AN ASSESSMENT OF THE ROLE OF THE SPECIAL CONTROL UNIT AGAINST MONEY LAUNDERING (SCUML) IN COUNTERING MONEY LAUNDERING AND TERRORISM FINANCING IN NIGERIA ABIODUN ADEBANJO (DOP)

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PUBLISHED DATE: - 23-09-2024
DOI: -

https://doi.org/10.37547/tajpslc/Volume06Issue09-08

PAGE NO.: - 85-104

AN ASSESSMENT OF THE ROLE OF THE
SPECIAL CONTROL UNIT AGAINST MONEY
LAUNDERING (SCUML) IN COUNTERING
MONEY LAUNDERING AND TERRORISM
FINANCING IN NIGERIA ABIODUN ADEBANJO
(DOP)

Abiodun Adebanjo

PhD Student City University, Cambodia

RESEARCH ARTICLE

Open Access

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INTRODUCTION

The problem of Money Laundering and Financing

of Terrorism, led to the development of Anti-Money

Laundering and Countering of Terrorism Financing
(AML and CTF) regulations in the world. With the

evolution of the threats posed by Weapons of Mass
Destruction (WMD), regulations were developed

around the prohibitions of Non-Proliferation of
WMD financing. These regulations came in the

form of Recommendations and Special Regulations
developed by the Financial Action Task Force

(FATF). FATF is the global money laundering (ML)
and terrorist financing (TF) watchdog. It sets

international standards that aim to prevent these
illegal activities that promotes and the harm they

cause to society. FATF was formed by the G-7 in
Paris in 1989. It however became more concerned

about terrorism financing after the September 11,
2001 terrorist attack on the United States (9/11)

by al-Qaeda. Money laundering results from the

generation of money from illicit sources. Persons
who generate money from illicit sources like drug

trafficking, illegal oil bunkering, smuggling of
goods, etc. would seek to launder such proceed into

legitimate ventures. Monies derived from such
ventures are also often used to finance terrorism

(United Nations Office on Drug and Crime.2009).
After 9/11, the international community made the

fight against money laundering and the financing of

Abstract

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terrorism a priority. International Financial

Institutions (IFIs) become more concerned about
the possible consequences of money laundering

and the financing of terrorism on nations all over
the world. These include risks to the soundness and

stability of financial institutions and financial
systems, increased volatility of international

capital flows, and a dampening effect on foreign
direct investment. The United Nations Security

Council passed a number of Resolutions against
terrorism financing. One very prominent among

the several was Resolution 1373 of September,

28th 2001 which called on member states to:

“Prevent and suppress the financing of terrorist

acts and refrain from providing any form of
support, active or passive, to entities or persons

involved in terrorist acts” (United Nations Security

Council 4385th Meeting).
The magnitude of the problem led all United

Nations (UN) to encourage countries to sign up to
Anti-Money Laundering and Counter Terrorism

Financing (AML/CTF) standards. One of the key

elements of AML/CFT regimes is the requirement
for Financial Institutions (FIs) and Designated

Non-Financial Businesses and Professions (DNFBs)
to report transactions they deem suspicious of

being related to criminal or terrorist activity to
specialised Units of government. As a result of

confidentiality traditionally attached to financial
transactions and because reporting entities (FIs

and DNFBPs) do not always have the means to
substantiate their suspicion, it proves difficult to

report it directly to the authorities in charge of
enforcing criminal laws. It therefore became

necessary for governments to establish specialised
agencies saddled with this task. This heralded the

need to establish Financial Intelligence Unit (FIUs)

(International Monetary Fund, 2004).
The Economic and Financial Crimes Commission

(EFCC) was established as a response to the need

for Nigeria to comply to the global call for the
enactment of robust laws against ML and TF and

the need to set up FIUs and agencies that would
address the issues around economic and financial

crimes which are the crimes that generate ML and
leads to the financing of terrorist. The EFCC was

established as a response to FATF blacklisting of

Nigeria in 2002 as one of the Non-Cooperative

Countries

and

Territories

(NCCTs)

(www.efcc,gov,ng). Section 2 of the EFCC

Establishment Act (2004) designated the EFCC as
the Nigerian Financial Intelligence. The function

was removed from the EFCC when the NFIU Act
was enacted in 2018, making it an independent

agency from the EFCC. The Special Control Unit
against Money Laundering (SCUML) was

established by the Federal Government in
September 2005 in compliance with the provisions

of the then Money Laundering (Prohibition) Act,

2004 which was subsequently repealed and
amended to Money Laundering(Prohibition) Act

2011(as amended). The most recent law from
which SCUML derived its power and mandate is the

Money Laundering Prevention and Prohibition Act,
2022. This was a requirement which brought

Nigeria in compliance with Recommendations 18
and 23 of FATF. The Unit by the current law is a

department in the EFCC (Money Laundering
(Prevention and Prohibition) Act, 2022).

Statement of the Problem

Upon its establishment in 2003, the EFCC was

designated Nigeria’s Financial Intelligence Unit

(FIU). By 2005, SCUML was created by the Federal
Ministry of Commerce and Industry and the EFCC

to regulate DNFIBPs in Nigeria. According to the
FATF, FIUs serve as national centers for the receipt

and analysis of suspicious transaction reports and
relevant money laundering information, associated

predicate offences, and terrorist financing. The

Egmont Group which is a group of FIUs across the
globe who have committed to sharing financial

intelligence, stated further that FIUs are to obtain
additional information from reporting entities and

that all FIUs all over the world must have timely
access to required financial, administrative, and

law enforcement information to undertake its
functions properly.
It is pertinent to say that FIUs are responsible for

disseminating analyzed results of financial

intelligence gathered from reporting entities which
are financial institutions and non-financial

institutions as well. SCUML therefore is the Unit
that is mandated by law to collect financial

information from all DNFIBPs in Nigeria. The

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Nigerian Financial Intelligence Unit (NFIU)

remained the EFCC and to fulfill that function the
EFCC had a Department designated as such. In

2018, the law exercising the NFIU from the EFCC
was enacted. The National AML/CTF Strategy of

Nigeria classified SCUML as one of the frameworks
for dealing with the threat of ML and FT in Nigeria.

