Africa’s most populous black nation, Nigeria, faces persistent challenges owing to the high level of poverty, low purchasing power of the populace, among other socio-economic issues. This situation has spiked the incidence of money laundering and counter-terrorism funding, thereby casting a negative shadow on the country. Olufemi Dada, a Certified Anti-Money Laundering Specialist and a Certified Business Analyst Professional of the International Institute of Business Analysis, in this interview, shares that only by prioritising effective implementation of regulatory frameworks can Nigeria and indeed Africa combat the challenges of money laundering and contribute to broader security and development goals. Pius Dukor brings the Excerpts:
How would you assess the fight against money laundering and terrorism funding in Nigeria and broader Africa in 2024? What are your expectations in 2025?
The economic landscape in these climes is unique owing to the persistent challenges around the high level of poverty, low purchasing power of the populace, and political instability within the continent. Putting Nigeria in perspective, we can say the country is slowly winning the fight against money laundering and counter-terrorism funding; however, some challenges persist within our AML/CTF framework.
If we take a deep dive into GIABA’s (Inter Governmental Action Group Against Money Laundering) annual follow up report and technical compliance re-rating, we can see some progress in addressing the nation’s technical compliance deficiencies with upgrades in several areas (over the past 12 months, we have been able to achieve upgrade in 4 AML/CTF recommendation), out of 40 FATF recommendations, Nigeria has 36 recommendations rated Compliant or Largely Compliant, this is a great feat made possible by improvements in its AML/CTF framework. Nevertheless, Nigeria remains on the Financial Action Task Force (FATF) grey list, indicating ongoing challenges in the implementation and enforcement of AML/CFT laws and regulations.
There are regulatory frameworks in place to combat ML/CTF in Nigeria. However, we should prioritise the effective implementation of the AML/CFT frameworks, focusing on areas like beneficial ownership transparency and asset recovery. The financial sector has a lot to play in all of these; reporting has not been top-notch, but we can see significant improvement.
The government should continually collaborate with international organisations, like the FATF and GIABA, to strengthen its anti-money laundering and counter-terrorism financing capabilities.
2025 has started well as we see giant strides in AML within the country, anti-graft agencies have extended their coverage to the online betting and the virtual currency space, as we see a shift to these sectors by the money laundering perpetrators
What are the most significant emerging typologies of money laundering and terrorism financing that you are observing in Nigeria and across the African continent, particularly with the increasing adoption of digital financial services?
Nigeria is experiencing numerous emerging typologies of money laundering and terrorism financing; this is made possible by the increasing use of technology and digital finance offerings. As beneficial innovations are emerging in the finance world, so are financial crime typologies. Notably, in the virtual currency space, illicit funds are laundered via the virtual currency space, which is made possible due to the lack of regulations within this sub-sector. Funds are moved beyond the watchdogs, financial organisations should perform more monitoring on crypto-related transactions, although this might be difficult owing to the lack of regulations in the trade of cryptocurrencies. Monies exchange hands without proper KYC being carried out, which is a massive challenge in the fight against ML and CTF.
Another emerging typology is the use of gaming/online betting sites to launder money and fund terrorism. There is also real estate and assets investments as emerging typologies.
We also have the use of gatekeepers who in the business world are entities who control access to decision makers, resources and information within an organisation. Musicians, Footballers and sports personalities have also been used to facilitate money laundering in recent times.
The lack of robust AML regulations and the high value of transactions in the sports world create opportunities for criminal actors to launder money.
How effective do you believe the current legal and regulatory frameworks for AML/CFT are in Nigeria and within regional bodies like GIABA and ESAAMLG? What specific areas require urgent strengthening or harmonisation?
Since their emergence, we can conclude that the AML/CTF regimes by the regional bodies are effective; however, a lot has to be done in the areas of transaction monitoring, proper reporting and enforcement of the laws and legislations around financial crimes. A lot has been done around the recommendations rolled out by these regional bodies to curb AML/CTF member countries are also being cooperative in a bid to be compliant with these recommendations.
However, there have been concerted efforts to combat ML and CTF, but there are inherent challenges common to the climes these bodies operate. Enforcement of the rule of law is a serious bane in the battle against AML/CTF. Many anti-graft law enforcers have been compromised, thereby hindering the implementation of the measures against the perpetrators.
