Insulating the vaults from the tide of dirty money: are the floodgates secure?

Date05 January 2010
Pages33-44
DOIhttps://doi.org/10.1108/13685201011010191
Publication Date05 January 2010
AuthorKonyin Ajayi,Hamid Abdulkareem
SubjectAccounting & finance
Insulating the vaults from
the tide of dirty money:
are the floodgates secure?
Konyin Ajayi and Hamid Abdulkareem
Olaniwun Ajayi LP, Ikoyi, Nigeria
Abstract
Purpose – The purpose of this paper is to discuss the issues faced by financial institutions in
detecting threats to their stability and integrity, and taking adequate steps to ensure that those who
engage in abuse are detected and sanctioned. The focus is on financial institutions in Nigeria.
The paper proffers practical recommendations towards greater effectiveness of Nigeria’s anti-money
laundering (AML) and counter terrorist-financing regimes.
Design/methodology/approach – The paper explores Nigerian legislation on money laundering,
terrorism, and related crimes. Data are also draw n from analysis of reports of relevant
law-enforcement agencies, regulatory agencies, as well as English and Nigerian case law.
Findings – The paper highlights the deficiencies in current money laundering and counter-terrorist
financing (CTF) legislation in Nigeria. It reveals that financial institutions may still be liable to their
customers in the course of complying with applicable legislation. The paper suggests that the power of
law-enforcement agencies to “freeze” assets be expanded, while legislation should be enacted with
explicit guidance on treatment of politically exposed persons, and terrorism.
Practical implications – The paper calls for a progressively risk-based approach to reporting of
suspicious transactions by Nigeria’s financial institutions, as well as greater attention to the provision
of training to compliance personnel.
Originality/value – This paper highlights issues requiring urgent legislative intervention; it also
draws attention to areas where law-enforcement agencies and financial institutions could collaborate
better in managing cost of compliance and securing the overall effectiveness of the AML and CTF
regimes.
Keywords Money laundering,Terrorism, Nigeria, Financialinstitutions
Paper type Research paper
Prolegomenon
The law has changed tremendously since LJ Sankey’s[1] declaration that “it is not
expected that the officials of banks should also be amateur detectives”. Recently, the
effect of money laundering legislation require banks (in common with other financial
institutions) to assume the garb not only of mere detectives, but of professional sleuths
also, a role for which they are not traditionally well-suited nor equipped given that they
are primarily profit-making enterprises (Bosworth-Davies and Saltmarsh, 1994, p. 54).
This about-face in the way our financial institutions are required to work has been
driven not only by the need to fight the pervasive threats to the stability and integrity
of our financial systems posed by the integration of dirty money[2] into the mainstream
financial economy; it has also derived additional force from the world’s realisatio n of
two great truths. First, that the flight of stolen funds from developing countries to
ready vehicles of obfuscation in the world’s financial centres means hunger, disease
and increased underdevelopment for the third world. Second, that through clever
manipulation of financial systems and instruments, today’s enemies of the developed
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
Insulating
the vaults
33
Journal of Money Laundering Control
Vol. 13 No. 1, 2010
pp. 33-44
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201011010191

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