Inter-Governmental Action Group against Money
Laundering in West Africa (GIABA) 2021 mutual

evolution report stated that SCUML has a general

understanding of Nigeria’s and sectorial ML/TF

risks. However, SCUML lacks resources to

supervise DNFBPs due to the composition and size
of the sector.
By the enactment of the Money Laundering

(Prevention and Prohibition) Act, 2022 which
repealed the Money Laundering Prohibition Act

(2012) as Amended, SCUML is designated a
Department under the EFCC. It presupposes that

the Unit has been strengthened to be able to deliver
on it mandate. The Unit has been in existence for 18

years. However, its activities have never been

reviewed to determine its effectiveness playing it

role in Nigeria’s AML/CTF regime. It is therefore

important to have a review of its activities vis-à-vis
i

ts place and position in Nigeria’s AML/CTF

framework. This paper is a summative assessment
of the impact of SCUML in the ecosystem of

Nigeria’s AML/CTF framework. A Summative

assessment seeks to determine the effectiveness of

an intervention put in place to deal with an
identified problem.

Aim of the Paper

The aim of the paper is to ascertain what SCUML

was established to do and to see whether it has the

capacity in terms of structure and resources to
deliver on the mandate. The article examined the

reason for the establishment of SCUML and how it
has fared in that regards. The work looked at the

key role of SCUML and evaluates the structure and
measure put in place by the Unit to play this role

effectively. The paper presents the scorecard of the

Unit based on available data.

Conceptualizing Money Laundering

According to UN Vienna 1988 Convention Article

3.1 money Laundering is defined as:

The conversion or transfer of property, knowing

that such property is derived from any offense(s),
for the purpose of concealing or disguising the

illicit origin of the property or of assisting any
person who is involved in such offense(s) to evade

the legal consequences of his actions.
According to FATF (1999) money laundering is an

illegal activity that legitimizes proceeds from
criminal enterprise. It is the processes (layering,

placement and integration) that are involved is
cleaning up monies derived from criminal

activities. Through these processes criminal
activities are made to appear legitimate. The act of

money laundering provides a support function to
proceeds from criminal activities. Hendriyetty &

Grewal, (2017) argues that Money laundering as a
criminal activity has a global impact. They opined

that it involves how criminal finances are
laundered through the financial systems,

international trade or other means. Korejo et al.,
(2021) opined that Money laundering is the

process by which criminals conceal the existence,

illegal source or illegal application of income and
then disguise or convert that income to make it

appear legitimate, i.e. cleaning illicit proceeds.
Olujobi and Yebisi, (2023) posits that as at today

Money laundering still occurs in three stages.
These stages are: placement, layering and

integration. Placement they say is introducing
money generated from crime into the financial

system, layering on the other hand is the cross-
border transfer of proceeds to avoid detection of

the source and, finally, integration is returning the
proceeds as legitimate income to the criminal.

History of the Establishment of SCUML

The Nigerian business environment was adjudged

by the international community to be awash with

unethical business behaviours, thereby making it a
safe-haven for money laundering and other forms

of illegal business dealings. The International
Community in 2001, through the Financial Action

Task Force (FATF), assessed the situation and

placed Nigeria on the list of Non-Cooperative
Countries and Territories (NCCTs). In response, the

Federal Government of Nigeria constituted a
Presidential Inter-Agency Committee in 2003 to

address the issues raised by the FATF. The

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Committee opened dialogue with the FATF and

initiated actions to address the identified
deficiencies. One of the major achievements in the

intervening period was the development of a
National Strategy and Implementation Plan to

remove Nigeria from the FATF NCCTs list.
Following the implementation of the National

Strategy and the attendant dialogue with FATF,
Nigeria was removed from the NCCT list in June

2006 (British Council, Security Justice and Growth
Programme Report, 2008, p.3).
The Implementation Plan, among other things,

culminated in the passage into law of the amended

Money Laundering (Prohibition) Act 2004, which
for the first time incorporated as well as defined

DNFIBPs and vested the regulatory responsibility
of same in the Federal Ministry of Commerce and

Industry (FMC and I). SCUML was established as a
specialized unit of the Federal Ministry of

Commerce and Industry by the Federal Executive
Council of Nigeria in September 2005 (British

Council, Security Justice and Growth Programme

Report, 2008, p.3).

An Overview of SCUML

SCUML was created as part of the measures for the

implementation of the FATF Recommendations 18

and 23. FATF Recommendations include amongst

others the establishment of Legal and Institutional
framework for the effective implementation of the

Anti-Money.

Laundering/Counter-Terrorism

Financing and Proliferation (AML/CFT/CPF)

measures in all countries. This led to the enactment
of the Money Laundering (Prevention and

Prohibition) Act, 2022 and the Terrorism
(Prevention and Prevention) Act, 2022 in Nigeria.

SCUML is mandated under the Money Laundering
(Prevention and Prohibition), Act, 2022 and other

extant rules and regulation to implement specific
sections of the Act and relevant AML/CFT/CPF

Regulations

in

line

with

the

FATF

recommendations for the implementation of

AML/CFT/CPF measures within the DNFBP Sector

in Nigeria.

Structure of SCUML

SCUML operates within the EFCC and has office in

the major Zonal Commands in the EFCC. It is

structured into units for its operations. Its office

are found in all the fourteen zonal commands of the
EFCC: Abuja, Lagos, Ibadan, Edo, Kaduna, Kano,

Gombe, Enugu, Maiduguri, Port Harcourt, Ilorin,
Sokoto and Uyo. The various offices report to the

Director who is at the Headquarters at the EFCC
Zonal Command at Abuja. It has a Compliance,

Registration, Enlightenment and Legal Unit among
others for its effective operation. Staff of the EFCC

are deployed to the Unit (SCUML, Head Office,
Abuja).

