The Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) has faulted some sections of the Nigeria Financial Intelligence Unit (NFIU) Bill which the National Assembly passed into law.
It also said the current administrative arrangement of the NFIU as structured in the bill may still be a challenge if not well managed.
The group faulted some sections of the NFIU which the National Assembly included in the bill, saying there were no measures put in the bill to check abuse by either the unit’s director or the minister of Justice & Attorney-General of the Federation.
GIABA’s observations were contained in a letter to President Muhammadu Buhari as part of the ongoing review of the NFIU bill.
The National Assembly on March 6 finally excised NFIU from the Economic and Financial Crimes Commission (EFCC) and domiciled it in the Central Bank of Nigeria (CBN).
The removal of the NFIU from the EFCC drew criticisms locally and internationally because it was allegedly designed to whittle down the powers of EFCC.
But the bill, which was transmitted to President Buhari on March 14, was yet to be signed into law because the presidency was seeking the input of some stakeholders like GIABA and a few international bodies.
In its letter to the President, GIABA cautioned on Section 2(3) and Sections 7(3) and 28(1) of the bill.
While Section 2(3) states that the FIU will be domiciled in the Central Bank of Nigeria, sections 7(3) and 28(1) show that the NFIU is administratively under the supervision of the minister of Justice.
GIABA, however, said that based on the recommendations of the Financial Action Task Force on Money Laundering (FATF) a FIU can be part of an existing authority.
It said: “The FATF recommendations state that an FIU may be established as part of an existing authority.
“When a FIU is located within the existing structure of another authority, the FIU’s core functions should be distinct from those of the other authority .The FIU has some supervisory functions which it intends to carry out jointly with the central bank.
“However, there is the need to ensure that the Central Bank does not interfere with the operations of the FIU.
“In the same vein, it is important for the Nigerian authorities to note that, there is no separation between the function of the attorney-general who is responsible for prosecutions and that of the Minister of Justice.
“Thus, it is crucial for the country to ensure that the Minister of Justice who is also in charge of prosecutions will not interfere in the operations of the NFIU, particularly the dissemination of financial intelligence.
“The current administrative arrangement may still be a challenge if not well managed. It is therefore important that Nigeria takes account of its own peculiarities and ascertains that this model is sustainable and can provide the requisite operational independence and autonomy for the FIU in line with the requirements of Recommendation 29 of the FATF standards, especially criterion 29.7 of the FATF Methodology (2013) and the report (FATF/PLEN/RD) (2018)6 of FATF Plenary in February 2018 in Paris, France.”
GIABA faulted sections 2 (4), 7(2), 8(2), 19 and 28(2) of the bill and lack of measures to prevent abuse by either the Director of the NFIU or the minister of Justice.
The letter added: “The decision of the GIABA Ministerial Committee in 2010 is not correctly reflected in the provision of the Sec 2 (4) of the Bill. However, that decision did not direct any FIU to co-ordinate the Inter-Ministerial Committee (IMC) in their respective country.
“Thus, there is no need to include GIABA in section 2. The correct rendition of the GIABA Plenary decision may be included in the explanatory notes but not within the provisions of the law.
“Furthermore, there is no executive instrument, legislation or regulation establishing the IMC. We suggest that Nigeria could consider enacting a law or issuing a regulation or an executive instrument or introduce a mechanism that establishes the IMC to coordinate AML/CFT policies in the country.
“The legal instrument should state the composition, functions and so on of the IMC and also designate the NFIU as its Secretariat.
“However, the determination of who coordinates the IMC should be the joint decision of the three line ministers (Finance, Justice and Interior) working on AML/CFT issues. This is a high-level policy issue that cannot reside in the NFIU.
“Section 19 of the Bill mandates the NFIU to conduct inspections to ensure compliance with the NFIU Act, the ML (Prohibition) Act and Terrorism (Prevention) Act. Based on this provision, the scope of FIU supervision will include all the preventive measures and will result in duplication of efforts. The Bill should mention the specific provisions of the ML and TF laws that relate to the FIU.
“Sections 8(2) and 28 (2) of the Bill mention a Board, however the Bill does not establish a Board in its opening sections or in any of its sections. There is the need to clarify this.
“To avoid abuse of power by either the Director of the NFIU or the Minister, there should be a committee of about 7 persons (Permanent Secretaries of the three line ministries; a deputy governor of CBN; a police officer not below rank of commissioner representing 1GP who is involved in the prevention of Financial Crimes; Commission Secretaries of EFCC and ICPC) to provide oversight functions on administrative issues only and without power to interfere with the core functions of the Unit. “