MONEY LAUNDERING, TERRORISM FINANCING AND ILLICIT FINANCIAL FLOWS LINKED TO MARITIME CRIME IN THE GULF OF GUINEA

EXECUTIVE SUMMARY

 

1.  It is well known that the sea is the real theater of the world economy. In fact, 90% of the trade carried out throughout the world is facilitated by maritime navigation routes. In addition, three quarters (3/4) of the Planet is occupied by the oceans. This is why the issue of safety at sea remains at the center of the objectives of sustainable development. Despite all efforts, the Gulf of Guinea continues to struggle with insecurity. According to the International Maritime Bureau (IMB), Sixty-five (65) incidents of piracy and armed robbery against ships were recorded in the first half of 2023, an increase from 58 incidents in the first half of the same period in 2022. Of the 65 reported incidents, 57 vessels were boarded, four (4) were attacked, two (2) were hijacked and two (2) were fired upon. During the same period, violence against crews continued with, in particular, 36 hostage-takings and 14 kidnappings.

 

2.  The Gulf of Guinea (GoG) is a part of the Atlantic Ocean that stretches from Senegal to Angola and covers approximately 2,874 nautical miles of coastline. It is an important maritime area for the transport of oil and gas as well as goods to and from Africa and the rest of the world. About 20,000 ships pass through the maritime waters of the Gulf of Guinea per year, and the weather conditions are not extreme. It is a maritime space also rich in fuel, fish and other resources, which makes it an immense potential for maritime trade, resource extraction, maritime transport and development.

 

3.  The proceeds generated by maritime crime could very much constitute a source of facilitation and supply for organized criminal gangs to extend their networks and make their criminal activities prosper at sea and on land. And yet, until now, few studies had been conducted to explore the links between the associated financial flows and maritime crime, and to propose appropriate countermeasures. This study, fully funded by the European Union (EU) under the 11^th EDF, is an attempt in this direction. It aims to be an important contribution to the West Africa Integrated Maritime Security Support Project (SWAIMS) ¹, by raising maritime awareness around the need to prioritize the confiscation of proceeds and instrumentalities of the maritime offence, and the dismantling of groups operating in networks.

 

4.  In summary, the results of this study, which relied heavily on the expertise of GIABA, its member States and the global network of actors in the fight against money laundering and the financing of terrorism, reveal a weak implementation of existing legal frameworks in terms of maritime security and safety, but above all a notorious lack of interministerial cooperation and inter-agency collaboration. This not only weakens the potential for detecting criminal activity at sea but makes it more difficult to trace the origin of funds generated by such activity, which may be concealed in complex offshore accounts or moved across multiple jurisdictions.

 

5.  This report presents an inventory of the situation in six (6) countries of the Gulf of Guinea, namely: Benin, Côte d’Ivoire, Ghana, Guinea Bissau, Nigeria and Togo. It nevertheless hopes, through the relevant conclusions and recommendations it contains, to inspire all the other coastal countries in the region.

 

6.  This regional report shows, approximately, that most illicit acts committed partially or totally at sea generate revenues to their perpetrators. It has the merit of dwelling on the weakness of the legal, institutional and operational responses to maritime crime, as well as the absence of public and private partnership to overcome this phenomenon. In light of the challenges and vulnerabilities identified through a desk review and an in-depth analysis of the case studies presented by the countries, the following recommendations have been formulated:

 

GIABA Coastal Member States shall, among others:

·  Conduct a sectoral risk assessment to determine the extent to which criminals can misuse their financial and non-financial sectors to conceal and launder proceeds from maritime crime and apply mitigating measures.

·   Develop or update national maritime safety and security strategies to ensure that they appropriately involve

the Financial Intelligence Units (FIU) and other relevant AML/CFT actors. Adopt a national policy document to combat all forms of crimes committed at sea.

·   Revise existing national AML/CFT strategies to include maritime professionals and all direct stakeholders

in maritime safety and security.

·  Carry out legislative reforms to ensure that all forms of maritime crime are criminalized in accordance with acceptable international standards, including the United Nations Convention on the Law of the Sea (UNCLOS).

·   Define through laws, regulations or any relevant directives, mechanisms by which key maritime agencies

and institutions would collaborate with the financial intelligence units in order to facilitate oversight of the sector and create of a routine of information sharing for the AML/CFT purposes.

·    Sensitize all actors operating in the port and maritime sectors so that they can strictly apply the FATF

standards as an effective tool to combat the laundering of funds arising from maritime crime.

