The Complete 2004 Laws of Nigeria

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MONEY LAUNDERING (PROHIBITION) ACT

ARRANGEMENT OF SECTIONS

PART I

Prohibition of Money Laundering

SECTION

  1. Limitation to make or accept cash payment.
  2. Duty to report international transfer of funds and securities.
  3. Regulation of over-the-counter exchange transaction.
  4. Duties incumbent upon casino.
  5. Identification of a customer.
  6. Special surveillance on certain transactions.
  7. Preservation of records.
  8. Communication of information.
  9. Arousing awareness among employees of financial institutions.
  10. Mandatory disclosure by financial institutions.

11. Liability of directors, etc., of financial institutions.

  1. Surveillance of bank accounts, etc.
  2. Determination of flow of transactions, etc.
  3. Money laundering offences.
  4. Other offence.
  5. Retention of proceeds of a criminal conduct.
  6. Conspiracy, aiding, etc.
  7. Offences by a body corporate.
  8. Trial of offences.
  9. Power to demand and obtain records, etc.
  10. Obstruction of the Agency or authorised officers.
  11. Repeal of section 13, L.F.N. 2004 Cap. N30.
  12. Repeal, etc., of L.F.N. 2004 Cap. M18.
  13. Savings.
  14. Interpretation.
  15. Short title.

 

MONEY LAUNDERING (PROHIBITION) ACT

An Act to repeal the Money Laundering Act, L.F.N. 2004 Cap. M18 and enact a new Money Laundering Actand for related matters.

[2003 No.7.]

[24th May2003]

[Commencement.]

PART I

Prohibition of Money Laundering

  1. Limitation to make or accept cash payment

(1) No person or body corporate shall make or accept cash payment of a sum
exceeding-

      (a)       N500,000 or its equivalent, in the case of an individual; or

     (b)       N2,000,000.00 (two million naira) or its equivalent, in the case of a body
corporate, except in a transaction through a financial institution.

2. Duty to report international transfer of funds and security

(1) A transfer to or from a foreign country of funds or securities of a sum exceeding
$10,000 or its equivalent shall be reported to the Central Bank of Nigeria (in this Act
referred to as "the Central Bank").

(2) A report made under subsection (1) of this section shall indicate the nature and
amount of the transfer, and the names and addresses of the sender and receiver of the
funds or securities.

  1. Regulation of over-the-counter exchange transaction

(1) A person whose usual business is to undertake over-the-counter exchange trans-
actions or a financial institution shall-

      (a)              before the commencement of business, submit to the Central Bank a declaration of his or its activity;

      (b)              prior to any transaction involving a sum exceeding $5,000 or its equivalent,
identify the customer by requiring him to fill a standard data form and present his international passport, driving licence, national identity card or such other document bearing his photograph as may be prescribed by the Central Bank or the appropriate regulatory authority;

              (c)      record all transactions under this section in chronological order, indicating
each customer's surname, forenames, and address in a register numbered and initialled by an officer authorised by the Central Bank for that purpose.

(2) A register kept under subsection (1) (c) of this section shall be preserved for at least ten years after the last transaction recorded in the register.

(3) Any person or financial institution that fails to comply with the requirements of customer identification and the submission of returns on such transactions as specified in this Act within seven days from the date of the transaction commits an offence and is liable on conviction-

      (a)              in the case of an individual to a fine of N25,000 for each day during which the offence continues;

      (b)              in the case of a bank or financial institution, to a fine of N1,000,000 for each day during which the offence continues;

      (c)       to the revocation of its licence as a bank or financial institution or the withdrawal by the Central Bank of the authorised dealer's licence.

  1. Duties incumbent upon casino 
    A casino shall-

      (a)       verify the identity of a gambler who buys, brings into exchanges chips or  tokens, by requiring the gambler to present an authentic document bearing his names and address;

                               (b)       record all transactions under this section in chronological order indicating-

           (i)  the nature and amount involved in each transaction; and

           (ii)  each gambler's surname, forenames and address,

in a register numbered initiated by an officer authorised by the Federal Ministry of Commerce for that purpose.

