Real Estate Is Latest Money Laundering Avenue – Angela Nworgu, SCUML Boss

Recently, she caused a stir when she accused Non – Governmental Organizations, NGOs, of being conduits for laundered funds. Now, Angela Nworgu, national coordinator of the Special Control Unit against Money Laundering, SCUML, in a chat with icirnigeria.org,fingers property business as the new popular means of laundering dirty money.

What is SCMUL all about, why haven’t we heard about it before now and under what law does it operate?

Well, recently, you would have heard more about us as we have been doing some enforcement. And this is because we had not recorded significant success in compliance in spite of all efforts that we made in sensitizing the entities that we cover. These entities are the designated non-financial institutions, DNFIs,  as opposed to financial institutions…They are designated by the Money Laundering Prohibition Act 2011. Section 25 of the Act has a list of the entities that SCML should supervise and regulate.

Can you mention them?

It is a whole lot of entities. You have hotels, professionals (accountants, lawyers, etc.), estate agents and operators, car dealers, supermarkets, casinos, non-government organizations, NGOs, dealers in jewelries, precious stones and metals, etc.

It is an open-ended list in the sense that whenever SCUML thinks that a particular sector is becoming vulnerable to money laundering or even terrorist financing, we are empowered by the Act to make recommendations to the minister of trade and industry to include those entities in the Act or in our regulatory document, before the Act is reviewed and its then added.

Once this is done, they become designated and then we can supervise and regulate them according to provisions of two Acts.

SCUML has been there since 2005 and it has been working. The problem is that the work that SCUML has to do is very, very much. We are supposed to traverse the entire length and breadth of Nigeria. If you consider that in Abuja alone, you would find thousands of DNFIs, you can imagine what the work load would be much. That’s probably why some people do not know about us.

Does your organization operate under the EFCC?

Yes, we operationally operate under the EFCC and this is because the EFCC has overall supervisory powers given to it by the Act for offences that are described as financial and economic crimes.

Money laundering is one of them. This is why we occasionally depend on them to help us in carrying out our work. Also, you know that the EFCC has enforcing powers. But legally speaking, we are domiciled under the ministry of trade and investments.”

 

When you talked about compliance with the money laundering law, exactly what are the reporting requirements and expectations for a DNFI?

Under section 5 of the Act, the law requires that you would declare your activities to SCULM. The law also requires that you register with SCUML and help to observe a certain reporting regimes such as currency transaction reports, CTR, to the NFIU.

You are also required to set up in your organization, an internal anti-money laundering audit regime or mechanism and appoint money laundering compliance officers who would interact with the staff of SCUML who have the mandate to supervise, monitor and regulate your currency transactions with respect to money laundering.

You are also expected to submit your staff for training in other to keep abreast with the current trend in the anti-money laundering regime. You are also supposed to display the anti-money laundering notice in a conspicuous place in your office, notifying the public that you are anti-money laundering compliant.

In terms of specifics, what would a supermarket, for example, be dealing with that would require it to make reports?

Money laundering is not all about threshold issue. If you remember the history of money laundering, it started with small cash transactions and supermarkets are involved in small transactions.

Also, money laundering is a predicate offence. Supermarkets too have this tendency of evasion of taxes. And don’t forget too that that under the current Act, every organization is required to declare its annual tax at the end of the year and prepared audited reports, no matter the type of business, whether it is a limited liability or not.

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It is also possible for a super market which is also involved in drug ring or prostitution ring to plunge monies from external sources into a super market and declare such amount of monies as part of business gains.

In addition to that, there are supermarkets that are involved in the sale of very expensive items or luxury goods. They sell very expensive electronics, furniture. And so when you look at the thresholds, it is easy for them to meet and exceed it.

There are super markets that have jewelry shops within them and you know how expensive jewelry is. A small amount of gold could be worth millions of naira and these are possible avenues of money laundering.