·  Support archiving systems in all maritime agencies and develop a mechanism for spontaneous sharing or systematic access to information by Financial Intelligence Units (FIUs) and criminal investigation and prosecution authorities.

·   Strengthen the operational capacities of criminal investigation and prosecution authorities to detect forms of

maritime crime and conduct parallel financial investigations.

·    Adopt a specific AML/CFT criminal policy that would systematize joint investigations, financial investigations, confiscation and recourse to regional and international cooperation.

·   Equip maritime crime fighting agencies with rapid intervention gadgets (high-powered engines) and state-

of-the-art equipment (drones).

·  Set up a system for alerting and denouncing acts of corruption in the maritime environment, together with a protection regime for whistleblowers.

·   Strengthen the powers and responsibilities of relevant maritime agencies to ensure that they contribute to

AML/CFT financial flow detection, investigation and prosecution efforts.

·  Take adequate measures to ensure the confiscation of all proceeds of criminal activities (including those committed at sea) and the property of their perpetrators (bank accounts, real estate and other valuables) when their guilt is established.

·   Continue and intensify the training of actors in the criminal justice system (Police, Gendarmerie, Secretaries

of Public Prosecutor’s Office, Registry staff and Magistrates) to prepare them to act in a network with new working methods and special and innovative investigation techniques.

·   Strengthen the capacities of lead maritime agencies in financial investigations and of all maritime courts in

AML/CFT matters.

·  Establish legal frameworks and institutional mechanisms to coordinate the use of international cooperation more effectively in the investigation and prosecution of ML/TF related to maritime crime.

·    Establish a mechanism for regulatory control and supervision of private maritime companies and their

activities to ensure that they comply with Law of the sea.

·  Follow up beyond the EU project to support the establishment of a Regional Forum of Lead Maritime Agencies for the exchange of information and knowledge on critical emerging AML/CFT issues.

·   Explore the opportunity to create a regional tribunal for the law of the sea to focus on the prosecution of

maritime criminal acts committed in the marine area of the Gulf of Guinea.

 

TYPOLOGIES OF MONEY LAUNDERING AND TERRORIST FINANCING LINKED TO CYBERCRIME IN WEST AFRICA

EXECUTIVE SUMMARY

 

1.  The digital attack surface has vastly expanded from a move to remote work, from more people coming online, and from more interconnectivity of computers and smart devices around the globe. With the development of digital technologies, the use of information and communications networks as a tool for facilitating illicit financial flows is rising as one of the key challenges in tackling the problem of the movement of illegal funds. New digital tools for money transfers, such as online and mobile banking, electronic payments, cryptocurrencies, e-commerce pro- viders, and online gambling services, especially if they are combined, provide a countless number of opportunities to distance money from illegal sources of profit or to illegally transfer money from legal sources. The COVID-19 pandemic also created new opportunities for criminals to abuse the financial systems through technologies in a more innovative and complex manner.

 

2.  In view of the foregoing, it is very clear that digital technologies pose significant problems to combatting money laundering, organized crimes and terrorist financing as cyber-attacks continue to evolve and increase in frequency and sophistication. All GIABA’s recent reports glaringly reveal the prevalence of cybercrimes, both as a major source of proceeds of crime and as a vehicle of criminal funds in the region. It appears that all types of crimes associated with digital technologies in the region are systematically difficult to deal with not only because of the regulatory and law enforcement gaps but also due to the lack of adequate expertise and infrastructures. In most GIABA member countries, cybercrime is a serious threat to national economies that requires a coherent and col- laborative response at a regional level. Standards also need to be agreed upon and harmonised internationally to reduce the risk of gaps and regulatory arbitrage.

 

3.  Cognizant of this complex challenge, GIABA conducted this typologies study on Money Laundering and Terrorist Financing linked to Cybercrime in West Africa. Despite the seriousness of this phenomenon, Cybersecurity is still considered to be a luxury, not a necessity in many African economies. Its importance has not yet been sufficiently appreciated or acknowledged. In view of the preceding, the conduct of such typologies exercise is imperative. This will fuel the basis of a structural and regulatory foundation of combatting computer-based crimes in West Africa.

 

4.  The study aims to enhance understanding on the money laundering risks linked to cybercrime among GIABA member States; to provide enhanced policy, compliance and enforcement. The findings will reveal the implica- tions for interventions and relevant recommendations will be proffered in that respect. The report sets to throw light on the differences between cybersecurity and cybercrimes and the magnitude of both phenomena in West Af- rica and the prevalence of the crime. It will explore the ML/TF risks factors associated with cybercrimes in the re- gion and map out the most common techniques and methods adopted to launder the proceeds of cybercrime. It will point out the most critical vulnerabilities leading to heightened risks of laundering the proceeds of cybercrime and proffer policy measures and action-oriented programmes that can be adopted based on the findings of the study.