(2) A register kept under subsection (1) (b) of this section be preserved for at least ten years after the last transaction recorded in the register.

  1. Identification of a customer

(1) A financial institution shall verify its customer's identity and address before opening an account for, issuing a passbook to, entering into a fiduciary transaction with, renting a safe deposit box to or establishing any business relationship with the customer.

(2) An individual shall be required to provide proof of his-

      (a)              identity, by resenting to the financial institution a valid original copy of an official document bearing his names and photograph;

      (b)              address, by presenting to the financial institution the originals of receipts issued within the previous three months by public utilities.

(3) A body corporate shall be required to provide proof of its identity by presenting its certificate of incorporation and other valid official documents attesting the existence of the body corporate.

(4) The manager, employee or assignee delegated by a body corporate to open or operate an account shall be required to produce not only the documents specified in subsection (2) of this section, but also proof of the power of attorney granted to him in that behalf.

 (5) A casual customer shall be identified in the same way as in subsection (2) of this section for any transaction involving a sum exceeding US $5,000 or its equivalent or for any number of transactions whose sum total exceed N:500,000.00 if the total amount is known at the commencement of the transaction or as soon as it is known to exceed the sum of US $5,000 or its equivalent.

(6) Where a financial institution reasonably suspects that the amount involved in a transaction is the proceeds of a crime or an illegal act, it shall require identification of the customer notwithstanding that the amount involved in the transaction is less than US $5,000 or its equivalent.

(7) If it appears that a customer may not be acting on his own account, the financial institution shall seek from the customer by all reasonable means, information as to the true identity of the principal.

6. Special surveillance on certain transactions

(1) When a financial institution is requested to carry out a transaction, whether or not it relates to the laundering of the proceeds of a crime or an act, the financial institution shall seek information from the customer as to the origin and the destination of the funds,
the aim of the transaction and the identity of the beneficiary.

(2) A financial institution shall within seven days after the transaction referred to in subsection (1) of this section-

      (a)       draw up a written report containing all relevant information on the matters mentioned in subsection (1) of this section together with the identity of the principal and, where applicable, of the beneficiary;

      (b)       take appropriate action to prevent the laundering of the proceeds ofa crime or an illegal act; and

      (c)       send a copy Of the report and action taken to the Central Bank, the Commission, the Security and Exchange Commission or such other appropriate regulatory authority, as the case may be.

(3) A financial institution which fails to comply with the provisions of subsection (2) of this section commits an offence and is liable on conviction to a fine of N1,000, 000 for each day during which the offence continues.

7. Preservation of records

A financial institution shall preserve and keep at the disposal of the authorities speci-
fied in section 8 of this Act

(a) the record of the customer's identification for a period of at least ten years after the closure of the accounts or the severance of relations with the customer; and

      (b) the record of transaction carried out by a customer and the report provided for in section 6 of this Act, for a period of at least ten years after carrying out the transaction or making of the report, as the case may be.

8. Communication of information

The records referred to in section 7 of this Act shall be communicated only to the Central Bank, the National Drug Law Enforcement Agency (in this Act referred to as "the Agency") judicial authorities, customs officers and such other persons as the Central Bank may, from time to time, by order published in the Gazettespecify,

  1. Arousing awareness among employees of financial institutions

(1) Every financial institution shall develop programmes to combat the laundering of
the proceeds of a crime or other illegal act, and these shall include-

      (a)       the designation of compliance officers at management level at its headquarters and at every branch and local office;

      (b)       regular training programme for its employees;

      (c)       the centralisation of the information collected; and

      (d)       the establishment of an internal audit unit to ensure compliance with and ensure the effectiveness of the measures taken to enforce the provisions of this Act.

 (2) Notwithstanding the provisions of this Act, the Governor of the Central Bank shall impose a penalty of not less than 1 million naira or the suspension of any licence issued on a financial institution for failure to comply with the provisions of subsection (1) of this section.

