The Egmont Group, an international body of 155 Financial Intelligence Units that provides a platform for the secure exchange of expertise and financial intelligence, meets from today, March 12, 2018, until Thursday, March 15. A deadline to Nigeria to separate its National Financial Intelligence Unit from the EFCC lapsed yesterday, without Nigeria enacting a law that would have done so. The likely outcome of the Egmont Group’s meeting will be Nigeria’s expulsion from the group.
In July 2017, the Egmont Group lost patience with Nigeria and suspended our National Financial Intelligence Unit because of the EFCC’s habit of leaking sensitive financial intelligence to the media even before charging suspects to court. The EFCC had also refused to cooperate in efforts to grant the NFIU operational independence.
The group demanded that Nigeria amend the laws to either make the NFIU a separate corporate body or transfer it to the Central Bank of Nigeria in line with global best practice. Egmont recognises four types of FIUs – the judicial model; the law enforcement; the administrative model; and the hybrid model which combines elements of at least two of the FIU models.
Nigeria runs the law enforcement model where our FIU is domiciled within the prosecutorial agencies, and since joining the Egmont Group has domiciled the NFIU within the EFCC. The NFIU’s independence has been a matter of contention since around 2015 as Egmont has felt that there is the risk that the unit may, or already be subject to political interference.
In response to Nigeria’s suspension, the Presidency set up a committee, headed by Senator Chukwuka Utazi, to reposition the NFIU and ensure that Nigeria is not expelled from the Egmont Group. Its report was due to be submitted in August 2017. However differences in key blocs in the National Assembly and the Presidency, stymied reform efforts. Last minute efforts to push through the law led to both houses rushing a reconciled version of the bill through confirmatory votes less than a week to Egmont’s March 11, 2018 deadline. Despite the National Assembly’s best efforts, the harmonised bill has not been signed by President Muhammadu Buhari. Multiple sources have indicated to SBM Intelligence that the unwillingness by the Presidency to mirror the speed of the National Assembly with regards signing the bill and allowing it become law is rooted in a desire to retain the embedded NFIU within the EFCC as a ready political tool to wield against perceived opponents.
Nigeria’s possible expulsion will be a devastating blow for our international financial transactions, made worse by the country’s recent drop in Transparency International’s Corruption Perception Index.
Our financial institutions could be blacklisted, affecting their ability to issue payment cards for international transactions. With the CBN’s tight regulation of the pricing of domestic transactions, the international transaction portfolio of most banks is what has subsidised their card business. This income is threatened by the potential suspension, and that will affect domestic electronic transactions under the current price regime. Banks will also be forced to access offshore facilities at a premium, making such funds more expensive for them. As always, this added cost will be passed on to customers.
An expulsion could also affect individual Nigerians’ ability to take part in international transactions. First to be hit would be bulk traders and e-commerce firms who will be forced to rely on cash to import their goods, raising their risk profile.
An expulsion could also have an adverse effect on the fight against corruption. One of the key drivers of corruption in the country is the relative ease with which persons are able to launder vast sums of money outside the country. This ability depends on foreign partners who would not be affected by an expulsion, and the ability to trace such monies is dependent on information from financial intelligence units abroad.
Another lesson for Nigeria here is that appearances matter. The optics are terrible in how the country has left this matter to the very end, with a mad dash to pass the bill. What this serves to underscore is the level of seriousness that Nigeria accords to issues of significant national and international interest. It is also indicative of how far down the line our lawmakers look in terms of trying to understand the real life impact of their actions. The National Assembly has, as of 9 March, passed the reformed NFIU law as demanded by Egmont. However, that it took this long to happen shows our lack of ability to focus on what is important.