 

5.  The methodology adopted was a multi-stakeholder approach including the GIABA Secretariat, expert groups and one expert from the member States. The main findings of the study include a dichotomy between cybersecurity and cybercrime, the prevalent nature of cyber cases and the methods, techniques and trends of the crime in West Africa. The study revealed that West Africa has witnessed a surge in internet connectivity above the Sub-Sahara Africa average. This connectivity is however, variable and dispersed. The connectivity rate in West Africa is as high as 70% (Cabo Verde) and low as 15% (Niger). The gains made in relation to the surge in internet connectivity is being eroded by the exponential rate at which cybercrime is being perpetrated and consequences are dire and damaging.

 

6.  Based on interviews conducted by country researchers, there is a convergence view that law enforcements through- out the region seems overwhelmed as 2 out of every 3 offences reported is related to cybercrime. This was more evident during the peak of the COVID 19 period (2020 – 2021). A diagram in Chapter 2 gives a pictural evidence of the prevalence of cybercrime in West Africa and depict the extent (estimate) at which the various case types are being perpetrated. The most prevalent of the cases (40%) falls under the advance fee fraud type. Next is mobile money related (15%) cases type, followed by Ponzi scheme (13%) cases type. The next most prevalent case types are website or business platform hacking (7%), and DDOS and businesses email compromise (7%) cases com- bined. The least cases reported are credit/debit card fraud and TF related cases.

 

7.  There were seven distinct typologies abstracted from the 52 identified cases that appear to describe the phenome- non. The typologies include electronic cards (credit/debit) fraud; email compromise scam/fraud; hacking and de- frauding business/organisation’s systems; advance fee fraud; Ponzi scheme fraud; mobile money related fraud; and cyber enabled terrorist financing cases. The indicators and red flags confirm that informalities, lack of awareness of cyber threats by the public, inadequate resources invested into cyber security by businesses and public institutions/ organizations, weak architecture, and regulatory systems and monitoring of the cyber landscape in the region, and weak enforcement systems has a spiral effect on cyber and cyber enabled crime, money laundering and terrorist financing in West Africa.

 

8.  There are significant legislative gaps in countries, particularly around the powers of the central authority in charge of the fight against cybercrime and around the legal and enforcement frameworks of countries to effectively detect, prove and curb ML or TF associated with cybercrime. While the legal and enforcement framework make provi- sions for law enforcement action to investigate and prosecute cyber criminals, the regulatory framework in most of West Africa either have insufficient preventive measures or is weak overall. Although few countries have made some gains on obtaining electronic and digital evidence during investigation. This continue to be a challenge in some jurisdictions.

 

9.  In line with global standard requirements particularly, under the FATF Recommendation 36 on International Co- operation which encouraged countries to ratify other relevant international instruments and conventions, such as the Budapest Convention and Malabo Conventions. the West Africa region has made considerable effort and prog- ress in the fight against cybercrime, alongside other predicate offences. But this effort and progress has not been free from challenges. It includes issues such as gaps in laws, institutions misunderstanding their mandate, limited technical capacity, inadequate human and material resources and a lack of collaboration and coordination. Also, international cooperation is still very weak.

 

10.  Although there is a wide range of methods and techniques used by cybercriminals to launder the proceeds of their criminal activities, investigators and prosecutors have conducted few or no parallel financial investigations when cybercrime is detected. They are also confronted, in many cases, with the difficulty of establishing proof of the cybercrime offence due to a lack of the required technology and equipment, ineffective integrated national coordination between AML/CFT operational units and a lack of implementation of regional and international cooperation mechanisms.

 

11. For the fight against cybercrime to be more effective and deterrent, the study put forward recommendations for both the public and competent authorities fighting against cybercrime. There is need to initiate and inten- sify awareness-raising campaigns for the public; promote a culture of cybersecurity in the region and support countries in the establishment of a legal and institutional framework in accordance with international standards currently in force. Conduct proper risks assessment and set up Digital Forensic Laboratories to support forensic evidence for LEAs. Strengthen the operational capacities of investigators on digital investigation techniques and bridge the gap between the legal framework and the Special AML/CFT/CFP laws to facilitate and fast track the criminal prosecution of cybercrime offences.