10. Mandatory disclosure by financial institutions

(1) Notwithstanding anything to the contrary in any other law or enactment, a financial institution or Casino shall report to the Agency in writing, within seven days any single transaction, lodgement or transfer of funds in excess of-

      (a)       N 1 ,000,000 or its equivalent, in the case of an individual; and

      (b)       five million naira or its equivalent, in the case of a body corporate.

(2) A person, other than a financial institution, may voluntarily give information on

                any transaction, lodgement or transfer of funds in excess of-

      (a)       100,000 or its equivalent, in the case of an individual; and

      (b)       N5,000,000 or its equivalent, in the case ofa body corporate.

(3) The Agency shall acknowledge receipt of any disclosure, report or information
received under this section and may demand such additional information as it may deem necessary.

(4) The acknowledgement of receipt shall be sent to the financial institution within
the time allowed for the transaction to be undertaken and it may be accompanied by a notice deferring the transaction for a period not exceeding 72 hours.

(5) If the acknowledgement of receipt is not accompanied by a stop notice, or if,
when the stop notice expires, the order specified in subsection (6) of this section to block the transaction has not reached the fmancial institution, the financial institution may carry out the transaction.

 (6) When it is not possible to ascertain the origin of the funds within the period of stoppage of the transaction, the Federal High Court may, at the request of the Agency, or other person or authority duly authorised in that behalf, order that the funds, accounts or securities referred to in the report be blocked.

(7) An order made by the Federal High Court under subsection (6) of this section shall be enforced forthwith.

11Liability of directors, etc., of financial institutions

Where funds are blocked under section 10 (6) of this Act and there is evidence of conspiracy with the owner of the funds, the financial institution shall not be relieved of liability under this Act and criminal proceedings for all offences arising therefrom, may be brought against its director and employees involved in the conspiracy.

12. Surveillance of bank accounts, etc.

(1) The Agency, pursuant to a Federal High Court Order obtained on a sworn declaration made by the Chairman of the Agency justifying the request, may in order to identify and locate narcotic drugs and psycho tropic substances, proceeds, property, objects or other things related to the Agency of an offence under this Act or the Economic and Financial
Crimes Commission Act, 2002 or any other Act or law- 

    (a)       place any bank account or any other account comparable to a bank account under surveillance;

     (b)       tap any telephone line or place it under surveillance;

     (c)       obtain access to any computer system; and 

     (d)       obtain communication of any authentic instrument or private contract, together with all bank, financial and commercial records, when the account, telephone line or computer system is used or reasonably suspected to have been used by any person suspected of taking part in a transaction involving the proceeds, of a financial or other crime.

(2) Banking secrecy shall not be invoked as a ground for objecting to the measures
set out in subsection (1) of this section or for refusing to be witness to facts likely to con-
stitute an offence under this Act or the National Drugs Law Enforcement Agency Act.

[L.F.N. 2004 Cap. N30.]

(3) Notwithstanding the powers conferred on the Agency under subsection (1) of this
section, the Agency and any other appropriate regulatory authority shall place any other
account relating to such financial transactions specified in this Act under surveillance.

13. Determination of flow of transactions, etc.

The Agency shall, in consultation with the Central Bank and the Corporate Affairs
Commission determine the flow of transactions and the identities of beneficiaries under
this Act, including the beneficiaries of individual accounts and of corporate accounts.

14. Money laundering offences 
(1) Any person who-

      (a)       converts or transfers resources or property derived directly or indirectly from illicit traffic in narcotic drugs or psycho tropic substances or any illegal act, with the aim of either concealing or disguising the illicit origin of the resources or property, or aiding any person involved in the illicit traffic in narcotic drugs or psycho tropic substances or any other crime or illegal act to evade the legal consequences of his action; or

      (b)       collaborates in concealing or disguising the genuine nature, origin, location, disposition, movement or ownership of the resources, property or rights thereto derived directly or indirectly from illicit traffic in narcotic drugs or psycho tropic substances or any other crime or illegal act,

commits an offence under this section and is liable on conviction to imprisonment for a term of not less than two years or more than three years.

