The Egmont group reportedly plans on expelling Nigeria’s Financial Intelligence Unit (FIU) at its meeting, scheduled for the 2nd-7th of March 2018 at Buenos Aires, Argentina.
The initial suspension placed on Nigeria in July 2017 was billed to last until January 2018. In response, the Senate passed a bill granting autonomy to the Nigerian Financial Intelligence Unit (NFIU).
What is the Egmont Group?
The Egmont Group is a united body of 155 Financial Intelligence Units (FIUs). The group provides a platform for the secure exchange of expertise and financial intelligence to combat money laundering and terrorist financing. Nigeria joined the organization in 2005 but was granted full membership in 2007.
Why Nigeria may be expelled
The Egmont Group is unconvinced that Nigeria’s Financial Intelligence Unit (NFIU) has sufficient independence from the Economic and Financial Crimes Commission (EFCC). The EFCC has been alleged to have used critical information it had obtained to arm-twist individuals that had cases. The body had also requested from a proper legal framework, in addition to a physical relocation.
Reps and Senate bicker
The bill is yet to be harmonized with the House of Representatives which is insisting on the NFIU being domiciled with the EFCC. The difference of opinions between both chambers has led to a delay in the bill being submitted to President Muhammadu Buhari for approval.
A section of the Reps’ version of the bill places the collation of all reports relating to suspicious financial transactions, analysing and disseminating them to all relevant government agencies on the EFCC. This then means the body will be under the supervision of the EFCC.
The Reps are of the opinion that the laws granting legal autonomy are more important than the physical location of the NFIU.
In theory, the EFCC has granted the body autonomy, but in practice, this has not happened.
Why has this taken so long to settle?
Typically, Nigeria tends to leave critical issues to the last minute. Therefore, it is not surprising that no action has been taken just yet. The Senate has also had a running battle with the EFCC Chairman, who has not yet been confirmed (by the Senate). Had the two arms had a cordial relationship, this may have been resolved in time.
Implications of an expulsion
On the country
The country’s war against corruption would also be affected as an expulsion would mean it will not have access to financial intelligence from sister agencies outside the country. The political elite in the country often launder huge sums of money to European countries. An absence of such information from financial intelligence units abroad makes it difficult to recover such funds.
The Muhammadu Buhari administration had picked the war against corruption as a key agenda. while his commitment to fighting corruption is largely debatable, an expulsion also gives a negative impression internationally, as regards Nigeria’s seriousness with the war on corruption.
If the expulsion goes through, Nigerian banks would be unable to issue ATM cards by Mastercard and Visa.The banks’ card income will also take a hit, coming at a time when yields on money market instruments are dropping
Banks may also have to access foreign trade lines and loans at a premium, making such funds slightly more expensive for them. This added cost will be in turn passed to businesses and customers.
E-commerce firms will also be affected since their business models are largely online. They would be forced to rely on cash for transactions, which comes with higher processing costs. The expulsion could also throw a spanner in the Central Bank of Nigeria’s bid to improve financial inclusion.
Many goods sold on such sites are imported. Hence a restriction on card usage means businesses would have to find alternative ways of purchasing goods. This then makes them more expensive, as most consumers would prefer to buy directly than using a Nigerian e-commerce site.
Manufacturers in the country are will also be affected as a large proportion of their raw materials are imported. At the peak of the foreign exchange crisis in 2016, many were forced to rely on the parallel market, to meet FX needs. An increase in raw materials cost leads to an increase in the price of the goods sold.
How it affects you
You may be forced to rely on cash for transactions abroad in the absence of cards. This could then push you to the parallel market, as official markets limit the amount of cash one can buy per quarter. Parallel market rates are more expensive than official rates.
Nigerians spend a large proportion of foreign exchange on upkeep for their wards schooling abroad, hospital bills, and personal travel allowance.
Pressure on the parallel market then leads to a depreciation in its rates. Parallel rates will become more expensive. This then makes regular transactions even more expensive for the average Nigerian.
3 startups to get N3 million grant each in the COVID-19 virtual hackathon
The hackathon hopes to identify accessible and cost-effective E-Learning solutions for public schools.
The Nigerian Communications Commission has announced that 3 finalist startups will get a grant of N3 million each at the end of the COVID-19 virtual hackathon.
These three startups will be selected from submitted entries that meet all the criteria and provide adaptable digital solutions for addressing the present and future impacts of pandemic and epidemic diseases.
The solutions must be novel, clearly explained, with proof of concept
NCC announced this through a statement published on its Twitter handle.
