CBN Chides Banks over Money Laundering

Dr. Sarah Alade, acting governor of the Central Bank of Nigeria (CBN), has linked banks to money laundering and other related crimes and accused them of aiding or abetting the crimes knowingly or unknowingly.

This is even as African financial experts also expressed concern the unwholesome roles of banks globally in the increasing menace of illicit money transfers across regional borders and the negative implications for the global financial system.

Alade levelled the allegations against the banks in her keynote address at the opening ceremony of the Regional Course on Combating Money Laundering and Other Financial Crimes organised by the West African Institute for Financial and Economic Management (WAIFEM) in Abuja.

She specifically noted that “bank facilities are used knowingly and unknowingly to further the act of money laundering and in most cases to retain the proceeds of such crime”.

Charles Mordi, director, Research, of the bank, who represented by the acting governor said that over 80 per cent of the proceeds of money laundering were associated with banks, one way or the other, all over the world.

According to her, the extent of financial crimes in terms of dimension, nature and level of sophistication is becoming worrisome, and therefore called for urgency by countries to build an investigative culture where suspected proceeds of illicit activity become routine part of investigation process to “follow the money” and identify its sources, so that substantial confiscation orders can be obtained, and the launderers prosecuted.

Alade listed money laundering, which is closely related to illicit trafficking in narcotics and human beings, corruption, terrorism, prostitution, illegal mining as well as foreign exchange malpractices, bank and tax fraud, as amongst the most prevalent financial and economic crimes being contended with by countries globally today

She lamented that despite international effort to mitigate the menace of money laundering, including the establishment of the Financial Action Task Force to serve as the principal international standard setting body as well as the Basel Committee on Banking Supervision, among others, the crimes were still prevalent.

While noting that effects of money laundering and related economic and financial crimes cause distortions in the financial markets through misallocation of investment, the CBN boss explained that the unwholesome acts usually have “deleterious macroeconomic consequences such as inexplicable changes in money demand, prudential risks to banks soundness, contamination effects of legal financial transactions and increased volatility of international capital flows and exchange rate due to unanticipated cross-border asset transfers.”

She, therefore, warned that money laundering also had a dampening effect on foreign direct investment , especially when a country’s commercial and financial sector were perceived to be associated with the incidence of organised crimes.

Alade also lamented that a concentration of economic power by organised crime spelled doom and could all too easily infect the political terrain of any nation, adding that this also portended greater risk for the rule of law and burgeoning democracy in the sub-region.

She raised a greater concern on the connection between money launderers and terrorists which she said were borderless and formed part of a larger network operating across agencies and across borders.

The acting governor said that in view of the growing menace of money laundering, law enforcement appeared a needle-in-a-haystack effort but that this should neither deter nor dampen the enthusiasm of law enforcers to combat financial and other economic crimes in all forms.

Earlier, Prof. Akan Ekpo, director-general of WAIFEM, described money laundering as a major threat to financial stability in any economy, particularly to small and fragile economies like the ones in the West African sub-region.

In another development, the CBN helmswoman has restated the need for the retention of the apex bank’s autonomy.

She said allowing the current status of the regulatory financial institution would further strengthen stability in the financial sector, sustain the gains already made towards sustaining the nation’s economy growth.

She spoke at the opening of a national seminar on banking, finance and allied matters for legislators held in Abuja.

Alada noted that the past two decades of financial re-engineering roles of the CBN had translated to improved macro-economic environment, access to credit, financial inclusion, payment and settlement system, employment generation and strengthening of the market mechanisms in the country.