Mandate of SCUML

Section 17of the Money Laundering (Prevention &

Prohibition) Act, 2022 established the department

SCUML under the Economic and Financial Crimes
Commission (EFCC). SCUML is responsible for the

supervision

of

Designated

Non-Financial

Businesses and Professions (DNFBPs) in Nigeria. In
compliance with the provisions of the Act, relevant

laws and applicable regulations. This provides the
legal framework for SCUML with availability of

criminal and administrative sanctions. The
DNFBPs are defined under Section 30 of the Money

Laundering (Prevention and Prohibition) Act, 2022
to include: Business outfits dealing in Jewelries; Car

Dealers; Dealers in Luxury Goods; Chartered
Accountants; Audit Firms; Tax Consultants;

Clearing and Forwarding Companies; Legal
Practitioners; Hotels; Casinos; Supermarkets;

Dealers in Precious Stones and Metals; Law Firms,
Notaries,

and

other

Independent

Legal

Practitioners; Accountants and Accounting Firms;

Trust and Company Service Providers; Dealers in
Real Estate, Estate Developers, Estate Agents and

Brokers; Estate Surveyors and Valuers; Mortgage
Brokers; Hotels and Travel Agencies; Consultants

and

Consulting

Companies;

Construction

Companies; Importers and Dealers in Automobiles;

Practitioners of Mechanized Farming; Pool betting
and Lottery; and Dealers in High value goods.

Content of FATF Recommendation 23

The requirements set out in Recommendations 18

to 21 apply to all designated non-financial

businesses and professions, subject to the
following qualifications:
(a) Lawyers, notaries, other independent legal

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professionals and accountants should be required

to report suspicious transactions when, on behalf
of or for a client, they engage in a financial

transaction in relation to the activities described in
paragraph (d) of Recommendation 22. Countries

are strongly encouraged to extend the reporting
requirement to the rest of the professional

activities of accountants, including auditing.
(b) Dealers in precious metals and dealers in

precious stones should be required to report
suspicious transactions when they engage in any

cash transaction with a customer equal to or above
the applicable designated threshold.
(c) Trust and company service providers should be

required to report suspicious transactions for a
client when, on behalf of or for a client, they engage

in a transaction in relation to the activities referred

to in paragraph (e) of Recommendation 22
(International Standards on Combating Money

Laundering and the Financing of Terrorism &
Proliferation. The FATF Recommendations: 2012 -

2023 pp, 20 -21).

Literature Review and Theoretical Framework
Empirical Review

Julius, Omobola & Olajide (2012) opined that

money laundering is one of the most pervasive
economic crimes in the world. They observed that

Trillion of dollars are laundered through the
financial market each year. They observed that

such amounts of money cannot be successfully
laundered without the involvement of financial

intermediaries whom they contend includes

bankers (agents of financial institutions) and
lawyers (designated non-financial entities). These

persons they stated further use their expertise to
conceal and obscure illegal activity. Lawyers and

bankers

they

referred

to

as

financial

intermediaries in the act. Their study examined the

predatory

activities

of

these

financial

intermediaries in facilitating money laundering in

Nigeria.
Julius, Omobola & Olajide (2012), utilized publicly

available data as evidence to illuminate the role
played by these intermediaries. In the study they

found that in pursuit of organizational and
personal interest, the financial intermediaries

create enabling structures that support illicit

activities of political and economic elite in Nigeria.
They argued that activities of these financial

intermediaries’ and anti‐social practices are

significant, as huge amounts are lost to this

practice. They concluded that the establishment of
money launderin

g laws and the creation of anti‐

money laundering agencies had not brought about
professional transparency and ethical conduct to

these category of persons. They recommend that
there is a need for policy makers to reform the

financial institutions in order to promote integrity,

accountability and ethical professional conduct to
curb money laundering and to build trust in the

Nigerian financial system.
Normah, Zulaikha, & Intan (2016) contend that

DNFBPs are expected to comply with requirements

listed in FATF Recommendations, which include
the need to: (i) Conduct due diligence on their

clients, (ii) Maintain proper records and
documentation of related transactions for at least

six years and (iii) Submit suspicious transaction

report to their Competent Authority, which is the
agency in charge of anti-money laundering regime

of a country, when necessary. In trying to examine
the role of DNFBPs, they analyzed the Mutual

Evaluation reports of countries within the Asia
Pacific Region.
The Asia Pacific Group on Money Laundering is

charged with the responsibility of assessing the
level of compliance of the Forty (40) countries in

the Asia Pacific region based on the stipulated

FATF standards. They observed that DNFBPs in the
region need to comply with five major

recommendations of FATF which include:
Recommendations 12, 16, 17, 20, 24 and 25. They

made this point because based on the result of their
assessment, that DNFBPs in the countries in the

region have very poor compliance rating on these
recommendations. They concluded that the low

level of compliance on the aforementioned
standards, implies either a lack of awareness

among countries or poor enforcement by
regulators.
Newbury (2017) opined that the aim of his work is

to highlight vu

lnerabilities in Australia’s AML/CTF

regime through Australia’s non

-compliance with

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the FATF recommendations on the regulation of

DNFBPs. The study presents findings from
research conducted in 2015 that focused on some

of the principal arguments for and against the

extension of Australia’s AML/CTF regime to

DNFBPs. Review and consideration of the merits of
these arguments was undertaken to support the

conclusion that AML/CTF regulation should be
extended to DNFBPs, in line with the FATF

recommendations. He observed that exemption of
many DNFBPs from AML/CTF regulation

perpetuates vulnerabilities within Australia’s

AML/CTF regime will continue to make criminals
continue to exploit these vulnerabilities. He

observed further that the regulated AML/CTF
sector will continue to shoulder an unfair burden of

Australia’s AML/CTF response; until the issue is

addressed.
Newbury (2017) argues that there is need for

operators to be provided with evidence of an
objective assessment of factors for and against the

regulation of DNFBPs in Australia. He contends that

such evidence as to the need to have DNFBPs come

into compliance with Australia’s AML/CTF

framework is of value to government
policymakers, regulators, financial institutions and

DNFBPs. He concludes from the examination of
what exists in Australia, there is a reasonable

justifications for AML/CTF regulation in the
country to include DNFBPs in Australia. The

regulation of DNFBPs should be incorporated into

Australia’s AML/CTF regime.

