CHAPTER ONE GENERAL INTRODUCTION

• Background of the Study

Money laundering and terrorist financing undermine development by eroding social and human capital, affecting social and political stability, causing artificial rise in the cost of business, and thus driving away business and investment and undermining the ability of the states to accelerate development. A State or Society that is infested with Terrorism and Money laundering is bound to be lawless or order less, and anarchy, will thus, set in thereby rendering the society undeveloped politically and economically.

The process of globalization and advancement in modern technology have made West Africa to be more vulnerable to the threats of terrorism and money laundering than any other region of the world. Nigeria, Kenya and some African countries have witnessed the scorch of terrorism: Resources from organized crimes through money laundering have sustained this menace thus the need for a fight against money laundering and terrorist financing. Globalization has resulted in the need for international organization and regional bodies to broaden their focus beyond state – based security threats to encompass, those emanating from non-state perpetrators¹.

1 Abdullahi Y. S: (2001) “Implementation of UNSCR, 1373 in West Africa: Issues and Challenges”: A paper presented at the United Nation Security Council General Meeting, held at New York, USA, on Wednesday, 28 September, p.2

Transnational organized crime is one of the major threats to international peace and security. Thus, money laundering and terrorist financing form part of the threat. While money laundering (ML) is a derivative crime, financing of terrorism (FT) is a ‘reversed’ form of money laundering as it may involve both legitimate and illegitimate wealth². These menaces are detrimental to peace and security, and could undermine the overall development of society. This is why concerted global efforts to eradicate these phenomena are gaining momentum.

Also, technological advancement, in tandem with globalization, has changed the economic and political landscape of the planet. Organized criminals take advantage of the powerful instruments of technology and globalization to perpetrate their unwholesome activities with relative impunity. While criminals respect no territorial boundaries, law enforcement must act within the ambit of the law to counter the activities of criminals. Given the difficulties in responding rapidly to the threat of transnational organized crime, law enforcement, even in the most advanced countries, always seems to be a step behind the complex modus operadi of criminals. Consequently, no nation can effectively tackle the menace of transnational organized crime in isolation. It should be noted at the outset that criminals usually explore and exploit the socioeconomic conditions of societies, in particular taking advantage of the weak links in regulation and enforcement, such

2 GIABA Annual Report, 2007, p.9

as inadequate legislation and opportunities to corrupt.³

The September 11, 2001 terrorist attacks on the United States of America accelerated this paradigm shift and provoked global efforts to address international terrorism. An important element of such efforts is the United Nations Security Council Resolution (UNSCR) 1373 of 2001, which was adopted subsequent to these attacks principally sought to combat acts of terrorism by placing barriers on movement, organization and funding of terrorist groups⁴.

In effort to compliment the United Nation Security Council Resolution 2001 in combating money laundering and terrorism financing in West African Region GIABA was created. The inter-Governmental Action Group Against Money Laundering in West Africa (GIABA) is a specialized institution of the Economic Community of West Africa States (ECOWAS), as well as a Financial Action task force (FATF) style Regional Body (FSRB)⁵. Its mandate is to develop anti-money laundering and counter financing of terrorism (AML/CTF) measures, and to coordinate regional efforts to combat money laundering (ML) and terrorist financing (TF). Its membership consist of all member states of the ECOWAS as it is, with it’s headquarters in Dakar, Senegal, as such, a regional inter-

3 Ibid at P 9

⁴ Abdullahi Y.S. op cit p. 2.

⁵ The Resolution established the counter terrorism committee security council (CTC). This committee is mandated to monitor the implementation of the resolution through the center Terrorism Executive Directorate (UNCTED)

governmental body which supports the work of the UN in preventing, detecting, deterring and suppressing terrorism, particularly its financing.

Since the establishment of a functional secretariat in 2006, the Inter- Governmental Action Group against Money Laundering in West Africa has remained focused on its mandate to protect the economies of member states against abuse and misuse for the purposes of laundering the proceeds of crime⁶. As a FATF – style Regional Body, GIABA works assiduously to implement acceptable international standards against Money laundering and Terrorist Financing, including the FATF 40 + 9 Recommendations against money laundering and terrorist financing.

As an ECOWAS Institution, GIABA depends on the strong support of the ECOWAS and development partners to provide technical assistance to its members in order to help them build the necessary framework and capacity to respond rapidly to the problems of money laundering and terrorist financing, and to intensify the overall regional integration process of the ECOWAS respond rapidly to the problems of money laundering and terrorist financing, and to intensify the overall regional integration process of the ECOWAS.