Low Suspicious Activities Reporting is another challenge experienced in the fight against AML and CTF; most suspicious transactions are not being reported to the authorities accordingly.
Investment in AI and machine learning has also been an albatross; this is my forte. I have always proposed the deployment of these tools for proper monitoring of transactions and financial activities; however, funding the implementation has been a major challenge for the players in the financial sector.
As a Certified Anti-Money Laundering Specialist, how do you leverage your extensive network and expertise in the industry to offer tailor-made solutions to reduce regulatory risks?
I am privileged to be a CAM Specialist for over 5 years now, and I have been able to attend high level conferences and meetings where I have socialised with high profile players in the AML Industry internationally, I have been exposed to extensive knowledge sharing sessions with industry juggernauts around the world, there are platforms which we brain-storm and share emerging financial crime typologies and trends. These exposures have allowed me to proffer desired solutions to risks and challenges associated with AML and CTF, not only in the financial space but to businesses generally. The playing field keeps expanding, and criminals are looking for loopholes in business frameworks.
My expertise in Tech cuts across Machine learning and Artificial Intelligence. I have been exposed to complex AI and machine learning tools that can trigger any flags/breaches in an organisation’s financial software system.
In your experience, what are the key challenges faced by financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) in Nigeria and Africa in implementing robust AML/CFT compliance programs, and what best practices can be shared?
So far in my journey with Financial Institutions & DNFBPs in Nigeria and Africa generally, the main challenge with implementing robust AML/CFT programmes could be associated with funding, most FIs and DNFBs don’t invest much in their AML/CFT programmes.
There’s a need for adequate investments in AML/CFT programmes within the financial sectors, through the integration of sophisticated Artificial Intelligence and Machine learning tools in the monitoring of transactions passing through the system.
Proper reporting to law enforcement and anti-graft agencies should be encouraged, we have numerous suspicious financial activities and transactions that go under the radar of the anti-graft watchdogs without being reported.
My advice to FIs and DNFBs would be for them to place emphasis on investing more in their AML/CFT compliance programmes.
In what significant ways has your rich wealth of experience as a Certified Business Analyst Professional impacted the operations of the organisation you have worked with?
So as a Business Analyst, I have been privileged to be part of tech projects within organisations I have worked for. A business analyst gathers business requirements to be integrated into a software system. I have worked closely with project managers, product owners, software developers, software engineers, solutions architects, etc, in designing AML/CFT programmes.
My expertise in business analysis has given me the opportunity to be able to work hand in hand with IT professionals to build and implement structures/rules/firewalls in AML compliance programmes to combat money laundering and counter terrorism funding.
Whenever I am deployed as a resource on an AML build and implementation project, I eliminate the bureaucratic bottlenecks of gathering business requirements, as I am also an AML specialist. I know what the AML system needs to function optimally, and I know the functionalities that should be deployed to make the programme work desirably.
In conclusion, my expertise in BA affords me the luxury of being not just a Financial Crime Prevention Specialist, but I am also a Tech Specialist as I can function in the building of AML/CFT software programmes.
Looking ahead over the next 5-10 years, what do you see as the most critical priorities for strengthening AML/CFT regimes in Nigeria and Africa to better safeguard the financial system and contribute to broader security and development goals?
Over the next decade, there will be a systematic change in the mode of carrying out financial transactions. We will metamorphose into a more digital direction. During this period of change, critical priorities for strengthening AML/CFT regimes in Nigeria and Africa would include enhancing our regulatory frameworks. There is a need to strengthen our Beneficial Ownership Transparency by implementing robust beneficial ownership registries and ensuring accurate, up-to-date information.
Also, we need to leverage technology in the battle of AML/CFT by implementing advanced technological solutions like AI, machine learning, and data analytics to detect suspicious transactions, report them and improve AML/CFT efficiency, this would also incorporate secure information sharing wherein we develop secure platforms for sharing information among stakeholders.
Efforts should be made to improve Risk-Based approaches towards the fight against AML/CFT by enhancing risk assessments, mitigation strategies, and resource allocation.
Promoting transparency and accountability within the anti-graft agencies in the areas of asset recovery, in the sense of strengthening asset recovery mechanisms to recover illicit funds/assets and return them to their rightful owners.
By prioritising these areas mentioned above, Nigeria and Africa can strengthen their AML/CFT regimes, safeguard the financial system, and contribute to broader security and development goals.
