•UrgesTinubu to guarantee security to attract FDIs
From Juliana Taiwo-Obalonye, Accra, Ghana
Civil Society Legislative Advocacy Center (CISLAC) has reacted to Nigeria’s suspension by Financial Action Task Force (FATF) over its failure to scale a review of Money Laundering and Terrorism Financing Risk conducted by the global financial intelligence agency.
It said the suspension by FATF sends a signal to the international community that the country has deficiencies in its anti-money laundering (AML) and counter-terrorist financing (CTF) perceived as a higher risk destination for financial transactions and damage its reputation in the global financial system.
FATF at its plenary held between October 25 and 27 in Paris, France, reviewed Nigeria’s money laundering and terrorism financing risk.
Nigeria was among the 21 countries whose grey list status was reviewed during the a recent FATF meeting. It faulted the country’s anti-money laundering war.
Reacting to the development on the sidelines of the 11th Pan-African Conference on Illicit Financial Flows and Taxation (PAC), organised by Tax Justice Network Africa (TJNA) and the African Tax Administration Forum (ATAF), in Accra, Ghana CISLAC’s Executive Director, Auwal Musa Rafsanjani, said no investor worth its salt will want to invest his hard-earned money in a country bedeviled by corruption and insecurity.
He noted that it goes without saying that improving foreign ties is a key component of President Bola Tinubu administration’s economic plan, adding that the President has constantly urged investors to take advantage of opportunities in Nigeria through his overseas appearances assuring that ongoing reforms will be maintained for a more competitive economy that draws Foreign Direct Investment (FDI).
Rafsanjani said: “However, while deliberate efforts are being made to amplify the profitability of foreign investment in Nigeria, there must be complementary efforts to guarantee the safety and security of such investments.
“The FATF’s efforts to promote international cooperation in the prevention of money laundering and terrorist financing have been crucial to the formation of the Egmont Group of Financial Intelligence Units which helps countries develop their national anti-money laundering systems through a unified structure that ensures secure financial transfer between Financial Intelligence Units at local and international levels to investigate and prevent money laundering and terrorist financing.”
The CISLAC boss stressed that the Egmont Group’s objectives and activities are largely shaped by the FATF’s “Forty plus Nine” recommendations which provide a comprehensive framework for combating money laundering and terrorist financing.
“The FATF on its part, maintains a blacklist and grey list which have led financial institutions to shift resources and services away from the listed.
Typically, 73% of countries have been removed since the grey list’s inception, so it is not a permanent list, and nations have the chance to be taken off it after cooperating with the FATF to address their identified shortcomings.
“However, Nigeria in its usual manner has failed to address these concerns and this is not the first time.
“In July 2017, just 10 years after the Nigerian Financial Intelligence Unit (NFIU) joined the Egmont Group, Nigeria was suspended by the Group for flouting its rules and regulations with the threat of an expulsion in January 2018. Following Nigeria’s suspension, a Presidential adhoc committee was constituted by the then Vice President in 2017 to reposition the Nigerian Financial Intelligence Unit (NFIU), to advise on the financial and other implications for the proposed membership of the Financial Action Task Force (FATF) and prepare for a mutual self-evaluation visit by the FATF, as well as any other relevant recommendations needed to advance our capacity to fight crime using financial intelligence.
“So, it is surprising to see that barely five years after, Nigeria has been placed on the Greylist of “Jurisdictions Under Increased Monitoring” with the likelihood of slipping into the Blacklist list of “Non-Cooperative Countries or Territories”.
Rafsanjani said the FATF has more than 200 member countries, and being placed on the grey list warns countries that doing business with a greylisted country might help facilitate terrorism and money laundering.
He said: “Just few days ago, the President sought German investment in critical sectors of the Nigeria economy, particularly power and rail transportation.
“Similarly, in September 2023, his visit to India had one focus: attracting investments to Nigeria with lucrative opportunities for investors, but most essentially, jobs for Nigerians and new revenue opportunities for Nigeria’s federal and sub-national governments. Now more than ever, Nigeria needs foreign direct investment (FDI) inflow to address its growing economic challenges and this suspension and likely blacklisting is a “warning” as it holds the potential for significantly affecting our credibility and opportunities for FDI in the following ways:
Negative Perception and Credibility – Being suspended by FATF sends a signal to the international community that the country has deficiencies in its anti-money laundering (AML) and counter-terrorist financing (CTF) frameworks, as we will be perceived as a higher risk destination for financial transactions, potentially damaging our reputation in the global financial system.
“Restricted Access to International Finance: We may also face restrictions in accessing international financial services and markets and international banks may be more cautious about engaging in financial transactions with us.
“Impact on Trade and Investment: Foreign investors often consider a country’s regulatory environment, including its AML and CTF measures, when making investment decisions. This suspension may lead to decreased investor confidence, potentially deterring foreign investment. International organisations would have to audit companies and take extra steps before investing in the country and this is of importance to Nigeria, as the country’s foreign direct investment (FDI) has been fluctuating for the past few years.
“Increased Cost of Doing Business: If the sanctions get worse, companies that are interested in investing in Nigeria may face increased due diligence requirements, adding to the cost of doing business. Financial institutions may also implement more stringent measures when dealing with transactions involving Nigeria.
“Strained Diplomatic Relations:
Especially at a time when we are seeking to strengthen diplomatic relations mainly for economic growth, decisions like this can have diplomatic implications as other countries may view being placed on the FATF list as a form of international censure. This can strain diplomatic relations with other countries and impact broader economic and political ties.
“Potential for Blacklisting:
This suspension is a warning sign and precursor for blacklisting as “Non-Cooperative Countries or Territories” if Nigeria fails to meet required recommendations to address deficiencies in its AML and CTF frameworks.
“While the 15 recommendations imposed by the FATF are a significant reduction from the 84 items identified as deficiencies in the country’s evaluation report published in August 2021, a lot needs to be done to strengthen consistency, commitment and coordinated efforts by all stakeholders and particularly reporting entities from the private sector.
“Nigeria must position itself as a viable country and veritable authority in foreign relations, commerce, trade, investment, security, defence, intelligence, investigations, Customs and Excise and other human endeavours. This can only be achieved through genuine commitments by this administration, with a high sense of responsibility, probity, accountability and integrity”, Rafsanjani said.