Somorin, (2018) argues that in response to the

trend of money launderers many have now resort

to the non-financial sector to conceal their illicit
and criminal incomes, as a result of this the FATF

released new \Revised Standards in 2012 on
DNFBPs. The Revised Standards he contends

requires countries to improve AML/CFT measures
on DNFBPs. He reiterated that these standards

include that DNFBPs be subject to AML/CTF
regulations in order to prevent criminal activity. He

contends that the Revised FATF Standards of
February 2012, are targeted at dealing with risks

relating to money laundering, terrorist financing,
the financing of the proliferation of weapons of

mass destruction and others. Somorin, (2018)

concludes that it is important to see that quite a

number of legislative frameworks to combat
Money Laundering (ML) and Terrorist Financing

(TF) have been developed in several countries
around the world. Nigeria should not be left out. He

concludes that it is crucial that Nigeria improve on
the exiting compliance mechanisms and

framework that relates to DNFBPs in the country.
Buno, Emmanuel, & Giwa, (2021) examined

DNFBPs from the broader scope of their
compliance in the West African sub-region. They

argue that DNFBPS are important actors both in the
formal and informal sectors owing to the nature of

services they offer. The DNFBPs are key players in
financial and economic development and thus are

highly vulnerable to money laundering (ML) and
terrorist financing (TF) risks. Globally, and indeed,

within the West African region, typologies studies
have indicated several instances of misuse of

DNFBPs for the laundering of proceeds of crime
and to a lesser extent, TF. They opined that the

factors that make DNFBPs vulnerable to ML and TF

in the sub-region, include limited understanding of
ML/TF risk and anti-money laundering and

combating the financing of terrorism (AML/CFT)
obligations, and poor implementation of AML/CFT

measures by the sector. As reporting institutions,
DNFBPs are required to implement appropriate

measures to mitigate the ML/TF risk facing them.
Mutual evaluation reports (MERs) of countries in

the region noted weak implementation of
AML/CFT measures by DNFBPs compares to

financial institutions. These coupled with the
general poor monitoring and supervision of

DNFBPs for compliance, make them a weak link in

member states’ AML/CFT regime.

In the study, Buno, Emmanuel, & Giwa, (2021)

found that there is a general lack of information on

the exact size of DNFBPs across member states, the
risk of ML/TF associated with DNFBPs is generally

identified as high across member states, the extent
and level of monitoring/supervision of DNFBPs for

AML/CFT compliance trails what is obtainable in
financial institutions; the institutional and

operational frameworks for regulating, supervising
and monitoring DNFBPs are either weak or poorly

defined in many West African states; and the focus

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of AML/CFT technical assistance has been more on

financial institutions than DNFBPs.

Historical Account of the Evolution of Anti-

Money Laundering Regime in Nigeria

In the early 1980s, there were concern with impact

of narcotics and psychotropic drugs on individual

and national development; this made the General
Assembly of the United Nations (UN) to response to

these concerns. The UN General Assembly passed
Resolution 37/141 of 14 December, 1984

requesting its Economic and Social Council to ask
the UN Commission on Narcotic Drugs to draft a

Convention against Illicit Traffic in Narcotic Drugs.
Consequently, the UN Convention against Illicit

Traffic in Narcotic Drugs and Psychotropic
Substances of 1988(Vienna Convention) came to

light. The Convention recommended, amongst

other things, that each state party should by its
domestic laws prohibit:

…the conversion or transfer of property knowing

that such property is derived from a drug related

offence… for the purpose of concealing or

disguising the illicit origin of the property or of
assisting any person who is involved in the

commission of such an offence or offences to evade
the legal consequences of his actions (United

Nations Convention Against Illicit Traffic in

Narcotic Drugs and Psychotropic Substances, 1988,
p 6).
States parties were also urged to prohibit:

…the concealment or disguise of the true nature,

source, location, disposition, movement, rights

with respect to, or ownership of property, knowing
that such property is derived from drug trafficking

or an offence related to it (United Nations
Convention Against Illicit Traffic in Narcotic Drugs

and Psychotropic Substances, 1988, p7).
The rationale behind these two provisions is easy

to deduce. It was reasoned then that if drug

trafficking and related offences are going to be
controlled, it is important to strike at the

motivation for participation in the commission of

such crimes: namely, financial enrichment. Also if
the funds derived from drug trafficking are not

targeted and withdrawn, they would provide funds
to be reinvested to grow the illegal business.

Nigeria signed the instrument on March 1, 1989

and ratified it later in the same year on November
1, 1989. The Nigerian government in furtherance

established the National Drug Law Enforcement
Agency (NDLEA) via Decree 48 of 1989 as the first

statute to criminalize some kind of money
laundering in Nigeria (Section 3 National Drug Law

Enforcement Agency, Decree 48 of 1989 (now Cap
N30 LFN 2004). The main focus of the legislation

was not to prohibit money laundering but to
criminalize trafficking in hard drugs and allied acts.

Nonetheless, it criminalized the laundering of

proceeds of hard drug related offences as required
by the UN Convention.
The Money Laundering Decree of 1995 was the

first money laundering-specific statute that was
enacted in Nigeria. This was as a result of the

fundamental flaw of the NDLEA Decree 48 of 1989.
Other economic and financial crimes, for example,

human trafficking were escalating and contributing
to the growth in the incidence of money laundering.

This led the UN to think of another convention to

tackle the problem. By the late 1990s, transnational
organised crimes had become so prevalent. In

2000, the UN adopted the Convention against
Transnational

Organized

Crimes

(Palermo

Convention).
The Palermo Convention of 2000 proffered a

broader definition of money laundering. The

Palermo Convention went beyond making drug
trafficking the only predicate offence for the

offence of money laundering. It used the broader

phrase “the proceeds of crime”. This minor

distinction made a lot of difference and as a result,

the Convention has been endorsed by the major
standard-setting instrument on money laundering.

Nigeria signed the Palermo Convention on 13
December, 2000 and ratified it on 28 June, 2001.

