Nigeria Risks Imminent Expulsion from Egmont Group

It is longer news that the Nigerian Financial Intelligence Unit, NFIU, has been suspended from the activities of the EGMONT Group of Financial Intelligence Units, and has been disconnected from the Egmont Secure Website, a platform used for the exchange of information by members.

The suspension of the NFIU though generally misconstrued, is not for the lack of effectiveness of the NFIU, or its failure to meet the EGMONT Group standard operation as an FIU; rather, the failure of Nigeria to address the legal frame work of the NFIU vis-a-vis its operational autonomy with the EFCC.

For the records, the NFIU has over time performed creditably, a fact which is evidenced from the quest of FIUs within the West/Central African region to be mentored / sponsored by the NFIU. The EGMONT Group in recognition of the effectiveness and robustness in the activities of the NFIU approved the NFIU to mentor the FIUs of the GAMBIA, Liberia and Sierra Leone to EGMONT Group membership and equally appointed the Director of the NFIU, its regional representative for the West/Central African sub region. This is aside various other typology projects the NFIU coordinated and conducted on behalf of the EGMONT Group.

Considering the above, it could not be said that the NFIU has not been effective or not lived up to expectations within the EGMONT Group.

The genesis of the current situation dates back to 2013 when a former Director of the NFIU fraudulently petitioned the EGMONT Group and painted a gory picture of an FIU completely insecure and unfit to perform its mandate. Even though an on-site visit of the EGMONT Group conducted in the aftermath of the allegations gave a clean bill to the NFIU, a support and compliance process of the EGMONT Group was triggered, which has since put the NFIU under a search light, with the request that it defines its relationship with the EFCC.

An FIU under the Egmont Group principle and protocols is expected to be operationally autonomous with a robust confidentiality policy. It should be discrete and insulated from any form of political interference that may compromise its ability to effectively perform its mandate The NFIU possess these characteristics. The EGMONT group recognizes that these characteristics exist in the NFIU. Its only concern has been that, the NFIU does not have the legal framework to guarantee that these characteristic will not be compromised in the future and as such insist that the Economic and Financial Crimes (Establishment) Act 2004 be amended to address these concerns.

Unfortunately very few people are informed about the modus operandi of the FIU. Yet, we have so many people masquerading as experts on the subject! The core characteristic of the FIU makes its activities and operations less known to the public. Except a person who had been a staff of the FIU or an officer of the Egmont group secretariat, most of these so called expert opinions are simply derived from open source information which should be subject to verification. The perception that the EGMONT Group insists that the NFIU must be separated from the EFCC is completely misconstrued, self serving and calculated to defeat and compromise the Anti-Money Laundering, Countering the Financing of Terrorism (ANL/CFT) regime in Nigeria.

The EGMONT Group by its charter protocols and principles recognizes the existence of four types of FIUs – Administrative, Judicial, Police and Hybrid FIUs. The EGS adopts completely the recommendations of the Financial Action Task Force, (FATF) most particularly recommendation 29, which deals exclusively on FIUs. The interpretative note to recommendation 29(9) provides that, an “FIU may be established as part of an existing authority, when an FIU is located within the existing structure of another authority, the FIU’s core functions should be distinct from those of the other authority”.

Recommendation 29(10) states that the “FIU should be provided with adequate financial, human and technical resources, in a manner that secure its autonomy and independence and allows it to conduct its mandate effectively, countries should have a place processes to ensure that the staff of the FIU maintain high professional standards including standards concerning confidentiality and should be of high integrity and be appropriately skilled”.

Nowhere in the FATF’s standard recommendations provided that an FIU must standalone. A standalone FIU without the capabilities enumerated in Recommendation 29 (9) and (10) will lack the requisite operational autonomy to carry out its mandate. The NFIU as it stands today has 90% of these capacities and it has been functioning optimally in the discharge of its responsibilities.

The question will be: what is the guarantee that the standalone FIU being proposed will have these capacities soon enough to meet the requirements of the FATF and the EGMONT Group, which will convince the EGMONT Group to lift its suspension against the NFIU?

It is worrisome that some individuals will deliberately undermine the achievements of the NFIU at this stage of its development. These individuals are doing the greatest disservice to Nigeria by failing to restrict themselves to the core issues that are of concern to the Egmont Group, and projecting a misconceived position, with the sole intent of establishing a new FIU.

