MONEY LAUNDERING ACT 2011 AS AMENDED – A LEGAL REVIEW

INTRODUCTION:

The money Laundering Act is a statute enacted to check the rising incidence of crimes relating to laundering of money via banks and other financial institutions by individuals and Body corporate. Most often than not, the money so laundered are looted from the coffers of government, or from the sale of hard and dangerous drugs, weapons and in other instances defrauded from unsuspecting members of the public.

The effects of such financial crimes in the country cannot be over-emphasized as it destabilizes the economy, leaves the masses impoverished and in most cases, the illicit monies are used in the sponsorship of terrorist and other agents of political instability. The Act was first passed in 2004 as The Money Laundering (Prohibition) Act, 2004

The National Assembly under its statutory powers repealed the Money Laundering (Prohibition) Act, 2004 and replaced it with the Money Laundering (Prohibition) Act, 2011, hence the need for this review.

REVIEW OF THE RELEVANT SECTIONS TO THE BANK

Part 1.            PROHIBITION OF MONEY LAUNDERING

Section 1 (a) and (b) of this Act limit the amount of money to be paid or accepted as cash payment. For an individual it is now N5 million while a body Corporate it is N10 million. Anything in the excess of that must be made through a Financial Institution.

REPORTS ON INTERNATIONAL TRANSFER EXCEEDING USD 10,000 (Section 2)

Section 2 (1) (2) (3) made it mandatory for Banks and other Money Services Business to the CBN, SEC and the EFCC to make a report of any international transfer of funds, securities by a person, body corporate, where such transfer is in excess of USD 1000 within 7 days of such transfer.

Such reports shall indicate the nature of the transfer, the amount, names and addresses of the sender and receiver of the funds or securities.

IDENTIFICATION OF CUSTOMERS & ACCOUNT OPENING REQUIREMENTS

(section 3)

This section deals with the requirements for account opening and identification of customers before opening accounts, issuing passbook or even establishing any other business relationship with the customer.

REQUIREMENTS FOR INDIVIDUAL CUSTOMERS: (section 3(1) and (2) )

1.    Proof of identity:

Customer to provide a valid, original copy of an official document bearing the names and photograph of the customer or any other identification documents the relevant Regulators may approve from time to time.

2.    Proof of address:

Customer to present originals of receipts issued within the previous 3 months by Public Utilities or any other document as the Regulators may approve from time to time.

REQUIREMENTS FOR BODY CORPORATE: section 3 (3) and (4)

1. Proof of identity:

The Company to present its certificate of Incorporation and other valid official documents attesting to the existence of the body

2. The Manager, employee or assignee delegated by such body corporate to open the account shall be required to produce not only the documents as in 1 above, but must also present proof of the Power of Attorney granted him/her in the behalf.

REQUIREMENTS FOR CASUAL CUSTOMERS: section 3 (5)

A casual customer shall comply with the under listed regardless of the number of transactions including wire transfer involving a sum exceeding USD1000:

1.    Proof of identity:

Customer to provide a valid, original copy of an official document bearing the names and photographs or any other identification documents the relevant Regulators may approve from time to time.

2.    Proof of address:

The customer presents originals of receipts issued within the previous 3 months by Public Utilities or any other document as the Regulators may approve from time to time.

REQUIREMENTS FOR PUBLIC OFFICER: section 3 (8)

Section 25 defines Public Officers as individuals who are or have been entrusted with prominent public function, both within and outside Nigeria and those associated with them.

1.    Proof of identity:

The Officer provides a valid, original copy of an official document bearing the names and photograph or any other identification documents the relevant Regulators may approve from time to time.

2.    Proof of address:

The Customer presents originals of receipts issued within the  previous 3 months by Public Utilities or any other document as the Regulators may approve from time to time.

Apart from the above, the bank in the establishment of any business relationship with Public Officer must put in place appropriate risk Management systems; obtain senior management approval before establishing and during any business relationship with any public officer.

REPORT ON SUSPICIOUS TRANSACTIONS S. 3 (6) & (7):

Where there is a reasonable room to suspect that the amount involved in a transaction is a proceeds of a crime or illegal act, then the Bank shall require identification of customer regardless that the amount in the transaction is less than USD1000 or equivalent.

Where it appears that the customer may not be acting on his own account, the bank shall seek from the customer, by all reasonable means as to the true identity of the principal. Where the customer is a body corporate, the bank shall take reasonable means to understand the ownership, control structure, the natural persons who truly own and control the customer.

