ECOWAS INITIATES ANTI-MONEY LAUNDERING STRATEGY

The conference on Anti-money laundering in ECOWAS held recently in Lagos
could not have come at a better time. Considering the growing concern and
effort to stem the rising tide of money laundering activities as well as
other financial crimes especially at the international level, the
conference, indeed was apt and very imperative in sensitizing authorities
and financial sector operators on the gravity and profound impact of such
crimes on the local economy as well as the need to tighten loopholes that
encourage such crimes and ensure that the fight against them is sustained.

Prior to last year when the country was almost black listed by the
Financial Action Task Force (FATF) due to none compliance with its basic
money laundering laws, there appears to be a lack lustre effort on the part
of government to effectively address the problem of money laundering and
other financial crimes.

The attitude of the government in this regard though might be attributed to
ignorance on the pervasive effect of such crimes on the economy, the FATF
however sees it as a subtle encouragement of the crime.

This, perhaps informed the objective of the conference which is "bringing
the anti-money laundering regime in compliance with international standards.

Simply defined, money laundering implies hiding, moving and investing the
proceeds of criminal conduct/activities, it involves a series of multiple
transactions used to deceive government authorities as to the origin,
existence and application of illicit / illegal sources of income and the
eventual processing of such income to give it a toga of legitimacy. It is
the act of making dirty money clean.

Consequently it promotes crime, as well as prevent detection of criminal
activity as well as punishment of perpetrators of such activities.
According to Associate professor, department of Finance, University of
Lagos, Dr S.I. Owualah, money laundering provides convenient shelter for
drug dealers, terrorists, illegal arms dealers, corrupt government
officials and others who aids the activities of money launders.

These include precious metal dealers and brokers, commodities brokers,
automobile dealers, jewellers, real estate dealers, auctioneers, financial
institutions and financial consultants.

Though the impact of money laundering is not immediately visible or felt by
the common man, its existence however is of grave consequence to the
economy. If any thing at all encourages occurrence of criminal activities
that leads to it i.e as long as proceeds of criminal activities can be
disguised and injected into the economy, crime will be more rampant.

Speaking on the economic impact of money laundering, Governor, Central Bank
of Nigeria (CBN) Chief Joseph Sanusi stated that money laundering affects
indigenous entrepreneurship, more so with the trade liberalization.
Proceeds of drug sales and other criminal activities are used to bring in
and dump goods in the market, which are sold at prices below cost prices in
the exporting countries.

The reason being that the drug baron has imported so as to transfer the
dirty money and not for profit motives." This situation he explained,
"depresses domestic production due to uncompetitive pricing of the imported
products.

Because the return on investment from domestic production and legitimate
business activity will almost inevitably be lower than the high returns
made by the money launderers, domestic production is hereby depressed by
their activities."

This situation he remarked affects small and medium scale enterprises in
particular, which are the growth target which the government is
addressing." "Consequent to this development, foreign investment will
decline, because investors will be scared of an economic environment where
illicit monies are allowed to play significant role in the allocation of
scarce resources", he explained.

Speaking in the same vein, President Chartered Institute of Bankers of
Nigeria (CIBN) Mazi Okechukwu Unegbu, noted that, "armed with the
purchasing power acquired through illegal activities, the money launders
are capable of penetrating perceived obstacles or hurdles in an effort to
hijack economic, social, and political power.

They mobilise their ill-gotten wealth to penetrate both the law enforcement
and judicial system with ease. They have access to the most advanced
technological equipment in perpetrating their nefarious activities."

Such activities undermine public confidence in the judicial system and this
in turn projects a negative image of the country to the outside world hence
a disincentive to prospective foreign investors."

Money laundering also undermine the banking system as well as reduces the
effectiveness of monetary policy.

This is because money launderers use the backing system to clean up their
dirty money.

According to Mr A.N. Ohanyere, "money launderers, in order to avoid
detection, find the services and facilities of banks and financial
institutions appropriate for placement, layering, integration and other
crucial processes of concealment of criminal funds." This without any doubt
mars the integrity and reputation of the banking system.

According to Sanusi, money laundering poses a danger to the health and
existence of not only individual banks but, when sufficiently widespread,
the entire banking system.

In addition to these is the social cost of money laundering which according
to Owualah include, "heavier government spending on law enforcement, health
care for treatment of drug addicts as well as rehabilitation of victims of
human trafficking and other money laundering-related crimes," "high
potential of its corruptive influence on virtually all segment of the
society as a result of sheer magnitude of the economic power of money
launders. The above formed the basis of discussions at the anti money
laundering conference.

The Conference provided a broad definition of money laundering and x-rayed
the numerous manifestations and ramifications of the phenomenon. The
Conference reviewed existing legislation and other legal instruments that
relate to financial crimes in general and money

laundering in particular in Nigeria and the ECO WAS sub-region in general.
It also examined the various problems militating against adequate
enforcement of these legislation and laws. The Conference identified the
major institutions whose activities have a direct bearing on the phenomenon
of Money Laundering as banks, insurance companies, discount houses and
savings and loans syndicates, the Securities and Exchange Commission and
the Stock Exchange.

Similarly, the Conference identified the police, Drug Law Enforcement
Agency, the Judiciary and the New Financial and Economic Crimes Commission
as the major agencies and instruments for the enforcement of anti-money
laundering laws and initiatives.