The grant, it said, will enable the three startups with the most promising digital solutions to produce a prototype within 2 months of receipt.
According to the statement, submitted entries are expected to provide solutions in sectors such as health, digital communications, education, transportation.
For those in health, the solutions should find a way to empower frontline healthcare workers or prevent, trace, and contain the spread in Nigeria.
Solutions in digital communications are expected to aid the sustenance of economic activities and people-to-people communication while encouraging social distancing without compromising productivity.
The hackathon also hopes to identify accessible and cost-effective E-Learning solutions for public schools, as well as improved safety measures in public transportation in Nigeria.
Interested tech hubs, startups and innovative digital SMEs can still submit entries on or before July 17, 2020.
CBN expands scope of regional banks in Nigeria, gives compliance timeframe
The aim of this directive is to expand the reach of the regional banks across the country, the CBN said.
The Central Bank of Nigeria (CBN) has expanded the scope of regional banks in the country, by requiring them to open branches in at least one additional geopolitical zone outside of the existing geopolitical zones where their operating licenses cover.
A circular that was issued earlier this week by the apex bank said this new directive is in accordance with “section 8 (g) of the CBN Scope, Conditions & Minimum Standards for Commercial Banks Regulations no  2010 as revised on September 4, 2019.”
The new directive took effect on Friday, June 26, 2020. In other words, all the regional banks are expected to have become aware of this development since then. They now have a timeframe of six months to establish their presence in the geopolitical zones outside of where they currently operate.
It should be noted that prior to this time, regional banks in the country typically operated in at least two geopolitical zones of the federation. However, in line with the new expansion, the CBN shall now prescribe an additional geopolitical zone for each of these regional banks, thereby making the coverage area three geopolitical zones per regional bank.
Meanwhile, the CBN said the aim of this directive is to expand the reach of the regional banks across the country, whilst ultimately promoting financial inclusion. Note also that the new directive affects all regional banks, both the ones engaged in commercial banking and non-interest banking. Some part of the circular said:
“Effective the date of this circular, all banks with regional authorisation shall be required to operate from one additional geopolitical zone as may be prescribed for each institution by the CBN, without prejudice to the existing requirement of the minimum of two (2) geopolitical zones of the federation. The essence is to promote spread and balance of the regional banks across the country.
“The compliance timeline to establish operational footprint at the advised zone shall not exceed six (6) months from the issuance of the regulatory advice to each regional bank by the CBN.”
Nigerian and US Authorities battle former Enron Nigerian Subsidiary over $80 million Yacht
Both Nigerian and American governments have opposed Enron Nigeria’s appeal.
19 years after the bankruptcy of Enron Corporation, one of the biggest corporate bankruptcies in American history, a former subsidiary of the company is battling Nigerian and American Authorities over the sale of a yacht valued at over $80 million acquired by Nigerian businessman Kolawole Aluko.
The yacht was seized by the US Government in 2018 after prosecutors say it was bought with the proceeds of bribes paid to Nigeria’s former Minister of Petroleum, Diezani Alison–Madueke.
The yacht was later auctioned for $37 million in 2019. The Nigerian government also dropped claims to the proceeds of the sale recently and a Texas Court ordered all proceeds should be retained by the US Government.
However, a former unit of the Bankrupt Enron, Enron Nigeria Power Holdings claims it’s entitled to the proceeds and demands $22 million in a bid to get an arbitration awarded to them against the Nigerian government for suspending a contract signed with Enron in 1999 to build and operate a Power plant.
Enron Nigeria claims the Nigerian government dropped claims to the proceeds of the yacht’s auction in an attempt to fraudulently transfer assets to stop creditors from accessing them. Saying Nigeria dropping its claims was “a recognition of the factual and legal basis” in a DOJ court filing.
Both Nigerian and American governments have opposed Enron Nigeria’s appeal.
Enron Nigeria Power Holdings Ltd is owned by ex-Enron staff involved in the negotiations for the Power Plant contract in Nigeria and was bought out of bankruptcy for $750,000 in 2004 by a Cayman Islands registered company.
An arbitration ruling in 2012 awarded Enron Nigeria Power Holdings $11.2 million including interest in damages against the Nigerian government.
The DOJ says Mr. Aluko bought the yacht for $82 million in 2013 and funded a lavish lifestyle for Alison Madueke in exchange for NNPC contracts valued at over $1.5 billion.
Aluko and his business partner, Olajide Omokore are also accused of laundering illicit revenues into and through the United States