Upon this, the Money Laundering Decree of 1995
was repealed and replaced by the Money

Laundering (Prohibition) Act of 2003. The law was
in operation for only ten (10) months before it was

again repealed and replaced with the Money
Laundering (Prohibition) Act of 2005 (Ige, 2011).
The major legislative development that qualified

Nigeria as a country with a div to fight money

laundering was the establishment of the Economic

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and Financial Crimes Commission (EFCC) in 2003

by the Economic and Financial Crimes Commission
(Establishment) Act of 2004. One of the primary

functions of the EFCC is to investigate allegations of
money laundering according to Section 6(b) of the

Economic and Financial Crimes Commission Act
2004. It was to strengthen the EFCC to fulfil its

mandate that the 2004 Money Laundering
(Prohibition) Act was passed (this has since been

repealed with the Money Laundering (Prohibition)
Act (2012).
The EFCC is invested with wide powers critical for

carrying out this mandate, including the power to

place bank accounts under surveillance and carry
out other actions designed to assist investigators to

identify the owners and locate the proceeds or
properties derived from crimes, a power hitherto

vested only in the National Drug Law Enforcement
Agency. The 2004 Act empowered the EFCC,

NDLEA, Central Bank of Nigeria (CBN) and ‘other
regulating Authorities’ to place bank accounts

under surveillance as part of measures to facilitate

tracing the proceeds of crimes. While Section 20 of
the 2003 Act vested the power to inspect books and

records of financial institutions in the NDLEA
alone, Section 20 of the 2004 Act confers the same

power on the EFCC.
Under the 2003 Act, the power to determine the

flow of transactions and identify the beneficiaries

of individual and corporate accounts was conferred
on the NDLEA but by virtue of s.13 of the 2004 Act,

the EFCC now has the exclusive authority to

exercise this power. Other provisions of the 2004
Act that confer exclusive power on the EFCC are

Sections 1 (5) and Sections 5(5) of the EFCC Act
2004. One of the most profound and far reaching

innovations contained in the EFCC 2004 Act is the
introduction of the term

“Designated Financial

Institutions”. The interpretation section contains a

list of the institutions that fall within this class:
Dealers in jewellery, cars and luxury goods,

chartered accountants, audit firms, tax consultants,

clearing

and

settling

companies,

legal

practitioners, hoteliers, casinos, super markets or

such other businesses as the Federal Ministry of
Commerce or appropriate regulatory authorities

may from time to time designate (Section 24 of the

2004 Act).
Quite a number of sections make reference to this

term. Where found, the provisions impose duties
such as keeping of register of transactions and

special surveillance on certain transactions.

Framework against ML and TF in Nigeria

According to the Nigeria’s National Strategy on

AML/CFT there are two frameworks for the
combating of AML/CTH in Nigeria and these are:

Regulatory and Institutional or enforcement
framework:

The Regulatory Framework

This consists of regulatory and supervisory bodies

empowered by their establishment act and other

AML/CFT laws to regulate the entry and
operational activities of their respective operators

including issuance of sector specific and AML/CFT

regulations and guidelines, application of
administrative sanctions, etc. The regulators and

supervisors are responsible for the supervision of
the financial institutions and designated non-

financial institutions (DNFIs). Other bodies which
perform supervisory roles such as self-regulatory

bodies, accrediting institutions and other
administrative authorities empowered to regulate

the various sectors of the economy in relation to
AML/CFT in Nigeria form part of the regulatory

framework. The key regulators and supervisors
include:
a) The Central Bank of Nigeria (CBN).
b) National Insurance Commission (NAICOM).
c) Securities and Exchange Commission (SEC).
d) Ministry of Industry, Trade and Investment

(Special Control Unit against Money Laundering).
e) National Pension Commission (PenCom) and
f) Corporate Affairs Commission (CAC).

Institutional Framework

This are institutions specifically created to deal

with issues around corruption and other

irregularities in the Nigerian economic sector. Ever
since the commencement of the AML/CFT regime,

Nigeria has built strong institutions poised to
implement government measures and policies

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aimed at mitigating the occurrence of money

laundering countering the financing of terrorism.
Several competent authorities with adequate

institutional framework include but not limited to
the Nigerian Financial Intelligence Unit (NFIU), the

Economic and Financial Crimes Commission
(EFCC), which is the primary authority for the

investigation and prosecution of financial crimes,
anticorruption agencies (ACAs) such as the

Independent Corrupt Practices Commission (ICPC)
and the Code of Conduct Bureau (CCB), law

enforcement agencies (LEAs) such as the National

Drug Law Enforcement Agency (NDLEA), National
Intelligence Agency (NIA),Department of State

Services (DSS), Nigeria Police Force (NPF), Nigeria
Customs Service (NCS), Nigeria Security and Civil

Defense Corps (NSCDC), Nigeria Immigration
Service (NIS), National Agency for the Prohibition

of Trafficking in Persons (NAPTIP) and all other
agencies established by law to tackle the all defined

predicate offences of money laundering in Nigeria.
Predicate offence is that offence that is committed

before the proceeds can be laundered. Other
institutions include the Federal Ministry of Justice,

Federal Ministry of Finance, Federal Ministry of
Interior, Federal Ministry of Foreign Affairs,

Federal Inland Revenue Service (FIRS), National
Identity Management Commission (NIMC), and the

judiciary. The Central Bank of Nigeria (CBN),
Securities and Exchange Commission (SEC) and the

National Insurance Commission (NAICOM),
supervise the banking and non-banking financial

institutions for AML/CFT purposes.

Theoretical Framework

The work adopted system’s theory as the

theoretical framework for explaining this study.
According to Alexander & Stanley (1998) the

general system theory is a trans-disciplinary
conceptual approach. Central to it the concept of a

system. A system is simply defined as a group of
interacting, interdependent elements that form a

complex whole. The talk of systems concepts have

been central to the rise of ecology as a field of
inquiry, with such concepts as ecosystem. In

creativity research the systems approach has also
at times been referred to as an ecological approach,

because of the emphasis on the larger ecosystem in

which creativity emerges.
According to Demetis, (2010) the systems theory

amply describes AML/CTF frameworks across the
globe. He opines that the control of money

laundering particularly from the standpoint of
technology is complex. It is proper to see an

integration of technology and people working

together to implement rigidly defined standards
that deals with the issue of ML and TF. Demetis,

(2010) went on to state that the systems theory is
tested, not only in terms of viable technology, but

also in an actual case study involving real issues in
financial

institution.

