The adequacy of the legal framework for combating money laundering and terrorist financing in Nigeria
| DOI | https://doi.org/10.1108/JMLC-12-2022-0171 |
| Published date | 09 February 2023 |
| Date | 09 February 2023 |
| Pages | 110-126 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Howard Chitimira,Oyesola Animashaun |
The adequacy of the legal
framework for combating
money laundering and terrorist
financing in Nigeria
Howard Chitimira and Oyesola Animashaun
Faculty of Law, North-West University, Potchefstroom, South Africa
Abstract
Purpose –Banditry and terrorism constitute serious security risks in Nigeria. This follows the fact that
Nigeria is rated as one of the leading states in the world that is plagued by terrorism. Terrorists and
bandits usually embark on predicate crimes such as kidnapping, smuggling, narcotics trade, and similar
trades to finance their terrorist enterprises in Nigeria. The funds realized by criminals from nefarious
sources such as sales of narcotics and ransom from kidnapping are usually laundered to make their
criminal enterprises self-sustaining. Thus, all “dirty”money is laundered so as not to attract the attention
of law enforcement agents. The funds realized through receipt of ransom from kidnapping, smuggling or
funds from sponsors are laundered through channels such as bureau de change, which are difficult to
monitor by the Nigeri an authorities due, i n part, to flaws and loopholes in the current anti-money
laundering and anti-terrorist laws. This paper aims to adopt a doctrinal and qualitative desktop research
methodology. In this regard, the current anti-money laundering and anti-terrorist laws ar e discussed to
explore possible measures that could be adopted to remedy the flaws and lo opholes in such laws and
combat money laundering and financing of terrorism in Nigeria.
Design/methodology/approach –The article analyses the regulation and combating of money
laundering and terrorist financing activities in Nigeria. In this regard, a doctrinaland qualitative research
method is used to explorethe flaws in the Nigerian anti-money laundering laws so asto recommend possible
remediesin respect thereof.
Findings –It is hoped that policymakers and other relevant persons will use the re commendations
provided in this article to enhance the curbing of money laundering and terrorist financing activities in
Nigeria.
Research limitations/implications –The articleis not based on empiricalresearch.
Practical implications –This study is importantand vital to all policymakers, lawyers, law studentsand
regulatorybodies in Nigeria and other countries globally.
Social implications –The study seeks to curb money laundering and terrorist financing activities in
Nigeria.
Originality/value –The study is based on original research which is focused on the regulation and
combatingof money laundering and terrorist financing activitiesin Nigeria.
Keywords Money laundering, Legal framework, Flaws, Terrorist financing, Banditry
Paper type Research paper
© Howard Chitimira and Oyesola Animashaun. Published by Emerald Publishing Limited. This
article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may
reproduce, distribute, translate and create derivative works of this article (for both commercial and
non-commercial purposes), subject to full attribution to the original publication and authors. The full
terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
This article was supported in part by the National Research Foundation of South Africa (NRF),
Grant Number: 141933. Consequently, the authors wish to thank the NRF for its support.
JMLC
26,7
110
Journalof Money Laundering
Control
Vol.26 No. 7, 2023
pp. 110-126
EmeraldPublishing Limited
1368-5201
DOI 10.1108/JMLC-12-2022-0171
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
1. Introductory remarks
In recent times, Nigeria has been enmeshed in manifold security challenges such as Boko
Haram terrorism, Fulani-herdsmen militancy and widespread banditry [Onuh et al. (2021),
Sambo and Sule (2021),Ojo (2020),Ajala (2020),Chukwuma (2020),Lenshie et al. (2020),
Olaniyan and Yahaya (2016)]. For instance,the Global Terrorism Index for Nigeria was 8.6
points out of the maximum 10 pointsin 2019, which means that Nigeria was ranked number
three in the list of countries with the highest impact of terrorism behind Afghanistan and
Iraq (Cusack and Abiakalam, 2020). Boko Haramis a radical Islamic terrorist group that is
involved in unending guerrilla warfare with the Nigerian state. The word Boko Haram is
derived from the Hausa language, which translatesliterally to “western education is a sin or
forbidden”. Money laundering is a process where the true origin and ownership of the
proceeds from illegal activities are concealed and disguised but processed through an
intricate financial web into a legitimate fund so as to infuse it into the formal economy
[Chitimira (2020),Eboibi and Mac-Barango (2019),Enofe et al. (2018),Reuter and Truman
(2007)]. It is the act of giving dirty money a legitimate appearance, and it may facilitate
further crime by enabling the criminal networks to divert the laundered money into
legitimate ventures so that such networks are financially self-sustaining (Levi, 2002).
Terrorist financing generally refers to the processing of funds to finance and facilitate
terrorist activities. It is a framework with three levels, namely, activities done to obtain
money, techniques and methods usedto move the money and storing such funds until they
are required (Tofangsaz,2012).
It is submitted that bandits and terrorists commit various crimes to fund for their
nefarious activities in Nigeria. The collection of ransom from Nigerian governments, the
families and principals of kidnapped victims is a new way by which terrorists and bandits
finance their criminal activities. For instance, on 23 April 2021, students of Greenfield
University in Kaduna Statewere abducted by bandits and a ransom of US$438,000 was paid
for their release by their parents [Mohammed (2021),Lenshie et al. (2020),Ibrahim and
Ahmad (2020)]. Similarly, from 2014 to date, Boko Haram abducted numerous victims,
including foreign nationals and young Nigerian school children, who were eventually
released in batches upon the payment of undisclosed ransomby the Nigerian governments,
foreign companies and/or the relatives of the victims [Zenn (2021),Ajakaiye et al. (2021),
Okoli and Ugwu (2019),Ibrahim and Mukhtar (2017),Attah (2019),Caulderwood (2014),
Guitta and Simcox (2014)]. In 2020, it was reported that a United Arab Emirates (UAE)
Federal Court of Appeal affirmed the conviction of sixNigerians over their alleged funding
of Boko Haram terrorists [1]. The vast sums of cash that are paid as ransom to terrorist
groups are laundered and used to sustain theircriminal enterprises. Moreover, terrorism and
banditry are predicate crimes to money laundering. Terrorists and bandits demand, collect
and launder all their ransom money, and this creates insecurity and financial integrity
challenges for the Nigerian stateand the Nigerian financial markets (Osasona, 2021;Ani and
Nweke, 2014). Apart from kidnapping for ransom, terrorists and bandits in Nigeria commit
other predicate crimes to money laundering, such as smuggling of goods, drug trafficking,
bank robberies and the collection of tax and/or “protection fees”from Nigerian residents
(Tiwari et al.,2020;Attah, 2019). The revenue derived from these predicate crimes is then
laundered and used to finance terrorism,banditry and other crimes [2]. Accordingly, there is
a huge need to strengthen the Nigerian anti-money laundering and counter terrorist
financing (AML/CFT) regulatory regime(Onuh et al.,2021;Tiwari et al., 2020). To this end,
the paper explores the statutory regulatory efforts that were used in Nigeria to combat
money laundering. It also analyses the adequacy of such efforts in relation to the effective
The adequacy
of the legal
framework
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