(2) A person who commits an offence under subsection (1) of this section shall be subject to the penalty specified in that subsection notwithstanding that the various acts constituting the offence were committed in different countries or places.

15. Other offences

(1) Without prejudice to the penalties provided for illicit traffic in narcotic drugs or psycho tropic substances, the laundering of drug money or the proceeds of a crime or illegal act, any person who-

    (a)              being a director or employee of a financial institution warns or in any other way intimates the owner of the funds involved in the transaction referred to in section 10 of this Act about the report he is required to make or the action taken on it or who refrains from making the report as required under that section; or

    (b)       destroys or removes a register or record required to be kept under this Act; or

    (c)       carries out or attempts under a false identity to carry out any of the transactions specified in sections 1 to 5 of this Act; or 

    (d)       makes or accepts cash payments exceeding the amount authorised under this Act; or 

   (e)              fails to report an international transfer of funds or securities required to be reported under this Act; or  

    (f)        being a director or an employee of a bureau de change, casino or other finan-cial institution, contravenes the provisions of section 2, 3, 4, 5 or 10 of this Act, commits an offence under this section.

 (2) A person who commits an offence under subsection (1) of this section is liable on conviction- 

   (a)       in the case of an offence under paragraphs (a) to ( c) of subsection (1) to im-prisonment for a term of not less than two years or more than three years;

    (b)       in the case of offences under paragraphs (d) to (f), where the offender-

                                                 (i)    is an individual, to a fine of not less than N250,000 or more than one million naira or a term of imprisonment of not less than two years or more than three years or to both fine and imprisonment; or

                                             (ii)     is a financial institution or any other body corporate, to a fine of not less than N250,000 or more than N1,000,000.00 (one million naira).

(3) A person found guilty of an offence under this section may also be banned indefinitely or for a period of five years from exercising the profession, which provided the opportunity for the offence to be committed.

(4) A person found guilty of an offence under paragraph (d)(e) or (f) of subsection (1) of this section shall not be affected but the provisions of this sections 18, 19, 20 and 25 of the National Drugs Law Enforcement Agency Act.

[L.F.N. 2004 Cap. N30.)

(5) When, as a result of a serious oversight or a flaw in the internal control procedures, a financial institution or person designated in section 10 of this Act, fails to meet any of the obligations imposed on him or it by this Act, the disciplinary authority responsible for the financial institution, or the person's professional body may, in addition to any penalty in this Act take such disciplinary action against the financial institution or person as is in conformity with its professional and administrative regulations.

16. Retention of proceeds of a criminal conduct Any person who-

      (a)              whether by concealment, removal from jurisdiction, transfer to nominees or otherwise retains the proceeds of a crime or an illegal act on" behalf of another person knowing or suspecting the other person to be engaged in a criminal conduct, or has benefited from a criminal conduct; or

      (b)              knowing that any property either in whole or in part directly or indirectly represents another person's proceeds of a criminal conduct, acquires or uses that property or has possession of it,

commits an offence under this Act and is liable on conviction to imprisonment from a term of not less than five years or to a fine equivalent to five times the value of the proceeds of the criminal conducts or to both such imprisonment and fine.

17. Conspiracy, aiding, etc.

A person who-

      (a)       conspires with, aids, abets or counsels any other person to commit an offence;
or

                               (b)       attempts to commit or is an accessory to an actor offence; or

      (c)        incites, procures or induces any other person by any means whatsoever to commit an offence, under this Act,

commits an offence and is liable on conviction to the same punishment as is prescribed for that offence under this Act.