 

12.  Set up a Regional Forum of National Platforms to Combat Cybercrime in West Africa to allow competent author- ities to network, share information and intelligence. Monitor the signing, ratification and domestication of inter- national instruments and build capacity in detection, investigation, prosecution, and adjudication of cybercrime cases and how to follow the money, including undertaking parallel and financial investigations.

 

REPORT OF NIGERIA NATIONAL RISK ASSESSMENT ON MONEY LAUNDERING AND TERRORIST FINANCING

The prospect of Nigeria and its huge economic potentials is not without challenges, as proceeds from Advance Fee Fraud, armed robbery, arms trafficking, banking fraud, bribery and corruption, capital market fraud, counterfeiting of currency, currency trafficking, drug trafficking, fraud and forgery, human trafficking and sexual exploitation, kidnapping and hostage taking, pipeline vandalism and illegal oil bunkering, piracy and copy rights infringement and
smuggling all constitute major sources of illicit proceeds and source of financing terrorism in Nigeria. Money laundering in Nigeria takes many forms. Perpetrators launder money through real estate investment, wire transfer to offshore banks, deposits into foreign banks, round tripping, reselling imported goods, such as luxury or used cars, textiles, and consumer electronics purchased with illicit funds, jewelries as well as bulk cash smuggling. Consequently, Nigeria in her effort to rise above the foregoing menace, successfully conducted its first National Money Laundering and Terrorist Financing (ML/TF) Risk Assessment (NRA) in 2016. The assessment was also in response to recommendation 1 of the Financial Action Task Force (FATF)’s 40 recommendations which, requires all countries to identify, assess and understand the money laundering and terrorist financing (ML/TF) risks elements prevalent in their jurisdictions for the development of efficient measures to combat the crime and efficient allocation of scarce resources to do the same. The Nigeria Financial Intelligence Unit (NFIU) in consideration of its strategic role as the national agency responsible for the coordination of Anti- Money Laundering and Combating the Financing of Terrorism (AML/CFT) matters in the country, coordinated and led the process under the auspices of Nigeria’s AML/CFT Inter-Agency Ministerial Committee (IMC). 

2016

TYPOLOGIES STUDIES ON MONEY LAUNDERING ARISING FROM ELECTRONIC COUNTERFEITING AND INTELLECTUAL PROPERTY THIEF IN WEST AFRICA

The literature on counterfeiting and IP theft is fraught with a series of issues. First, there is no consensus on basic concepts and the definitions of the phenomenon. Thus, although counterfeiting is a widely used word, its usage in particular contexts has not been defined. National definitions, especially in relation to counterfeit drugs and medicines, vary considerably. Nonetheless, counterfeiting has been defined generally in relation to infringement on IP rights,
especially trademarks. The WTO defines it as “unauthorized representation of a registered trademark carried on goods identical or similar to goods for which trademark is registered, with a view to deceiving the purchaser into believing that he/she is buying the original goods.”39 This is similar to the definition provided in the WTO TRIPS Agreement, which defines “counterfeit trademark goods” as “any goods, including packaging, bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes on the rights of the owner of the trademark in question under the law of the country of importation.” The OECD also a definition that highlight violation of trademarks.41 However, there are often terminological differences in the description of counterfeiting. For instance, counterfeiting is often used interchangeably with piracy – the unauthorized use of copyright-protected materials such as music, movies, books, and computer software.

February 2017

MONEY LAUNDERING RELATED TO FRAUD IN PUBLIC PROCUREMENT IN WEST AFRICA: A CASE STUDY OF NIGERIA

Money Laundering Related to Fraud in Public Procurement in West Africa: A case Study of Nigeria.

February 2014

TYPOLOGIES OF MONEY LAUNDERING THROUGH THE REAL ESTATE SECTOR IN WEST AFRICA

Various studies, including those carried out by the Financial Action Task Force (FATF) over the past few years, suggest that advances in technology and the progressive tightening of anti-money laundering (AML) regulations are leading money launderers to make more complex arrangements outside the formal financial services industry, such as the use of various professional services, and in particular the real estate business.

The primary objective of this typologies exercise is to carefully examine the vulnerability of the real estate sector in West Africa, given the large volume of monetary transactions involved and its significant impact on geo-political and socio-economic conditions in the West African region. The exercise also attempts to shed light on how the real estate sector in West Africa could be especially attractive to launderers.

The study aims essentially at (i) exploring the means by which illicit funds are channelled through the real estate sector to be integrated into the formal economy, and (ii) identifying the control measures in place to combat this form of abuse in member states. It is essential to note that one of the most effective ways of gathering information on how the sector is manipulated is to examine concrete case studies. The report is therefore based on information provided by GIABA members who took part in the 2008 typologies exercise.