⁶ GIABA Annual Report. op. cit p7

Nigeria as one of the member state of G1ABA is the largest country in sub- saharan Africa, both in terms of size and population, but in 2007 Nigeria had been described as one of the most corrupt country in the World⁷. Pervasive corruption in Nigeria constitutes a major threat and underlines most of the money laundering cases reported in recent time.

However in the recent time Nigeria has demonstrated a commitment to AML/CFT issues both within the country as well as in the Region. In 1995 the first Anti Money Laundering (AML) Act was enacted but was replaced in 2004 by Money Laundering (Prohibition) (MLP) Act, 2004. Also the Economic and Financial Crimes Act, 2004 was enacted which led to establishment of the Economic and Financial Crimes Commission (EFCC) as the coordinating agency for all AML related cases. Nigeria Financial Intelligence Unit (NF1U) was established in 2005 under the EFCC to receive, analyze and disseminate financial intelligence to law enforcement agencies and other relevant institutions. With the recent Boko Haram issue and other activities of terrorism, the Money Laundering and Terrorism Act, 2011 was enacted to combat terrorism, money laundering and other related activities in Nigeria.

⁷ Transparency International (TI) Corruption perception Idex from 1995 to 2007.

Also, The Gambia which was lacking behind amongst the GIABA member states in combating money laundering and Terrorism in West Africa prepared to upgrade its deficiency on the 27 June, 2012 in which, the Finance and Economic Affairs Minister of The Gambia, Abdou Kolley presented a Bill before the National Assembly, the Anti-Money Laundering and Financing of Terrorism Bill, 2012 for ratification by the Country’s law makers⁸.

Finally, GIABA amongst other things develop the strategies to protect the economics of member states from abuse and the laundering of proceeds of crime, improve measures and intensify efforts to combat the laundering of proceeds of crime in West Africa, also strengthen the co-operation amongst its members⁹.

1.2    Statement of the Problem

A State or Society that is infested with Terrorism and Money Laundering is bound to be lawless or order less, and anarchy, will thus, set in thereby rendering the society undeveloped politically and economically.

In region like West Africa, those within the corridor of power have access to money and see money laundering as of right, this believe constitutes a major threat and undermines most of the money laundering cases reported in recent time, for example most of these funds are being hidden in Western banks and

⁸ www.GIABA.Com.Orgaccusedon4thSeptember,2012.

⁹ Ibid.

off-shore centers, while a significant amount have been laundered through the acquisition of properties, luxury cars and purchase of high net with shares in blue chip companies¹⁰ and some of these proceeds from the money laundering becomes a major financing to terrorism in West Africa.

Another issue is related to deficiencies in the national legal framework of some member states and inadequate national coordination among competent authorities with regard to money laundering and counter-financing  of Terrorism. Also, some of the member states do not have laws which adequately criminalize terrorist financing. Even where such law exists, it was observed that there was little or no regulation or procedure in place to ensure appropriate freezing, seizure and confiscation of terrorist funds. Most member states had no mechanism for designation of persons identified as terrorists, delisting or even disseminating updated list of terrorist to financial and non financial institutions¹¹. Relatively, the informal and based nature of the region’s economy, which facilitate the illegal ownership, movement, transfer or exchange of funds, and the porous borders, among others, constitute precarious mix which could be used as a marker to ascertain the level of risk of terrorist activities and terrorist financing. All the emanated issues need to be visited in order to have a

¹⁰ Mutual Evaluation Report of the Federal Republic of Nigeria, September 24 to October 5, 2007

¹¹ Ibid.

secure environment for healthy competition, investment, global peace and security.

Another problem with the cases of money laundering and terrorist financing in West Africa is the way and manner the cases were handled before our courts, for example in Nigeria apart from the case of Queen vs Ibori¹² the former governor of Delta State, James Ibori, who was convicted in London for money laundering and allied crimes, (a Nigeria judge had earlier tried, discharged and acquitted him of similar offences in Federal Republic of Nigeria vs Ibori¹³), only a few higher profiled cases had been decided with laudable sentences. For instance in Federal Republic of Nigeria vs Balogun¹⁴, the former Inspector General of Police, Tafa Balogun, was given only 6 month (which he spend in the hospital) for embezzling N17 billion. In Federal Republic of Nigeria vs Ibinidion¹⁵, former Edo State Governor Lucky Ibinidion was fined N3 million for stealing N9 billion. In Federal Republic of Nigeria vs George¹⁶ former Chairman of the Nigerian Ports Authority, Olabode George, earned just 30 months for stealing over N9 billion. Also in Federal Republic of Nigeria vs Ibru¹⁷ former Managing Director and CEO of the Ocenic Bank Plc, Cecilia Ibru was convicted only for 6 months in prison following a ―plea bargain‖ for the unprecedented single case of fraud of N190 billion in cash

