Jan 04 2008 Marcus Simpson
Nigeria's anti-corruption agency recently announced its intent to penalise banks for not installing anti-money laundering software, statutorily required since December 31. The Economic and Financial Crimes Commission may take action against six of the nation's banks for overstepping the deadline, although it has not yet publicly named any of the institutions. Nigeria's authorities have already extended the deadline for banks to install the software twice — it was first moved to March 31, 2007 from the original date of December 31, 2006. Local reports, however, have referred to industry insiders ruling out the possibility of a further extension.
Nigeria's Money Laundering Prohibition Act requires banks to report suspicious transactions to the Nigerian Financial Intelligence Unit. It also requires them to report individual transactions exceeding N1m ($8,500) and corporate transactions exceeding N5m ($42,500) to the FIU as well. Ostensibly, Nigeria's authorities have claimed that the AML software will greatly help the banks in these reporting requirements.
Nigeria has joined a minuscule group of countries in passing a statutory requirement for banks to use software for this purpose. The most prominent other member is Switzerland, although the Swiss requirement is primarily an onus which only applies to the largest banks, notably UBS and Credit Suisse. Most of the country's banks are exempt.
It will be interesting to observe if the EFCC actually carries out its threat to penalise the non-compliant institutions. Complinet reported last November on a Nigerian central bank circular issued to financial institutions which criticised the latter for laxity in enforcing the country's "know your customer" requirements. Admonishment does not equate to punishment. A hypothetical comparable situation in the UK is more likely to result in the Financial Services Authority announcing punishment measures, if it finds against a regulated institution, via a final notice.
