Money laundering regulation and the African PEP: case for tougher civil remedy options

Publication Date04 January 2016
Date04 January 2016
AuthorTayo Oke
SubjectAccounting & Finance,Financial risk/company failure,Financial compliance/regulation
Money laundering regulation and
the African PEP: case for
tougher civil remedy options
Tayo Oke
Afe Babalola University, Ado Ekiti, Nigeria
Purpose The high crimes of bribery and money laundering resonate vividly with the public,
especially where politically exposed persons (PEPs) are involved. Conventional wisdom thus far,
dictates the adoption of even stiffer criminal sanctions for perpetrators of such crimes to solidify
deterrence. This paper contends that while this approach may be a viable option in respect of PEPs in
Western jurisdictions, it is less so with PEPs in Africa, where their peculiar socio-legal antecedents have
rendered the venomous arrow of criminal sanction a largely anodyne prickle. The paper further
contends that only a paradigm shift away from criminal to tougher civil remedy options can effectively
address the endemic incidents of a growing number of PEPs actively engaged in nancial crime aimed
at asset stripping the state for personal gain in Africa.
Design/methodology/approach – The paper juxtaposes empirical evidence from historical records
with comparative regional and international approaches to establish some creative new thinking on the
subject matter.
Findings The paper makes an important, signicant and persuasive argument for a kind of
paradigm shift in the approach to ghting corruption by PEPs in Africa specically …. It is quite
creative in deciphering a major root cause of the ineffectiveness in most of Africa of criminal sanction as
an anti-corruption weapon, and in pressing trust law and the principles of duciary obligation into the
service of thinking through the reinvigoration of the legal battle against corruption in Africa.
Originality/value The paper makes a signicant original contribution to the legal and policy
literature. The author also displays an impressively sound technical command of the relevant and
rather pivotal trust law principles and case law.
Keywords Money laundering, Africa, Civil remedies, Criminal sanction, Politically exposed persons
Paper type Research paper
The author is grateful to Messrs David Lewis, Head of Anti-Money Laundering and Terrorist
Finance, Sanctions and Illicit Finance Team at the UK Treasury, and DCI Jon Benton, Head of the
Metropolitan Police Financial Crimes Unit, for their insights during the author’s interviews with
them for this paper; Professor Michelle Gallant, University of Manitoba, Canada, and
Dr Mahmood Bagheri, Institute for Advanced Legal Studies (IALS), University of London, for
their initial helpful comments on the paper, which started its journey as an LLM dissertation at
IALS. Also, Professor Biko Agozino, Virginia-Tech University, USA, for his critique of the nal
draft of the paper. Last but not the least, the anonymous reviewers for their constructive
engagement with the paper’s thesis. That said, responsibility for all errors and omissions in this
work is entirely of the author.
The current issue and full text archive of this journal is available on Emerald Insight at:
Journalof Money Laundering
Vol.19 No. 1, 2016
©Emerald Group Publishing Limited
DOI 10.1108/JMLC-01-2015-0001
We never rigged, we never cheated, we never knowingly abused state funds. We simply did
what we thought was best for Zambia. Former Zambian President, Rupiah Banda (BBC News
Africa, 2011;The Southern Times, 2011;The Post Online, 2011).
This cryptic statement from a notable PEP is at once a note of deance and a nod to a
culture of permissiveness in the administration of state resources in a country that can
least afford it. It expresses a sentiment that is more widely shared among political elites
across Africa than is presently appreciated outside the continent. It is a sentiment that
envisages no clear separation between the interests of the ruling party and the wider
interests of the state. The operative word in the quote is “abuse” of state funds, which is
a subtext for asset stripping of the state for personal gain. As we shall demonstrate later
in this work, the line between maximising personal gain and doing what a PEP in
Banda’s position thinks is “best” for his country can be a very thin one indeed. With that
observation in mind, this paper offers a view of criminal sanction which appears
controversial on the surface, but which, upon closer examination of the argument, seems
not only plausible, but entirely logical. Rather than looking at law as an independent
variable, this paper takes a holistic approach that navigates against the tide of
conventional wisdom in part, but it is one that addresses the particularly vexed issue
of corruption, money laundering and the state in Africa on the one hand, and the failure
of universally conceived notions of criminal sanction to stem its tide on the other. The
ultimate goal here is not simply to decry the awful nature of the phenomenon, but to
explicate and (hopefully) cut the Gordian knot through the analytical components
assembled in the main body of this paper.
In relation to anti-money laundering (AML) legislation and PEPs specically, the
failure of universally conceived notions of criminal sanction is also a reection of the
absence of a “joined-up thinking”[1] in the extraterritorial aims of the international
regimes in this regard, considering their reach and spread through: United Nations (UN),
Organisation for Economic Cooperation and Development (OECD), Basil Committee on
Banking Supervision, Financial Action Task Force (FATF), The Wolfsberg Group,
etc[2]. This is in addition to the absence of a concerted approach from within Africa to
compliment the aims and ambitions of these international regimes. Consequently, the
analysis of the imperative of civil remedies discussed in the latter part of this work
follows a careful dissection of the roots, causes and offshoots of politically exposed
persons (PEPs) as a phenomenon, and the contours of their intricate interconnectedness
with the state in Africa. This is a more fruitful endeavour than looking at money
laundering offences and PEPs as isolated incidents that can be dealt with by the logic of
a straightforward application of criminal sanction.
PEPs: concept and contentions
The European Union (EU) recently launched a new project designed to contribute to the
ght against money laundering in Ghana, Nigeria, Senegal and Cape Verde (European
Union Report, 2013;Ghana Business News, 2013), and according to the latest World
Bank estimate, “nearly forty per cent of Africa’s aggregate wealth has ed to foreign
bank accounts”[3]. It is a truism that the bulk of the laundered money from Africa nds
its way into various nancial institutions and investment portfolios in the West, for

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