¹² Robert Barr (27 February, 2015) “Ex-head of Nigerian State Admits Financial Crime” Associated Press and asset

¹³ (2009)3 NWR(PT 1127)

¹⁴ FHC/L/099/2005 (unreported)

¹⁵ (2014) ALL FWLR (PT 734) P. 101

¹⁶ Suit No ID/71c/2008 (unreported) ion appeal at the Supreme Court the decision of the Lower Courts were reversed and he was discharge anquited).

¹⁷ FHC/L/299c/2007 (unreported)

Recently, menaces by insurgents have been reported in the vast Sahel/Sahara area between Mali and Niger, thus constituting a potential threat¹⁸. In January, 2008, Mali Customs seized about 750Kg of Cacaine estimated at US $45 million after a desert shootout with heavy armed smugglers near Algerian border¹⁹. While in Nigeria recently, the menace of Terrorism and terrorist attack is becoming more rampant than any other offence in the country, for example in April, 2014 over 76 people were killed and several injured in Nyanya – Abuja explosion²⁰. While in April 15, 2014 over 200 female students abducted in Chibok, Borno State²¹. In May 20, 2014 twin bomb explosions killing 118 people in Jos, Plateau State²² and in June 2, 2014 over 200 civilians slaughtered in Gwoza, Borno State²³. As a result of the mentioned, there is need for inter-governmental action to curb these menace, hence the establishment of intergovernmental action group against money laundering and terrorist financing in West Africa (GIABA).

1.3    Aim and Objectives

The general aim of this study is to analyze the Role of Inter-Governmental Action Group against Money Laundering and Terrorist Financing in West African (GIABA). The study seeks to achieve the following intermediate objectives, thus:

¹⁸ www.giaba.org/member-states/16_Mali.htm1 accessed on 1/7/2013.

¹⁹ Ibid

²⁰ Dailysum “Imagine Another Four Years of Insecurity” Friday, January 23, 2015.

²¹ Ibid

²² Ibid

²³ Ibid

1. To examine how far and successful has GIABA achieved its mandate of combating Money Laundering and Terrorist financing in West
2. To analyze the problems and Challenges being encountered by GIABA in the discharge of its
3. To make some findings and offer suggestions on the best ways to enhance the discharge of GIABA‘s
4. To serve as a future reference material for lawyers, scholars and law students who may be interested in the further research of the subject matter of

1.4                   Scope of the Study

The scope of this study shall be limited to ECOWAS Inter Government Action Group against Money Laundering (GIABA) efforts at combating money laundering and terrorist financing in West Africa, the Financial Action Task Force Recommendations 40+9, United Nations Conventions and Treaties on Money Laundering and Terrorist Financing and also African and ECOWAS Treaties related to the subject maters.

1.5                   Research Methodology

The research methodology to be adopted is the Doctrinal Method.

1. Primary Sources or Authorities to be used shall consist of the The Revised Statutes of Inter-Governmental Action group against Money Laundering in West Africa (GIABA). The FATF 40+9 Recommendations, United Nations Security Council Treaties and Resolutions on Money Laundering and Financing of Terrorism (AML/CFT), some GIABA Member States local legislation on (AML/CFT), like Nigerian AMT/CFT, Act 2011, EFCC Act, 2004 etc.
2. Secondary Sources which shall consist of relevant information from leading authorities, Text books on Anti-Money Laundering and Counter- Terrorism Financing, writings, articles of scholars in journals, magazines and opinion of

Empirical method of research shall also be adopted to  supplement the doctrinal Method. Thus, information shall be sourced from the government agencies, individual‘s institutions that are involved in Anti-Money Laundering and Counter-Terrorism Financing in Nigeria through the conduct of interviews. All information sources shall be acknowledged in the foot note references and sufficiently analyzed.

1.6    Literature Review

The discourse on the subject matter, the Role of Inter-Governmental Action Group Against Money Laundering and Terrorist Financing GIABA in combating Money Laundering and Terrorist Financing under ECOWAS Community. The array of literature by several scholars of different discipline predates the establishment of GIABA in 2006 to include but not limited to law and social science. However, there materials where necessary will be called in aid, there are nevertheless not our concern, thus not the subject of this review.