TERRORIST FINANCING IN WEST AND CENTRAL AFRICA

Terrorism is of growing concern for the international community which, in the recent past, has witnessed an increasing number of attacks at the hands of terrorist groups. West and Central Africa are particularly vulnerable to terrorism. The continuing violence and conflict in this area since 2010 has sparked concerns that the threats from terrorism could derail hard-won economic gains, contribute to political instability and undermine future development. Communities in these areas have experienced the devastating impact of extremist violence from a multiplicity of terrorist groups.

However, as we have experienced with ISIL, in a more globalised world, the threats from a regional conflict can spread to impact the global community. The regional and potentially global impacts of terrorism, highlights the importance of the international community taking all necessary steps to find ways to deprive terrorist organisations of their funding. Terrorist organisations are all different in their nature and purpose but they all require resources for self-maintenance, facilitation and funding of various types of attacks. Terrorist financing (TF) may encompass complex financing structures used to conduct large scale attacks or simplistic models used to support small cells and fund smaller attacks.

This report is intended to update the FATF/GIABA report on Terrorist Financing in West Africa (October 2013) and to extend the study to the Central African region. It finds that while the 2013 study is still relevant, the scale and nature of terrorist groups within the region have changed and this has had an impact on financing strategies as well. The report considers the possible funding sources (the threats), particularly in relation to Boko Haram and groups linked to Al-Qaeda, including Al-Qaeda in the Lands of the Islamic Maghreb (AQIM) and its affiliates, and also considers potential means to finance terrorism and other contextual factors (the vulnerabilities). It reveals a number of threats and vulnerabilities that are specific to the region including the prevalence and profitability of cattle rustling as a key feature of rural and cross-border criminality in the Chad Basin. It also highlights the role of cash, including foreign currency, in TF in the region.

The report breaks down the threats into confirmed and suspected sources of funding. It appears that Boko Haram is mostly funded locally, while Al-Qaeda affiliates may also be benefiting from foreign donations. While there are indications that terrorist organisations are associated with criminal organisations and with organised crime in the region, there is limited evidence to support these alleged links.

THE NEXUS BETWEEN SMALL ARMS AND LIGHT WEAPONS AND MONEY LAUNDERING AND TERRORIST FINANCING IN WEST AFRICA

This presents the findings of field research on the nexus between illicit trafficking in Small Arms and Light Weapons (SALW) and Money Laundering (ML) in West Africa on the one hand; and illicit trafficking in SALW and Terrorist Financing (TF) in West Africa on the other in all 15 member States of the Economic Community of West African States (ECOWAS).  

Following a comprehensive desk research and analysis of relevant laws and egulations related to SALW and money laundering and terrorism financing, fieldwork was conducted in the form of interviews on the basis of confidentiality with relevant stakeholders in public, private, and civil society sectors. Further analysis of research data was conducted by consultants.

TERRORIST FINANCING IN WEST AFRICA

In West Africa, there is significant concern about the rise of terrorism. This is manifested by the number of terrorist attacks in some West African countries that have resulted in large human casualties and the destruction of property. The source of funding for terrorist activities has equally been of concern in the sub-region. The phenomenon is underpinned by several factors, including the presence of large, informal, cash-based economies, political instability, ethnic and communal violence, pervasive corruption, widespread poverty, gross unemployment, and underemployment. Significantly, terrorist groups and their financiers drive funds from both licit and illicit activities, and move them through formal and informal channels to support their activities. All of these factors
have adverse effects on peace, security, and development in the sub-region.

The devastating effects of terrorism and terrorist financing have provoked strong interest among the authorities and national governments of the Economic Community of West African States (ECOWAS) on countering the threat, based on a clear understanding of the modus operandi of terrorist groups and their financiers. Accordingly, this typologies study aims to discover the methods used by terrorists, terrorist groups, and their supporters to collect, transfer, and utilise funds for their activities. It aims to provide a deeper understanding of the methods used by financiers to assist terrorists in carrying out acts of terrorism. The study also aims to provide information on terrorist financing methods to assist competent authorities and reporting entities in their responsibilities to combat terrorist financing. In this regard, the study provides case studies, from which key indicators and red flags have been generated to help policymakers and regulatory and enforcement authorities as well as reporting entities to understand better the nature and dynamics of terrorist financing in the sub-region.

As a prelude to this typology study, and recognizing the challenges of getting information on the subject matter in the sub-region, the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) commissioned five experts, one each in Burkina Faso, Mali, Niger, Nigeria and Senegal, to carry out a background study on terrorism and terrorist financing in their countries. These countries were selected based on the prevailing incidences of terrorism or its effects on them compared to other GIABA member States.