You must understand that what we are interested in is the money trail. We want to see whether money laundering is going on and the way to see that is to look at records, know what monies come in and go out, do they go through the banks? Are they cash transactions? And then, somewhere along the line, if some untoward is happening, we are able to put our finger on it.

When we do these things, it is not because a crime has already been committed but we are following through looking at the money trail. It is very important for us; so that if something suspicious is identified, it can be picked up.

So when we go to a shop that is not complying like the Exclusive Store that you mentioned, we want to look at their records, we want to see if they have been involved in anything. It is not that we have a case against them already.

The NGO is another very vulnerable sector because of the trust built and the fact that they put themselves out as people helping the society and so when money launderers use them, nobody asks any question

The demand you make on operators and owners of these businesses would involve them spending some money. Does that not add more burden and cost to their operations which they can now pass on to customers?

No. we are doing our work in such a way that we don’t make them incur extra cost. The forms that we require them to fill are very simple. In fact, we have had to look at the forms and reduce the fields so that as you are transacting, if you have internet facilities, by the click of a button, you can send your report to us. That way, it doesn’t take your time or money and this is what we are encouraging many of the entities to do if they have internet facilities, to make their work much easier. Those that don’t have, the forms are easy to fill. Our registration is free. Even when we conduct trainings, it is free. So they cannot accuse us of increasing the cost of running their businesses.

The challenge we have with some of the DNFIs is the fact that some of them are illiterate, especially the car dealers.

 

Real Estate is an obvious way of laundering money especially in Abuja and so what exactly are real estate operators meant to report in terms of compliance?

One of the requirements of the law is that he has to register with SCUML, which is free of charge. Then he has to comply with the regulations which include reporting all their transactions above the threshold, he has to appoint a compliant money laundering officer and place a notice. These are the main components. But in the registration process they have to give us their CAC registration details.

It is obvious that real estate is being used to launder stolen funds in Abuja. If you have been in operation and have been doing your work, why are plazas and real estate springing up so fast.

Well, they are actually under check and if there are areas where money is been laundered, I think SCUML is handling it.

Do you have examples?

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Yes I have examples but we cannot call names because some of them are subjudice and as you know we cannot discuss such cases.

Of course it has been noticed, even internationally, that real estate is a sector vulnerable to money laundering. The Financial Action Task Force, FATF, for instance, has noted in one of its researches that the estate sector has become vulnerable to money laundering.

Here in Nigeria, we have noticed it too. The Central Bank of Nigeria, CBN, for instance, knows it. It is the easiest way of laundering money, especially here in Abuja. We must face the fact that the people who steal money, easily hide it in property. So they buy lands and they build mansions, whether you call them plazas or hotels, etc., and in some cases, they leave them fallow to buy time.

What we are doing is that, we have started looking beyond the property to see who owns it. When we know who owns it, it would give us an incline to whether money is being laundered. For instance, if the owner is a Politically Exposed Person, PEP, that heightens the risk and is like a red flag and then we go deeper and deeper.

But even in doing this we have challenges because some of these people do not register these properties in their own names. That is referred to as layering in one of the three stages of money laundering.

Despite this, we are doing our work in exposing and unveiling the owners of these properties. When you have one person owning multiple expensive properties, it rings a bell and then we take the necessary action.

So rest assured that we are doing our work. We need to be more empowered, both in terms of personnel and funding, in order to expand and meet the scope of our work which is nationwide.

Another method that has become popular for laundering is car sales. What has been your experience and challenges in dealing with this vulnerable business?

In terms of car dealers, in the past, before politically exposed persons became the big money launders, it used to be drug traffickers. When drug pushers take drug outside the country, the easiest way of returning these funds is the purchase of expensive vehicles and when they successfully ship them in, they convert these ill-gotten funds to legitimate funds.

The challenge that we face in regulating this sector is that majority of the dealers in cars are illiterate. The organized car dealers in Abuja, for instance, cannot form one-quarter of the unorganized segment. So it is difficult to regulate the unorganized ones that are found on the streets. They change stands regularly.