The organisations like Financial Action Task Force (FATF), Egmont Group and the Basle Committee have all provided insight and materials on this topic. The works and material consulted include Abdullahi²⁴; Economic and Financial Crimes in Nigeria. Citing the different between “Money movement facilities and money laundering but without making distinct and clear different between the two. Alexandra²⁵ on Money Laundering in West Africa: An Analysis. Alexander²⁶ on Terrorism Theory and Practice, and Ohanyere²⁷: Issues on money laundering and financial crimes in Nigeria. The aim of this research is actually to fill the gaps and lacunars not covered by other available but rich sources of knowledge.

Ribadu²⁸, while examine the state of corruption and obstacles to effective prosecution of corruption and other financial crimes in Nigeria identified issues such as the gaps n the law, inadequacy of existing procedural and evidence law, congestion and slow pace of court proceedings, competence of counsel, jurisdictional problems, cost of investigation and prosecution among other factors militating against effective prosecution of corrupt practices in Nigeria. He concluded by suggesting the need to amend the 1999 Constitution and Relevant Laws on the subject matter particularly the provisions that serve as constraints in the enforcement of the relevant legislation. This also researcher is of the same view and would provide more solution to that effect in this study.

²⁴ Abdullahi Y. S., (2006),  ―Economic and Financial Crimes in Nigeria‖. Issues and Options

²⁵ Alexandra K: ( 2009)., Money Laundering in West Africa; An Analysis. University of Toronto

²⁶ Alexander J. (1979), Terrorism Theory and Practice, West view press, Calorado

²⁷ Ohanyere, A. N(2002): Issues on money laundering and financial crimes in Nigeria

²⁸ Ribadu, N: (2004) ‘Obstacles to Effective Prosecution of Corrupt Practices and Financial Crimes cases in Nigeria’ A paper presented at the 1^st Stakeholders Summit on Corrupt Practice and Financial Crimes in Nigeria, Kaduna, November 23^rd – 25^th.

The views of Onu²⁹, Usman³⁰, and Ali³¹, are found most relevant and are shared in this dissertation. The aggregate conclusion is that there is the need for severe penalties on erring persons/corporations. Thus, stripping the criminal of the profits made from criminal activities is being seen as an effective way to combat crime as well as a means of doing justice by restoring the criminal to the position he was prior to carrying out these crimes. However, it has been observed that enacting many laws with severe penalties without more cannot hope to stamp out or even significantly reduce crime.³² Besides, while the aforementioned works seems to dwell on issues of money laundering in relation to state security and financial institutions in Nigeria as can be seen in the works of Usman and Ali respectively, this dissertation will attempts to

²⁹ Onu, P.I., (2003) ‘Legal and Institutional responses to Money Laundering in Nigeria: some perspective’. University of Benni Journal of Business Law, vol.1., No.1.

³⁰ Usman, A. K. (2005) ‘Money Laundering and State Security in Nigeria’ in Contemporary issues on Nigerian Laws. Faculty of law, A,B.U., Zaria Annual Publication, pp. 167-186.

³¹ Ali, L. H. (2003-2005) ‘The Role of Regulatory Institutions and Enforcement Agencies in Combating Money Laundering by Financial Institution in Nigeria: A case study of Banking Industry’. A.B.U. Journal of Commercial Law, Vol. 2 No.1, pp. 189-197.

³² Chukkol, K.S. (1990) ‘Towards a National Drug Control Strategy: A blueprint’, in Awa, U.K. and Osibajo, Y., (eds)

Narcotics: Law and Policy in Nigeria. Federal Ministry of Justice; Lagos. Law Review Series, Vol. 8, 1990, p.220.

emphasize on the Money Laundering and Terrorist Financing within the West African region.

Osinbajo³³. Traced the historical perspectives of Penal Policy of Drugs Related Legislation since the 1935 – Ordinance (The Dangerous Drugs ordinance) to the 1989 National Drug Law Enforcement Decree and came to the conclusion that the policy in this respect has been largely in-coherent owing to the absence of stability in the punishment provisions of the legislation. The discussion touches on the topic of this dissertation and thereby will enrich this research.