October 2013

NATIONAL RISK ASSESSMENT OF MONEY LAUNDERING AND TERRORIST FINANCING: REPUBLIC OF GHANA

A key feature of the NRA is to understand ML/TF risks and in so doing, identify and evaluate threats, vulnerabilities and their impact on the country and that on the economy of Ghana. The NRA process tested the robustness of the current AML/CFT regime in Ghana. The objective is to identify, assess and mitigate ML/TF risks, through adjustments and amendments in the legal and regulatory frameworks. These measures may require direct policy changes. The desired outcomes of the NRA process are to develop a National Strategic AML/CFT Action Plan that will assist in the allocation of AML/CFT resources, as well as, assist in revising or developing guidance for “Accountable Institutions” so as to ensure compliance with the AML/CFT regime.

The NRA process should support the Government of Ghana’s declared fight against money laundering, illicit financial flows and transnational organised crimes. As far as the process is concerned, the World Bank provided the conceptual framework in the form of a national risk assessment tool (including excel templates), gave technical assistance and guided the working groups in the effective use of the tool. All the findings, interpretations, and judgments of the exercise, are solely the work of the working groups in Ghana, and they do not reflect the views of the World Bank. This report was produced entirely by the working groups.

The NRA process in Ghana involved three phases, undertaken between September 2014 and April 2016. This report discusses the last phase, which is the finalisation and recommendations of the Report and the Action Plan. The Mutual Evaluation done on Ghana in the year 2009, revealed several shortcomings in the country’s compliance with the AML/CFT measures. For instance, Financial Institutions did not conduct any CDD on their customers as required by recommendation 5 of the FATF Recommendations. There were no guidelines. There were no guidelines to enable Accountable Institutions fashion out internal rules in compliance with the afore mentioned recommendations. Besides, the Financial Intelligence Centre was not in existence. The situation has however changed as several legislations have been passed to address the shortcomings revealed during the last Mutual Evaluation of Ghana in the year 2009. All the sectors captured in this NRA have acknowledged the fact of the tremendous growth of Ghana’s cash-based economy. As a result many microfinance institutions have emerged, and are operating, thus boosting the internal transfer of money. This has made the financial system vulnerable to ML/TF risks.

FINANCIAL INCLUSION PRODUCTS RISK ASSESSMENT: NIGERIA NATIONAL MONEY LAUNDERING AND TERRORIST FINANCING RISK ASSESSMENT

As part of her National (ML/TF) Risk Assessment (NRA), Nigeria assessed the money laundering/terrorist financing risk in financial inclusion products in Nigeria. This is in compliance with Recommendation 1 of the Financial Action Task Force (FATF) Standards. The objectives of the Assessment is to determine and assess the level of money laundering and terrorism financing threats inherent in existing or proposed products and services targeted at financial inclusion, as well as determine and assess the vulnerabilities of institutions, financial or non-financial actors or professionals.

The assessment covered the formal and semi-formal sectors of the country’s financial system including Banking, Capital Market, Insurance, Pension and Non-Bank Micro Finance Institutions. In Nigeria, financial inclusion is defined as adult Nigerians having easy access to a broad range of formal financial services that meet their needs at an affordable cost. The services include payments, savings, loans, insurance, and pension products. Based on a national survey conducted in 2010 by Enhancing Financial Innovation and Access (EFInA)1, it was revealed that 39.2million Nigerians representing 46.3% of the adult population were financially excluded and had no access to either formal or informal financial services. Also, according to the EFInA 2010 Survey, only 25.4million were banked (representing 30.0% of the adult population) and the main barriers to having a bank account are lack of money, irregular income and distance to the bank.

2016

IMPROVING COMPLIANCE WITH INTERNATIONAL AML/CFT STANDARDS: REPORT ON THE STRATEGIC REVIEW OF THE FIRST ROUND OF MUTUAL EVALUATIONS OF GIABA MEMBER STATES (2007-2012)

As a Financial Action Task Force Style Regional Body (FSRB), the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) is mandated to undertake mutual evaluation (ME) of its member States. The ME exercise commenced in 2007 with the evaluation of Sierra Leone, and was completed in 2012, with the evaluation of Sao Tome and Principe, which became a full member of GIABA in 2012. In total, sixteen (16) member States, namely, - Benin, Burkina Faso, Cape Verde, Cote d'Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Sao Tome and Principe, Senegal, Sierra Leone and Togo, were evaluated. Sao Tome and Principe has not been included in this review for two strategic reasons. Firstly, the country became a member of GIABA at the time when the first round of MEs was about to be concluded. This means that there was limited engagement with the country throughout the first round of the evaluation. Secondly, because the country is not a member of ECOWAS, it has not benefitted from the technical assistance given to ECOWAS members States. The data for the ME, therefore, may be skewed and incomparable with those of ECOWAS member States.

