Director, Banking Supervision, Mrs Tokunbo Martins who spoke at the weekend during the Chartered Institute of Bankers of Nigeria (CIBN) anti-money laundering workshop held in Lagos, said the move would ascertain if lenders were complying with Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) regulations of Nigeria and those of countries where they do business.
The post-2005 banking consolidation saw many local banks to opening foreign subsidiaries. The United Bank for Africa is in 19 African countries plus New York, United Kingdom (UK) and Paris; GTBank is in Cote d’Ivorie, Kenya, Liberia, The Gambia; FirstBank has subsidiaries in Ghana, the UK, China, Paris, Johannesburg.
Skye Bank is in Sierra Leone, The Gambia and Guinea; Diamond Bank is also in UK, Senegal; Zenith Bank is in Ghana and the UK while Access Bank has units in the UK, Ghana, Zambia among others, are likely to come under probe.
Matins said: “Section 29 of the CBN AML/CFT Regulations, 2013 (as amended) requires financial institutions to maintain all necessary records on transactions, both domestic and international for at least five years after completion of the transactions or such longer period as may be required by the CBN and Nigeria Financial Intelligence Unit (NFIU), provided that this requirement shall apply regardless of whether the account or business relationship is on-going or has been terminated.”
She disclosed that financial institutions were expected to maintain records of the identification data, accounts files and business correspondence for at least five years after the termination of an account or business relationship or such longer period as may be required by the CBN and NFIU on a timely basis.
She said the examiners will be acting based on Section 22 (4) of the CBN AML/CFT Regulations, 2013. The directive, she added, is part of consolidated supervision and AML/CFT regulations allowing financial institutions to ensure that their foreign branches and subsidiaries observe AML/CFT measures consistent with the provision of the CBN regulation and to apply them to the extent that the local/host country’s laws and regulations permit.
Martins explained that where the AML/CFT regime in host country is weak, the regulation in home country must be applied to ensure that examiners analyse returns on foreign branches and subsidiaries to ensure compliance with the extant regulations.
She said that financial institutions were required to forward their AML/CFT Compliance Manual to the CBN for off-site review of the document as well as carry out enhanced customer due diligence for high risk customers and effective Know Your Customer (KYC) processes. “The KYC means knowing the identity of the customer and understanding the kinds of transactions in which the customer is likely to engage in. By knowing one’s customers, financial institutions can often identify unusual or suspicious behavior, termed anomalies, which may be an indication of money laundering,” she explained.
The CBN director said most challenges with the rendition of returns cantered around quality, accuracy, completeness and timeliness of the returns being rendered.
She said that some financial institutions do not render returns on a timely basis and that there are instances where they render suspicious transactions to the NFIU after a year of consummating such transactions contrary to extant laws and regulations.
“Most financial institutions fail to understand the importance of the renditions and as such render poor quality returns. Some of the affected reports include the tiered KYC returns, annual AML/CFT employee training programme and quarterly employee training. In addition, some financial institutions do not render AML/CFT returns in the prescribed format which in turn makes appraisal of the returns very challenging,” she said.
She said that even if Nigeria has the best laws and regulations, there would not be effective if banks through which laundered funds flow, do not have adequate record keeping and data analysis capabilities to detect such transactions.
She said the CBN will continue to do everything within its powers to ensure institutions under its supervisory purview are held accountable for actions which contravene the relevant laws that have been highlighted, and will also insist that financial institutions maintain adequate and relevant documentation of transactions and report suspicious transactions as required by law.
She said the methods used to perpetrate economic and financial crimes have become increasingly complex, involving high-tech crime, identity fraud, Internet fraud, money-laundering and terrorist financing.
“The emergence of electronic platforms has principally increased the concerns around money laundering thus providing bounteous opportunities for money launderers to cultivate ingenious tactics in executing these immoral acts, this invariably takes the concerns from an international perspective,” she said.
“Activities such as drug trafficking, exploitation of natural resources, corruption and misappropriation of funds affect the economic well-being of the populace of every country. The consequence of such activities goes well beyond financial loss and the economic well-being of the society. It is important that people feel they are living in a fair and just society and, if economic and financial crimes were not checked, people would begin to feel increasingly resentful.”
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