Consequently,

those

concerned with the formulation of policy, the
design of controls and procedures and the

implementation of such will find the systems
theory apt in the AML/CTF ecosystem.
The System theory is adopted for the work due to

its applicability and is ideal for adoption in

studying the role and effect of the work of SCUML
in the Nigerian AML/CTF framework. The EFCC,

NFIU, Central Bank of Nigeria, all the commercial
banks, the DNFBPs and SCUML which is a

Department in the EFCC, all play a collective
individualized role in the implementation of

Nigeria, AML and CTF regime. Each and every one
of the them have their specific role in the system of

ensuring that Nigeria complies to the globally
accepted standards of dealing with ML and TF. A

problem in one of them would result in a problem
in the entire ecosystem of dealing with the issue

around AML and CTF in Nigeria.

METHODOLOGY

This study is a desk research. The study utilised

data from records available in the EFCC Annul
Reports on the activities of the Unit from 2005

–

2022. The study also derived its information from

publications of government agencies, news reports
from newspapers and other information outlets

like the internet. Books and other publications that
are relevant to the study were consulted and

reviewed. Data are presented in Tables. Content
analysis of materials is adopted in making

deductions and inference in order to draw the
conclusion from the study.

RESULTS

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This work evaluates the activities of the Unit on the

following areas: Registration of DNFBPs;
Sensitization for DNFBPs; Rendation of Currency

Transaction Reports (CTRS) from DNFBPs;
Supervision and Site Examinations of DNFBPs in

2022; Sensitization for DNFBPs; Rendation of
Currency Transaction Reports (CTRS) from

DNFBPs and Support for Law Enforcement

Agencies. I shall present data on activities of the

Unit from inception till 2022, but shall analyses in
detail data from 2018

–

2022. This is because the

NFIU was removed from the EFCC in the year 2018,
so, the activities of the Unit was intensified by the

EFCC from that year. Table 1 is a summary of the
Record of SCUML from 2005 till 2017:

Table1: Registration of DNFBP by

SCUML from 2005-2017

Year

Registered

DNFBPs

Currency Transaction

Reported by DNFBPs

2005 and 2006

58

10685

2007

205

2704

2008

19

3912

2009

162

9,637

2010

193

9,352

2011

181

9,409

2012

1042

65,423

2013

16447

84,545

2014

8603

94,041

2015

5,235

93,349

2016

6,531

158,398

2017

10,185

387,935

Source: Researched Material (2024)

Analysis of the Activities of SCUML from 2018

–

2022
Registration of DNFBPs

In line with Section 6 of the Money Laundering

(Prevention and Prohibition) Act, 2022 and

Regulation 5 of the Economic and Financial Crimes
Commission (Anti-Money Laundering, Combating

the Financing of Terrorism and Countering
Proliferation Financing of Weapons of Mass

Destruction for Designation of Non-Financial
Businesses and Professions, and Other Related

Matters) Regulation, 2022, SCUML has the mandate

to register and certify all DNFBPs in Nigeria in
accordance with the provisions of laws and

regulations. The registration is processed online
via the SCUML website.
Within the period of 2018 - 2022 SCUML registered

a total number of 36,206 DNFBPs. A breakdown of
the total number registered as DNFBPs are: one

hundred and thirty three (133) Audit Firms, two
thousand eight hundred and fifty eight (2,858) Car

Dealers, two hundred and fifty four (254)

Chartered Accountants, one hundred and twenty
seven (127) Clearing and Forwarding Companies,

seven thousand nine hundred and two (7,902)
Construction Companies, two thousand eight

hundred and ninety four (2,894) Consulting
Companies, three hundred and seventy nine (379)

Jewellery Dealers, five thousand nine hundred and
forty three (5,943) dealers in Real Estate, three

hundred and sixty two (362) Estate Surveyors and
Valuers, two thousand four hundred and forty six

(2,446) Hotels and Hospitality Companies, two

hundred and ninety three (293) Legal
Practitioners, four thousand and fifteen (4,015)

Mechanized Farmers, thirty four (34) Mortgage
Brokers, six thousand two hundred and seventy

(6,270) Non-Profit Organizations, forty nine (49)
Pool Betting Companies, two hundred and forty

four (244) dealers in Precious Stones and Metals,
one thousand three hundred and sixty six (1,366)

Supermarkets, one fifty four (454) Trust and
Company Service Providers. Table 2 below

provides a detailed breakdown of the number of

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DNFBPs registered by SCUML from 1st January to

31st December, 2022. The table also provides

statistics of registration of DNFBPs from 2018 to

2022, a 5-year series.

Table 2: DNFBPs Registration from 2018-2022

S/N

SECTOR

2018

2019

2020

2021

2022

TOTAL

1.

Audit Firms

56

56

64

149

133

458

2.

Car Dealers

488

3,367

1,255

2,547

2,858

10,515

3.

Chartered Accountants

86

79

162

308

254

889

4.

Clearing & Settlement

43

47

87

157

127

461

5.

Construction Companies

3,039

3,271

3,476

8,390

7,902

26,078

6.

Consultants & Consult.

370

524

1,060

2,957

2,894

7,805

7.

Dealers in Jewelleries

82

122

204

337

379

1,124

8.

Dealers in Real Estate

1,509

1,187

1,900

5,107

5,943

15,646

9.

Estate Surveyor & Valuers

131

152

157

354

362

1,156

10.

Hotels & Hospitality

794

869

1,157

2,515

2,446

7,781

11.

Legal Practitioners

9

35

169

289

293

795

12

Mechanized Farming

789

1,180

1,962

4,233

4,015

12,179

13

Mortgage Brokers

7

6

7

18

34

72

14

Non-Profit Organisations ()NPOs

3,433

3,203

3,597

6,756

6,270

23,259

15

Pool Betting Casinos & Lottery

54

39

44

60

49

246

16

Precious Stones/ Materials

434

119

84

221

244

1,102

17

Supermarkets

267

309

698

1,442

1,366

4,082

18

Tax Consultants

28

37

30

110

183

388

19.

Trust and Company Service

41

59

161

335

454

1,050

Grand Total

11,660

14,661

16,274

36,285

36,206

115,086

Source: SCUML Annual Report Records 2022

The total number of registered DNFBPs for the

period 2018 - 2022 is 115,086. According to the

annual report of SCUML as seen from the Table, the
figures above show that there is a steady annual

increase in the number of registrations. Between
2018

–

2019, there was an increase of 20%. For the

period 2019 to 2020, there was an increase of 11%.