The evaluations were aimed at determining the level of compliance of the member States with the FATF Recommendations, based on a set of objectives and guiding principles as laid out in the 2004 FATF Methodology for Assessing Compliance, the FATF Handbook for Countries and Assessors and the GIABA Mutual Evaluation Process and Procedures (P&P).

Following the conclusion of the first round of MEs of GIABA member States, and in order to improve on subsequent evaluation outcomes, GIABA conducted a strategic review of the first round of the evaluations. The objectives of the review were to: i) review and analyze the framework for the evaluation in relation to the peculiarities of GIABA member States; ii) review and analyze the process and procedures adopted during the evaluation and determine the challenges encountered; iii) assess the outcome of the MEs and determine the consistency of the outcome; and iv) provide key observations, conclusions and recommendations drawing from the analyses and assessment of i-iii above in order to learn lessons that will help to improve the second round of MEs.

January 2014

ASSESSMENT OF COUNTER TERRORIST FINANCING CAPACITIES IN WEST AFRICA

The scourge of terrorism in West Africa which is sustained by numerous channels of terrorist financing have persisted despite numerous levels of engagements adopted at national and regional levels by the member states of the Economic Community of West African States (ECOWAS) to address it. The sources and methodologies for the financing of terrorism in the region have also continued to evolve and include the use of funds derived from licit and illicit activities. These funds are sometimes moved through the relatively under-regulated formal and largely unregulated informal channels to support the perpetration of various forms of terrorist activities. The incidences of terrorist financing have therefore persisted in West Africa irrespective of the measures adopted and targeted at combating them.

This background formed the motive force for this study initiated by the Inter-Governmental Action Group against Money Laundering in West Africa, otherwise known as GIABA. The study focuses on the assessment of the capacities of five (5) of GIABA’s terrorism most affected member States, notably Burkina Faso, Cote d’Ivoire, Mali, Niger and Nigeria in countering the financing of terrorism. The main objective of the study is to examine the capacities of the selected GIABA member states in countering financing of terrorism (CFT) through the application of international CFT standards and requisite domestic measures with a view to strengthening the capacities of these states in meeting the respective national CFT needs.

August 2020

ILLEGAL WILDLIFE TRADE AND FINANCIAL INVESTIGATIONS IN WEST AFRICA

In the last five years, West Africa has emerged as a major source and transit hub in the global illegal wildlife trade (IWT).1 The industrial scale of the multi-tonne, multi-product seizures originating from West Africa clearly demonstrates that profit-driven organised crime groups are running the trade. Yet, while the significance of the region in global IWT flows is increasingly recognised, very little is known about the financial aspects of these criminal operations. Based on 89 interviews with key stakeholders in West and Central Africa, as well as a survey of 12 out of 17 financial intelligence units (FIUs) based in the member states of the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), this paper assesses the extent to which the financial dimensions of IWT are investigated in the region. It finds that no country in West Africa currently conducts routine parallel financial investigations in IWT cases.

April 2021

MONEY LAUNDERING AND TERRORIST FINANCING LINKED TO THE EXTRACTIVE INDUSTRY/MINING SECTOR IN WEST AFRICA

The extractive industry of Africa is one of the largest in the world. For many African countries, the extraction and production of minerals constitutes significant parts of their economies, accounting for a high share of gross domestic product (GDP) or total exports. The sector remains the key to future economic growth in the region despite all challenges. It is a fact that the sector is marred with irregularities such as illicit artisanal mining, tax evasion, fraudulent contracts, high-level corruption and organised crime - all of these contributing to a considerable amount of proceeds being laundered or siphoned each year. Enforcement
agencies are not well equipped to deal with the very high degree of sophistication of the criminal elements operating in the extractive industry.