The NFIU has recently been tagged inefficient, meddled upon and above all, not operating up to international best standards but surprisingly, no comparison has been made between the NFIU and other FIUs perceived to be operating to the best international standards as pundits have constantly propagated. To this extent, we can only draw the inference that the NFIU is being given a bad name so as to facilitate its destruction and diminish the country’s AML/CFT achievements. The backlash could be Nigeria being blacklisted by the FATF, a development that will rubbish the current administration’s economic recovery plans and set the Country back in its efforts to attract direct foreign investments.

The speed and industry employed by the Senate to pass the NFIA bill is commendable, but the bill to establish the NFIA and disband the NFIU is miss- guided and detracts seriously from the issues at stake. The intention of the bill is bogus. Viewed carefully, the NFIA bill is designed to set up another Law Enforcement Agency with regulatory and enforcement capabilities. The concern of the EGMONT Group has always been that, an FIU should not be saddled with responsibilities that will cause it to deviate from its core functions of receiving, analyzing and disseminating information. The NFIA bill, if allowed to pass will not meet the EG criteria and Nigeria will be back to point zero.

As mentioned earlier, the problem that resulted to the suspension of the NFIU from the EGMONT Group had existed from the establishment of the Unit. Overtime measures have been employed to address the deficiencies. These measures included the issuance of the NFIU regulation of 2015, by a former Attorney General of the Federation, Mr. Mohammed Adoke. This regulation though addressed the concerns of the EGMONT Group, did not suffice, due to the provision of Section 1(2) (c) of the EFCC (Establishment) Act 2004. The EGMONT Group suggested that for the regulation to take full effect, the EFCC Act 2004 should be amended to specifically create the NFIU as a Unit under the EFCC or otherwise.

On the strength of this advice, the EFCC initiated the amendment of its Act, to address the Egmont Group’s concerns. Coincidentally, Honourable Oladele Kayode introduced a private bill, which equally sought to address the deficiencies inherent in the EFCC Act as well as incorporate the concerns of the EGMONT Group. The EGMONT Group was informed of this development at its plenary meeting of 29th – 3rdof February, 2017, in Doha, Qatar.

A copy of the proposed bill amending the EFCC Act and incorporating their suggestion was submitted to the EGMONT Group membership support and compliance-working group with a request from the NFIU, that the MSCWG review the bill and make comments and observations.

On the 2nd of March, 2017, the MSCWG forwarded its comments on the proposed EFCC amendment bill suggesting only, that some provisions in the bill be redrafted to make them clearer. Interestingly, nowhere in their comments on the proposed EFCC Amendment Bill did the EGMONT Group suggest that this proposed amendment will not address their concerns, neither was it suggested that the EGMONT Group will not accept any other legal instrument concerning the NFIU except the one creating a standalone FIU.

The only concern of the EGMONT Group had been the timely passage of the EFCC Amendment Bill. Indeed, a timeline of the 5th of July, 2017 was recommended to the NFIU. It was therefore the failure of the passage of the EFCC Amendment Bill that resulted to the suspension of the NFIU.

In accordance with the EGMONT Group principles and guidelines all that is required of Nigeria is to address its concerns by way of the passage of the EFCC Amendment bill and report back at its January 2018 plenary. If this is done, the suspension is automatically lifted at the same plenary.

But if Nigeria chooses to tow the line not suggested by the EGMONT Group by creating a new FIU and relocates the FIU to the Central Bank or any other entity as being proposed, the EGMONT Group will consider this as a fundamental change in the structure of the FIU, and the resultant effect will be an automatic expulsion. This will subject Nigeria to the process of reapplication for membership, under the revised EGMONT Group membership procedure adopted in 2014.

It took the NFIU a period of 2 years to conclude its original membership application. With the current requirements for membership, as cumbersome as there are now, for Nigeria to regain membership, it will take an estimated period of 3 years.

In my humble opinion, establishing a new FIU outside the EFCC would result to a situation that will aggravate the current situation which the NFIU is facing in the EGMONT Group.

The bill proposing the Amendment of the EFCC Act which has addressed the concerns of the EGMONT Group has been submitted to the EGMONT Group Membership Support and Compliance Working Group. It will therefore be preposterous to submit an entirely different law for consideration, as against what is already before them. Any attempt to do this will not only ridicule Nigeria before the international community, but Nigeria will be viewed as a very unserious, insincere and irresponsive country.

Following from the above and speaking from the position of knowledge, I recommend that the German experience should guide our decision. The German FIU was expelled from the Egmont Group in January 2017 on the grounds that there was a fundamental change in its structure by relocating the FIU from the German Police to the Customs. The EGMONT Group will not circumvent nor compromise its principles and protocols to favour Nigeria.

• Magu, acting Chairman of the Economic & Financial Crimes Commission, EFCC, writes from Abuja