From 2020

–

2021, there was increase of 13% for

the period 2020 to 2021. There was however a

decrease of 0.02% for the period 2021 to 2022. The
decrease of registration in 2022 is attributable to

the period of migration from the old registration
platform to the new one. The system had a software

update for that period. Aside the minor decrease in
2022, the registration based on statistics over the

years has been progressively steady. SCUML

enjoins a robust collaboration amongst critical

stakeholders in the AML/CFT/CPF regime in
Nigeria. There is also an effective regulatory

oversight of the Central Bank over Financial
Institutions on the requirement of evidence of

SCUML registration before DNFBPs enjoy banking
services.

Sensitization for DNFBPs

It is mandatory for at least a director of a DNFBP or

a trustee of a Non-Profit Organisation (NPO) to

attend a sensitization class before SCUML
Certificate of Registration is issued to an entity.

Only current directors of companies or trustees of
an NPO that are verified are issued with SCUML

Certificates of Registration. In 2022, SCUML
sensitized a total number of 33,412 DNFBPs on

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their obligations and liabilities under the relevant

AML/CFT/CPF laws and regulations. Table 3shows

various sub sectors of the DNFBPs sensitized from

2019 to 2022.

Table 3: DNFBPs Sensitization from 2019 to 2022

S/N

Sensitized DNFBPs

2019

2020

2021

2022

1

Construction Company

3,334

1,267

6,199

7,122

2

Consultants and Consulting Company

529

808

6,444

2,971

3

Dealers in Jewelleries and Luxury

123

110

365

449

4

Dealers in Real Estate

1,199

1,329

3,029

5,739

5

Estate Surveyor &Valuers

153

111

239

323

6

Hotels & Hospitality

929

701

1,248

2,170

7

Legal Practitioners

35

103

165

146

8

Mechanized Farming

1,186

1,397

2,522

2,855

9

Mortgage Brokers

6

14

4

17

10

NPOs

3,257

2,720

4,036

6,281

11

Pool, Betting, Lottery and Casinos

42

28

24

80

12

Precious Stones & Metals

120

74

142

319

13

Supermarkets

330

421

770

1,618

14

Tax Consultants

37

37

77

155

15

Trust and Company Services

61

89

146

485

16

Cars & Vehicles

672

668

1,293

2,095

17

Chartered Accountants

109

86

142

259

18

Clearing and Settlement

48

54

97

191

19

Audit Firm

56

56

99

137

TOTAL

12,226

10,073

27,041

33,412

Source: SCUML Annual Report Records 2022

The above-mentioned figure of 33,412 shows that

there was an increase of 6,371 (that is 24%) when
compared with the 27,041 DNFBPs sensitized in

2021. This is attributed to more DNFBPs signing
up to the registration. The need for registration by

DNFBs became necessary as many accounts were
suspended that failed to comply with government

directive on SCUML registration.

Rendation of Currency Transaction Reports

(CTRS) from DNFBPs

Sections 6 and 11 of the Money Laundering

(Prevention and Prohibition) Act, 2022 made it
mandatory for DNFBPs to file CTRs to SCUML

within seven (7) days of transaction. From 1st
January to 31st December, 2022 SCUML received a

total of 198,672 CTRs from 3,836 DNFBPs spread
among the various sectors of the DNFBPs. In

addition, SCUML also received 3,072 nil reports.
The CTRs received are from 2020

–

2022 are

presented in Table 4.

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Table 4: CTRs Reporting of DNFBPs from 2020 to 2022

SECTOR

2020

2021

2022

Car Dealers

2,645

2,998

2,370

Hotels & Hospitality

903

2,519

3,435

Supermarkets

756

607

2,412

Casinos/Online Casinos/Pool Betting/Lottery

5,891

2,408

2,914

Dealers in Mechanized Farming Equipment & Machineries

166

285

625

Non-Profit Organizations

4,463

5,183

16,513

Jewellery/Precious Stones & Metal & Luxury Goods

1,942

241

116

Accounting Firms/Audit Firms/Tax Consultants

3,830

2,286

2,585

Dealers in Real Estate/Estate Developers /Agents/Brokers &
Construction Companies

38,159

40,569

20,311

Consultants and Consulting companies

-

-

147,391

TOTAL

58,755

57,096

198,672

Source: SCUML Annual Report Records 2022

The total number of CTRs received in 2022 is

198,672 when compared to the 57,096 CTRs
received in 2021, it showed an increase of 141,576

CTRs, that is 248% increase. The increase was
attributed

to

an

intensified

compliance

examination of DNFBPs and the aggressive public
awareness

and

sensitization

programmes

embarked by SCUML.

Supervision and Site Examinations of DNFBPs

in 2022

In line with the mandate of SCUML, the Unit is

saddled with the responsibility of ensuring full

compliance of the DNFBPs with relevant provisions

of the AML/CFT/CPF laws and regulations in
Nigeria. Consequently, SCUML conducted off-site

and on-site examinations on a risk sensitive basis
and applied Risk Based Approach (RBA) in

regulating, supervising and monitoring the
DNFBPs in the country.

Off-Site Examination

: Off-site examination is

usually conducted on all registered DNFBPs before
conducting on-site examinations. This off-site

examination is also supported by risk assessment
using the International Monetary Fund (IMF) Risk

Matrix. This approach examines the risk factors of
customers,

geographical

location,

product/services and delivery channel. The off-site

examination is also a combination of media
reports, open source and internal information

received on DNFBPs. In the year 2022 a total of
5,172 off-site examinations were conducted across

various

DNFBP

subsectors.

The

off-site

examination is a prerequisite for the conduct of on-

site examination.

On-Site Examination

: In 2022, SCUML conducted

a total of 1,500 on-site examinations from the 5,172

off-site (that is approximately 29%) applying Risk

Based Approach to the examinations carried out on

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the DNFBPs. In addition, SCUML uses the

opportunity of on-site examination to create
awareness of its activities amongst the DNFBPs.