Chukkol³⁴, at the 1^st summit on corruption and financial crime, opined that “As regards the latent legislation, the Economic and financial crime Commission Act³⁵, one must admit mat its powers are so unwieldy that risks of duplication and confusion are very real possibilities. Section 7(2) provides that the commission has the responsibility of

―enforcing  the  provision of the  money laundering Act, the advance  fee  fraud  and other related offences Act, the Failed Banks (Recovery of Debts) and other financial practices in Bank Act, the Bank and other financial institution Act, the miscellaneous offence Act and any other law or Regulation relating to economic and financial

crimes. According to him, since the expression “economic crimes” includes “any

³³ Osinbajo, Y., ‘The Legal and Institutional Framework for the Eradication of Drug Trafficking in Nigeria’, in Awa,

U.K. and Osinbajo, Y., (eds) op. cit., n. 16, pp. 223-226.

³⁴ Chukkol K.S. (2004) “Review of the effectiveness of some existing legislation against corrupt practices and other economic crimes” Being a paper presented at the 10^th stakeholders summit on corruption and financial crime, Kaduna, 24^th November, 2004.

³⁵ Cap E1 op cit

form of corrupt malpractice^‖. Then the EFCC can perform a function clearly within the purview of the enforcement agencies spell out under the corrupt practices and other related offence Act. Thus there may be duplication of functions leading to possible conflicts and confusion. This is a topical African legislation that needs to be amended. Abdullahi in his Book³⁶ presented a simply and concise analysis of various economic and financial issues, reflecting their effects and the responses of the International community toward them. The economic and financial crime is generic terms, which include a number of unlawful practices defined both by FATF and the Economic and Financial Commission Act³⁷ and other relevant Authorities. But, the author failed to recognize other similar offences including financing of Terrorist.

Ribadu³⁸, the former chairman of EFCC, in the 3^rd plenary of the inter- Governmental Action Group against money laundering (G1ABA) said:

There is special need for heightened focus on the activities of Politically Exposed Persons (PEPs), Our money laundering typology is unique.

Western stereotypes are of little application in the West Africa sub-region. One community is cash-based nature of most transaction. The other is endemic corruption especially in the public sector.

³⁶ Abdullahi Y. S. (2006) Economic and Financial Crime in Nigeria. Issues and options.

³⁷ Cap E1 op cit

³⁸ Ribadu J, (2005). Economic Crimes in Nigeria, A paper presented at 3^rd Plenary of the Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA), Abuja Nigeria.

The above view is correct, West Africa region need to develop their unique legislation and unique tactics in combating money laundering and terrorist financing, because the region has unique problems, which the researcher too is of the same view. Finally, it is the opinion of the researcher that the GIABA members states need to enact roboust AML/CFT legislation, empowering Anti-graft agencies, establishing Financial Intelligence Units, strengthen securities in border, given special training to immigration officers and punishing the financial institutions that concealed the laundered funds or aids the perpetrators.

1.7                  Justification of the Study

With recent Terrorism attacks in the Northern Nigeria, Niger, Northern Mali Senegal and Guinea Bissau and rampant activities of Al-Qaeda and Boko Haram within this Region, developing this aspect of law becomes imperative. Also, this study will be beneficiary to Lawyers, Academicians, and Law Students who may be interested in further research in this area of study.

1.8    Organizational Layout

This study is divided into five chapters:

Chapter one deals with the General Introduction including background of the study, statement of the problem, Aims and Objectives, Scope of the study, the Methodology of the study, Literature Review, Justification of the Study and finally the organizational layout.

Chapter Two gives  an insight  as to the Definition of Terms,  Evolution and Development of GIABA, when and how its created, its Composition and membership include ad hoc ministerial committee, the Administrative Secretariat and Technical Commission, it’s mandate, the source of it finance, how the GIABA sanction it members, how the membership can be Withdraw and also an overview of the status of the fifteen (15) GIABA member states on AML/CTF and finally the conclusion.

Chapter three, deals with the legal framework and international Institutions on Money Laundering and Terrorism financing. These legal frame works includes; The FATF Recommendation/standard, FATF Forty Recommendation and Nine Special Recommendations. GIABA Statutes, United Nation Security Council Resolution 1373, (2001), ECOWAS Criminal Intelligence and investigation Bureau and the ECOWAS Community Court of Justice, its jurisdiction, prosecution and practice, judgment, enforcement and finally the conclusion.

Chapter four is the Examination of the role of GIABA in combating money laundering and terrorist financing. It discusses the meaning of money laundering and terrorist or terrorism financing. The role and function of GIABA, which includes technical assistance, self assessment, mutual evaluation, implementation of measures, typologies exercise, challenges of GIABA and conclusion. Chapter five being the final und concluding chapter deals with summary, conclusion, observation and recommendation.

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