October 2019

MONEY LAUNDERING AND TERRORIST FINANCING THROUGH THE INFORMAL AND ILLEGAL CURRENCY EXCHANGE SERVICE PROVIDERS IN WEST AFRICA

Money laundering through foreign currency ex-change operations is a very efficient way of dis-guising the true origin of illegal proceeds and their integration into the legal financial system. Cur-rency exchange services (CES), including bureau de change services, that involve foreign currency exchange operations are the fastest growing sector in the West African financial services industry in terms of the number of institutions that have sprouted over the last 10 years. The emergence of CES in West Africa has been associated with the advent of economic liberalization of the mid 1980s and early 1990s. Exchange controls were abolished subsequently after the introduction of the Foreign Currency Regulations, by the Central Banks/CES regulators, which were to govern the operations of the CES in liberalized economies.

August 2020

MONEY LAUNDERING/TERRORIST FINANCING AND THE SMUGGLING OF GOODS IN WEST AFRICA

This study was conducted by GIABA in order to explore the linkages of money laundering and terrorist financing (ML/TF) to the smuggling of good in West Africa. Goods smuggling is known to be a lucratively rampant criminal activity across the region that has defied law enforcement efforts over the past decades. However, while it is generally accepted that goods smuggling has become a serious transnational organised crime in the region, there has been no concern about the illic financial proceeds that flow from the activity. This study was embarked upon to focus on such illicit proceeds and to explore the risks of ML/TF associated with the criminal activity. Hence, the study is not a regular typologies exercise, which typically builds on existing cases of ML/TF to establish trends and methods. In undertaking this study, data was collected from all 15 member States of GIABA. Questionnaires were administered and interviews held during visits to the countries by the GIABA research team.

August 2020

MONEY LAUNDERING RISKS OF CASINOS AND THE GAMBLING SECTOR IN WEST AFRICA

This vulnerabilities report covers the risks of the casinos sector in West Africa, including risks of money laundering and other forms of illicit finance in the sector. In particular, the report focuses on the casino and gaming sectors in six GIABA Member states (Ghana, Nigeria, Senegal, Cabo Verde, Côte d’Ivoire, and Benin). This study has been ordered by GIABA, implemented with technical assistance provided in the context of the OCWAR-M project (Organized Crime: West African Response to Money Laundering and the Financing of Terrorism) by Expertise France, and funded by the European Union. These countries were chosen due to their systemic importance to regional stability, and relative risks present in their casinos and gaming sectors

THREAT ASSESSMENT OF MONEY LAUNDERING AND TERRORIST FINANCING IN WEST AFRICA

This report conducts a threat assessment of money laundering and terrorist financing in the West Africa region, specifically in Benin, Cape Verde, Côte d’Ivoire, the Gambia, Ghana, Nigeria and Senegal. The introduction outlines the objectives of the study and includes a
description of the methodology and operational approach, which included data collection from open source material, as well as a range of interviews with relevant observers, local officials, and key practitioners and decision makers. This was followed by detailed analysis seeking to examine the source of illicit funds, how they are laundered, and where they are being moved to, and in doing so, throw light on a range of issues, including the weaknesses in regional efforts to tackle laundering and the consequences of money laundering for the rule of law.

The first chapter addresses West Africa’s informal economy, which is a major vulnerability with regard to money laundering. It comprises perhaps 60-70% of formal regional GDP. In very general terms, the informal economy is the unregulated non-formal portion of the market economy that produces goods and services for sale. The large size of the informal economy in the region goes hand-in-hand with the cash- and commodity-based nature of the region’s economy. A distinction is drawn, though, between the merely informal on one hand and the outright criminal on the other; the major categories of predicate criminality for the purposes of money laundering being tax evasion and smuggling.

May 2010

KNOW YOUR CUSTOMER/CUSTOMER DUE DILIGENCE MEASURES AND FINANCIAL INCLUSION IN WEST AFRICA: AN ASSESSMENT REPORT

This report is the outcome of a study conducted directly by the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), which commenced in September 2016. The study is a follow up to an earlier study on financial inclusion carried out in 2013. It was undertaken to understand and address the challenges of implementing the money laundering and terrorist financing (ML/TF) preventive measures of Know–Your-Customer (KYC)/Customer Due Diligence (CDD) with due regard to financial inclusion. On the basis of the findings of the study, recommendations have been made to assist the relevant authorities in GIABA member States to design effective KYC/CDD frameworks that promote financial inclusion, in compliance with the letter and spirit of the Financial Action Task Force (FATF) Recommendations and Assessment Methodology (as revised).

The report will considerably help countries in the region as they struggle to expand access to financial services for the people, while ensuring effective protection of their financial systems against ML/TF. In so doing, countries in the region will be able to adapt the flexibility offered by the risk-based approach (RBA) to the implementation of ML/TF preventive measures, as contained in the international anti-money laundering and countering the financing of terrorism (AML/CFT) standards.

June 2018