kingdom, the national police data are often weighed alongside the independent data of the British Crime Survey. Also, Buscaglia17 was not comfortable with the use of data from national government sources. He used the data of the World Economic Forum's survey which is relatively comprehensive on global organised crimes and reached the conclusion that: ‘the most valuable and reliable strategy that is likely to curb organised crimes is connected to those that give adequate attention to high level public sector corruption.’18 Unfortunately, although Buscaglia's study contributed towards the understanding of organised crimes including money laundering and drugs trafficking, his findings are too ambiguous and may not be convincingly relevant to many countries. The reasons for the analytical defects of the study are that the data and the models of analysis may have resulted in fluke conclusions. The study did not anticipate the possible collusion of some national governments in organised criminal activities. Kingston19 observed that: ‘Where corruption is entrenched in the body politics of a country, it is practically impossible for the government to effectively enforce anti-corruption laws making it impossible for organised crimes of huge [financial] values to be controlled.’

 HISTORICAL OVERVIEW OF MONEY LAUNDERING

Seagrave20 estimated that money laundering has been in existence for more than 2000 years. He emphasised that the Chinese traders were probably the first to invent money laundering techniques to disguise their fortunes from the government in order to avoid paying taxes. Some of the earliest techniques they used include the purchase of mobile assets and transfer of monies across national borders with the belief that ‘[o]nly those who remained invisible could expect to hold on to their wealth in the face of continual extortion by imperial eunuchs and bureaucrats.’21 The only visible difference between the ancient Chinese style of money laundering and contemporary techniques is that the ancient Chinese were very interested in hiding the bulk of their accumulated assets with little worry about hiding the sources of those assets. The contemporary money launderers are strictly covering the sources and the destinations of the assets.

Gelemerova22 opined that money laundering existed far before the Chinese traders used the system to conceal wealth. She cited Uribe,23 who argued that money laundering practices are traceable well before the Middle Ages, when financiers adopted several methods to hide their circumvention of the laws which criminalised money-lending businesses. Another historical angle traces money laundering to 67 BC when pirates had to hide their stolen assets in Europe. The practice of money laundering continued till the sixteenth to the eighteenth centuries when the main form of layering was the use of criminally acquired monies to purchase gold.24

Many pirates were able to legitimise their wealth with the support of British, French and Dutch governments and some of them operated under a royal licence, although that would not constitute laundering the way we...

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