You may go out today and find a car stand that is filled with expensive cars, you issue a letter of sensitization, go back the next day, all the cars there have been removed for one reason or the other.

Again, if you follow the trend of car business, a lot of car dealers operate mostly for unidentified persons. The people you often see at the stands are not the real owners of the business.

 

What are the greatest challenges facing SCUML?

Basically, you know in any fight against corruption or money laundering, the perpetrators do not take things lightly and are bound to fight back.

Corruption is so endemic in Nigeria, it becomes very difficult each time we try to push because they have all it takes to fight back.

So, one of our greatest challenges is the attitude of Nigerians.

Another major challenge facing SCUML is the issue of funding. We are only funded by the EFCC, though we are domiciled in the federal ministry of trade and investment. We don’t receive any budgetary allocation, although we are making efforts see whether some of our projects can be funded by outside help

Many of the DNFIs do not know what is required of them by law. What methods does SCUML employ in sensitization?

From time to time, we often organize workshops, seminars and trainings for compliant officers of DNFIs. Recently we had trainings for DNFIs in Abuja, on September 1, this year and there is a plan to go to other zones to replicate what we did in Abuja.

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We have also been doing door-to-door sensitization of all the sectors which include the car dealers, the professionals, etc.

We are also in collaboration with some self – regulatory bodies and associations, such as ICAN, NBA, etc. We realised that if we have to do everything by ourselves, it would take a long time since we don’t have the required number of personnel and funding.

These bodies organization regulate themselves, they have their rules which they can enforce against erring members and so we use that to get through to the members. And the good thing is that these organizations also have state branches, so once we are able to deal with the one here in Abuja, we are already dealing with all the state branches.

In case of non-compliance by a DNFI, can SCUMUL enforce compliance?

By virtue of the EFCC Act, section 21, the EFCC has powers to demand and obtain reports from financial institutions and designated non-financial institution. But SCUMUL has the mandate to regulate the sectors. So we are using both laws now to demand for financial reports and other records and  in case of failure to comply, the EFCC being the overriding agency for anti-money laundering policy in Nigeria, will ensure compliance.

The EFCC has all the enforcement powers right from investigation to prosecution. So all the cases that need to be prosecuted, and there are many of them right now, are done under the auspices of the EFCC and this is covered by the Act.

A major problem with fighting money laundering in Nigeria is the absence of a non – conviction asset forfeiture law. The last National Assembly threw out a bill to that effect. Is that the end of the matter?

I think that it isn’t a closed issue yet, because there is a realization that it is a keen component of the fight against money laundering and corruption generally. If you depend solely on conviction, you may not achieve much. So it is still being looked at and I’m sure that at the right time, it would be reintroduced.

Are there laws under the SCUMUL ACT that protect an informant?

The Act under section 14 guarantees the confidentiality of whatever you give to us and anyone who exposes that has committed an offence against and can be prosecuted and imprisoned.

I also know that the Whistleblower Protection Act is being worked on as we speak and when that is passed into law, it would further back the provision of the Act.”

Finally, is the money laundering ACT in conformity with the 40 recommendations of the Financial Action Task Force?Or are there lacunas that we need to bridge in the law?

First, let me say that the laws that we make to counter some of the crimes are supposed to be our own domestication of what the FATF recommends.

Now what happens is that from one country to the other, they domesticate it but sometimes, they also leave some things out. But when the mutual evaluation is done, they find out these gaps and they advise you to fill them, and if you don’t fill them, they blacklist you and when you are blacklisted, you fail to get help from other members of the international community and you are embarrassed and so on and many countries don’t want this.

If you look back before the 2004 Act was enacted, we were in bad shape. Nigeria was blacklisted and there was uproar and quickly that Act was put together. But because it was put together hurriedly, there were a lot of gaps.

In 2011, the government tried to fill those gaps. When that happened, there were still some gaps and as we speak, that Act is undergoing another review in order to properly capture all the recommendations so that when the next mutual evaluation is done, Nigeria may be rated as compliant.”