18. Offences by a body corporate

(1) Where an offence under this Act which has been committed by a body corporate is proved to have been committed on the instigation or with the connivance of or attributable to any neglect on the part of a director, manager, secretary or other similar officer of the body corporate, or any person purporting to act in any such capacity, he, as well as the body corporate, where practicable, shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

(2) Where a body corporate is convicted of an offence under this Act, the Court may order that the body corporate shall thereupon and without any further assurances, but for such order, be wound up and all its assets and properties forfeited to the Federal Government.

19. Trial of offences

(1) The Federal High Court shall have jurisdiction to try offences under this Act.

(2) The Federal High Court shall have power to impose the penalties provided under this Act.

(3) In any trial for an offence under this Act, the fact that an accused person is in possession of pecuniary resources or property for which he cannot satisfactory account and which is disproportionate to his known sources of income, or that he had at or about the time of the alleged offence obtained an accretion to his pecuniary resources or property for which he cannot satisfactorily account, may be proved and may be taken into consid-
eration by the Federal High Court as corroborating the testimony of any witness in such trial.

20. Power to demand and obtain records, etc.

For the purposes of this Act, the Director ofInvestigations or an officer of the Agency duly authorised in that behalf may demand, obtain and inspect the books and records of a financial institution to confirm compliance with the provisions of this Act. 21. Obstruction of the Agency or authorised officers

A person who wilfully obstructs the Agency or any authorised officer in the exercise of the power conferred on the Agency by this Act commits an offence and is liable on conviction-

      (a)              in the case of an individual, to imprisonment for a term of not less than two years or not exceeding three years;

      (b)              in the case of a financial institution or other body corporate, to a fine of one million naira.

22. Repeal of section 13, L.F.N. 2004 Cap. N30

Section 13 of the National Drug Law Enforcement Agency Act is repealed.

23. Repeal, etc., of L.F.N. 2004 Cap. M18

The Money Laundering Act, 1995 is hereby consequentially repealed.

24. Savings

The repeal of the Act specified in section 23 of this Act shall not affect anything done or purported to be done under or pursuant to the Act.

25. Interpretation 
In this Act-

"Agency" means the National Drugs Law Enforcement Agency;

"Coastal Bank" means the Central Bank of Nigeria;

"financial institution" includes any individual, body, association or group of persons, whether corporate or unincorporated which carries on the business of investment and securities, a discount house, finance company and money brokerage whose principal object includes factoring project financing equipment leasing, debt administration, fund management, private ledger services, investment management, local purchase order financing, export finance, project consultancy, financial consultance, pension fund management, insurance institutions, debt factorisation and conversion firms, dealer, clearing and settlement companies, legal practitioners, hotels, casinos, bureau de change, super- markets and such other businesses as the Central Bank or appropriate regulatory authorities may, from time to time, designate;

"over-the-counter exchange transaction" includes a financial investments and securities transaction processed through a bank without reference to a bank account or one that is normally carried out otherwise than in organised exchange market and without any prescribed form;

"transactions" means-

(a)   acceptance of deposits and other repayable funds from the public;
(b)  lending;
(c)    financial leasing;
(d)   money transmission services;
(e)   issuing and managing means of payment (for example, credit and debit cards, cheques, traveller's cheques and bankers' drafts, etc.);

(f)     financial guarantees and commitments;
(g)    trading for account of customers (spot, forward, swaps, futures, option, etc.)
in-

               (i) money market instruments (cheques, bills, CD's etc.);

          (ii) foreign exchange;

          (iii): exchange, interest rate index instruments;
          (iv) transferable securities;

          (v) commodity futures trading;

      (h)   participation in capital market activities and the provisions of financial services related to such issues;  

      (i)        individual and collective portfolio management;

      (j)        safekeeping and administration of cash or liquid securities on behalf  of clients;

      (k)       life insurance and all other insurance related matters;

      (f)        money changing.

26. Short title

This Act may be cited as the Money Laundering (Prohibition) Act, 2003.

MONEY LAUNDERING (PROHIBITION) ACT

SUBSIDIARY LEGISLATION

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