Banks used for money laundering, says CBN Ag Gov

central_bank_nigeria-642x500West African financial watchers have expressed concern that banks are being used to perpetuate money laundering.

Delivering the keynote address yesterday at the opening ceremony of the regional course on combating money laundering and other financial crimes organized by the West African Institute For Financial and Economic Management (WAIFEM) in Abuja, the Acting Governor of the Central Bank of Nigeria (CBN) Dr. (Mrs) Sarah Alade stated that “bank facilities are used knowingly and unknowingly to further the act of money laundering and in most cases to retain the proceeds of such crime.”
Represented by the Director, Research of the CBN Mr. Charles Mordi at the event, Sarah Alade revealed that “over 80 per cent of the proceeds of money laundering are associated with banks, one way or the other, all over the world.”
Examples of financial crimes and money laundering activities which are executed through banks she said include round tripping, financial fraud, capital flight, fake cheques, fake currency minting, advanced fee fraud and insiders abuse.
Alade noted that “effects of money laundering and related economic and financial crimes cause distortions in the financial markets through misallocation of investment.”
She added that such unwholesome acts have “deleterious macroeconomic consequences such as inexplicable changes in money demand, prudential risks to banks soundness, contamination effects ob legal financial transactions and increased volatility of international capital flows and exchange rate due to unanticipated cross-border asset transfers.”
The Acting CBN governor warned that money laundering also has a dampening effect on foreign direct investment (FDI) “when a country’s commercial and financial sector are perceived to be associated with the incidence of organized crimes.”
One of the most valuable assets of a financial institution she said is integrity which on its part depends on the perception that it functions within a framework of high legal, professional and ethical standards.
Alade lamented that a concentration of economic power by organized crime spells doom and could all too easily infect the political terrain of any nation.
The activities of money laundering and terrorists were described as borderless and they “form part of a large network operating across agencies and across borders.” This she said has exerted more pressure on governments in the sub-region to put in place adequate measures to combat this menace.
In view of the growing menace of money laundering, law enforcement she said “appears a needle-in-a-haystack effort” but this should neither deter nor dampen the enthusiasm of law enforcers.
Speaking earlier at the event, the Director General of WAIFEM Prof. Akan Ekpo described money laundering as a key threat to financial stability in any economy more so to small and fragile economies like the ones in the sub-region.
He identified a number of the predicate offences for money laundering that are common in the West African sub-region to include: drug trafficking, human trafficking, arms trafficking and counterfeiting.