NDLEA WARNS ON CONSEQUENCES OF MONEY LAUNDERING

New Law Imposes N100 Million Fine Daily On Any Financial Institution That
Aids It

The National Drug Law Enforcement Agency (NDLEA), has drawn the attention
of financial institutions, particularly banks, to the consequences of a
violation of the new money laundering act, stating that the law compels
Compliance Officers in the banks to report suspicious transactions that
have to do with money laundering to law enforcement agencies for investigation.

Delivering a paper entitled: "Recognising, Repor-ting and Combating
Suspicious Transactions: Role of the Compliance Officer", at a two-day
national seminar with the theme: "Repositioning the Compliance Officer in
the Administration of the Money Laundering Prohi-bition", organised by the
NDLEA in Lagos for banks and financial institutions officials, NDLEA
Director of Prosecution and Legal Services, Mr Femi Oloruntoba, said
reporting suspicious transactions was one of the mandatory responsibilities
imposed on a financial institutions by the law as a tool to fight money
laundering. Oloruntoba warned the banks on the consequences of the
violation, stating that any defaulting institution was liable to a fine of
N100 million for each day the offence continues.

He told the bankers that suspicious activities of money launderers could be
recognised through the dubious characteristics of the customer or his
activities, suspicious account running profile, suspicious customers
identification circumstances, suspicious irregular transfer and suspicious
deposit and withdrawals, among others.

The NDLEA Chief explained that Section 6 (2) of the Money Laundering
(Prohibitive) Act 2004, required that a financial institution or a
designated non-financial institution shall within seven days after the
suspicious transaction referred to in sub-section 6(1) draw up a written
report, containing relevant information and send same to the Financial
Investigation Unit (FIU) of the Economic and Financial Crime Commission (EFCC).

"This in effect means that once a Compliance Officer comes across a
suspicious transaction, he must report to FIU wether the suspected
launderer carries out the transaction or not. The Compliance Officer has no
hiding place. He cannot just advise the customer or warn the customer to
desist from criminal activities and thereafter go to sleep without filing
report with EFCC Financial Intelligent Unit", Oloruntoba said, adding that
the Compliance Officer should equally obtain relevant information about the
suspect.

Such information, he said, must include the names, address, telephone,
occupation, date of birth, form of identification of the suspect and type
of relationship with the financial institutions.

Again, he warned that merely reporting such a suspect to a law enforcement
agency, was not a substitute for filling suspicious activity report with
the EFCC department of FIU within seven days as failing to do so would
still make the officer's institution liable.

Combating suspicious transactions, he said was the responsibility of
financial institutions, law enforcement agencies and regulatory officers.

"Compliance officers must be vigilant and consistent. There must be in
place an effective monitoring system. Customers activities must be
consistently monitored to see if such activity fits into the profile of
such customers. They must be effective monitor of deposits and withdrawals,
balances, wire transfer activity as well as conducts of customers.

"Monitoring must be comprehensive and there must be constant review of the
nature of transactions, the volume of transactions and critical assessment
based on risk of type of transaction and important risk factors put into
consideration. There must be an efficient know your customer policy in
place and probing questions like why does a customer want a relationship
with your financial institution", Oloruntoba cautioned, appealing that
while they establish monitoring their customers account, they must compare
on-going activities with purposes and transactions at the beginning of the
relationship to see if there were erratic fluctuations and the economic
justifications.

Transactions, involving hot zones like drug source countries, he said, must
be specially scrutinised and assessed, adding also that suspicious
disclosures should be handled by a small number of people , who were well
trained and aware of the sensitive nature of the information.

He added that it is good to develop a robust relationship with contacts
within investigating authorities, stating that the principles of the need
to know was very important, just as it was not essential that all employees
of a financial institution know about the suspicious activity being reported.

"Above all, willful blindness must be avoided by financial institutions and
compliance officers. Willful blindness are caused by profit considerations,
unhealthy rivalry and competition. While it is acceptable that financial
institutions are set up for profit considerations, it must not be at the
expense of integrity or good corporate governance, otherwise, the financial
institution may not survive the effects of recklessness", he said.