SPECIAL SURVELLANCE ON CERTAIN ACCOUNTS: Section 6 (1) & (2)

Where there is a special suspicion on any account because of the frequency which is unjustifiable, unreasonable or unusual the bank shall within 7 days after the transaction:

1.    draw up a written report containing all relevant information, with the identity of the principal and the beneficiaries where applicable

2.    take appropriate steps to prevent the laundering of proceeds of a crime or an illegal act

3.    send a copy of the report to the Commission whether the transaction was completed or not

SPECIAL POWERS OF THE COMMISSION & CBN:

Section 6(5) (b) confers powers on the EFCC and CBN  or their authorized representatives to place a stop order on any account or transaction for a time not exceeding 72 hours if it is discovered in the course of their duties that such accounts are involved in any crime.

Note that where it is not possible for the EFCC or the CBN to conclude their investigation within 72 hours, they must obtain an Order from the Federal High Court directing the Bank to block the funds, accounts or securities.

It is an offence for the Bank to fail to report to the Commission any reasonable suspicion within 7 days as stated in section 6 (1) and (2) and is liable upon conviction to a fine of N1million for each day during which the offence continues.

Note that where funds are blocked under an Order gotten from the Federal High Court by the EFCC or other relevant Agency under section 6(7) and there is evidence of conspiracy between the Bank and the owners of the funds, the bank involved shall not be relieved of liability under this Act and criminal proceedings for all offences arising therefrom may be brought against the directors and employees involved in the conspiracy. (Section 12)

PRESERVATION OF RECORDS: Section 7.  

The bank under this section is required to keep records of customers for a length of 5years as detailed hereunder:

1. Records of customers’ identification must be preserved for at least 5 years after the closure of the account or severance of relations with the customer.
2. Records and other related information of a transaction carried out by a customer including reports made to the commission on any unusual  or suspicious transactions on the account as in section6 shall be preserved for at least 5 years after the transaction or making of the report as the case may be.

COMMUNICATION OF INFORMATION: Section 8.

It is expected that records of customers as required in section 7 shall be communicated on demand to the CBN, NDLEA, and EFCC etc. as the case may be.

MANDATORY PRECAUTIONARY MEASURES TO BE PUT IN PLACE: Section 9.

It is mandatory for all banks to develop programmes towards combating the laundering of proceeds of a crime and other illegal act by:

1. Designation of Compliance officer at Management level at its Head office and every branch
2. Regular training programmes for staff
3. Centralization of information collected
4. Establishment of internal audit to ensure compliance.

It is important to note here that the CBN by this ACT is empowered to impose a penalty of not less than N1million or the suspension of any license issued the bank for failure to comply with the provisions of arousing adequate awareness among the staff.

MANDATORY DISCLOSURES: Section 10.

The bank is under an obligation to report within 7days to the commission of any single transaction, lodgement or transfer of funds in excess of:

1. N5million or its equivalent for individual
2. N10million or its equivalent for body corporate

A contravention of this disclosure is an offence and upon conviction attracts a fine of not less than N250,000.00 and not more than N1million for each day the contravention continues.

PROHIBITION OF NUMBERED OR ANNONYMOUS ACCOUNTS: Section 11.

The Act makes it an offence to create numbered or anonymous accounts.

An individual who contravenes this section is liable upon conviction to a term of not less than 2 years but not exceeding 5 years.

A bank or body corporate that contravenes this section shall be liable to a fine of not less than N10million but not exceeding N50million.

SURVEILLANCE OF BANK ACCOUNTS: Section 13.

In order to identify and locate proceeds, properties, objects or other things related to the commission of an offence under this Act the EFCC, CBN or other regulatory agencies may by the Order of the Federal High Court :

1. Place any bank account or any other account comparable to a bank account under surveillance
2. Obtain access to any suspected computer system
3. Obtain communication of any authentic instrument or private contract, together with all bank, financial and commercial records when the account, telephone line or computer system is used by any person suspected of taking part in a transaction involving the proceeds, of a financial or other crime.

It is worthy to note here that banking secrecy or preservation of customer confidentiality shall not be invoked as a ground for objecting to serving as a witness to facts likely to constitute an offence under this Act or obliging the Agencies with access to relevant information needed under this section.

It therefore becomes an offence under this Act to obstruct the Commission or authorized officers in the performance of their duty.

For an individual who constitutes such obstruction is liable upon conviction for a term not less than 2 years and not exceeding 3 years.

For a bank or body corporate it shall be a fine of N1million (section 22)

EXCLUSIVE JURISDICTION: Section 20.

The Federal High court is bestowed exclusive jurisdiction for the trial of offences under this Act.