The record of the examination portrayed
increasing focus on the high risk subsectors

identified in the National Inherent Risk
Assessment, 2022. The subsectors include Real

Estate, Casinos, Dealers in Precious Metals and
Stones, Trust and Companies Service Providers,

and the Car Dealership. As part of its effort to focus

on the FATF designated DNFBPs in 2022, the
Compliance and Enforcement Department limited

its compliance visits to the Non FATF designated
DNFBPs such as hotels, mechanized farming,

consultants and consulting etc., A detailed
breakdown of the various DNFBPs sub-sector

visited by SCUML in 2022 is illustrated in Table 5

Table 5: Examination of DNFBPs from 2018 to 2022

S/N

DNFI SUB SECTORS

2018

2019

2020

2021

2022

1.

Hotels & hospitality

300

228

178

338

299

2.

Car dealers & vehicles

165

183

69

235

303

3.

Construction companies

-

-

42

138

278

4.

NPOs

126

67

38

110

121

5.

Real estate/estate surveyors

285

245

31

172

254

6.

Supermarkets

-

-

34

49

73

7.

Casino/lottery

-

-

3

2

10

8.

Mechanized farming

-

19

1

17

52

9.

Dealers in jewellery, precious stones & metal

-

-

-

71

56

10.

Consultants and consulting companies

-

-

-

16

37

11.

Chartered accountants, audit firms & tax consultants

76

39

-

22

7

12.

Clearing and settlement

-

-

-

4

8

13.

Trust and company service providers

-

-

-

1

0

14.

Legal practitioners

-

-

-

-

2

TOTAL

952

781

396

1,175

1,500

Source: SCUML Annual Report Records 2022

The number of DNFBPs examined in 2022 is 1,500

showing an increase of 325 (28%) when compared
with 1,175 DNFBPs examined in 2021. The

increase was attributed to the premium the

Commission placed on inspections particularly

with increased vigour in 2022. Summary of the on-
site examination activities in the year 2022 is

presented in Table 6 below.

Table 6: Summary Statistics of On-site Examination

S/N

SUBJECT

NUMBER

1

DNFBPs Examined

1,500

2

DNFBPs Trained/sensitised

1,922

3

Non-compliant DNFBPs sent to EFCC for further investigation

145

4

On-going case Money Laundering cases in court

3

5

Forged SCUML certificates cases forwarded to EFCC

42

6

Conviction of DNFBPs on Money Laundering cases

18

Source: SCUML Annual Report Records 2022

Compliance Gaps and Challenges of SCUML On- Site Visit of DNFBPs in 2022

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Despite the volume of CTRs filed from the sector

and the volume of real estate seized and forfeited
in criminal prosecutions by the EFCC, the

Suspicious Transaction Reports (STRs) filing from
the sector remained non-existent. This was a

testimony to weak STRs monitoring, detection and
reporting system among the sector operators as

well as lack of proper and regular AML/CFT/CPF
training. Factors such as very high exposure to

activities of unlicensed operators, poor AML/CFT
controls, poor understanding of compliance

obligations, high exposure to Politically Exposed

Persons (PEPs) etc. equally remained a challenge.
SCUML intensified engagement with the various

SROs and Trade Associations various sectors of the

DNFBPs sphere. For example the estate
development sub-sector of the building industry,

which attracted major investment and is
vulnerable to activities of unlicensed operators.

Several meetings were held with Real Estate
Development Association of Nigeria (REDAN) to

improve compliance to SCUML regulations. To

curtail the operation of unlicensed operators in the
sector, SCUML ensured that only qualified

professionals could obtain its registration

certificate. SCUML also carried out risk profiling of
major construction companies in Nigeria 2022. The

report is yet to be finalised. This profiling has
helped in the enhancement of targeted and risk

based supervision of the sector.
As it relates to car dealership in Nigeria, feedbacks

were written to car dealers visited during the on-
site examination exercise on the observations

during the visits and the need for them to take
urgent remedial action to avoid been sanctioned.

Support for Law Enforcement Agencies

In the year 2022, SCUML provided information and

analysis to support investigation on 2,091 entities,

out of which 2,074 reports were from the EFCC.
Furthermore, SCUML received requests for

information on some DNFBPs from Law
Enforcement Agencies. SCUML also requested for

information on DNFBPs from other agencies and
their activities. Table 7 below gives the breakdown

of the agencies that SCUML exchanged information
with in 2022.

Table 7: Information Exchanged in 2022

ORGANIZATION

NO. OF INFO

REQUESTS FROM

OTHER AGENCIES

NO. OF ENTITIES INVOLVED

EFCC

422

2,074

NPF

1

1

NDLEA

1

6

TOTAL

424

2,081

Source: SCUML Annual Report Records 2022

DISCUSSION OF FINDINGS

While SCUML has made several strides especially

in the area of compliance with companies

registering with it before they can operate
corporate accounts, there are still a number of

issues to be addressed. Unlike most countries in the
West African sub-region GIABA in its Mutual

Evaluation Report Nigeria of August 2021 states
that SCUML has a general understanding of

Nigeria’s and sectoral ML/TF risks. However,

SCUML lacks resources to supervise DNFBPs due to

the composition and size of the sector.
Self-regulatory bodies for DNFBPs on the other

hand have a low understanding of ML/TF risks and
the AML/CFT obligations of the businesses and

professions in their sectors. SCMUL has melted out
limited sanctions on DNFBPs for non-compliance

with AML/CFT requirements. Lawyers are not
subject to AML/CFT obligations due to a 2017

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Court of Appeal judicial decision currently on

appeal at the Supreme Court. Internet casinos exist
in Nigeria, but are neither covered by AML/CFT

requirements nor supervised for such purposes.
The Report state further that a large number of

unregistered/unlicensed dealers in precious metal
and stones (DPMS) and car dealers, both

designated as DNFBPs, are operating in Nigeria.
SCUML is one of the Competent Authorities (CAs)

that reporting bodies are send report to in terms of

compliance with Nigeria’s AML/CFT/CPF regime.

There are quite a number of DNFBPs in Nigeria that
are regarded as SROs, SCUML does not have control

over such bodies and a good number of DNFBPs
falls under this category. SROs includes such as the

Nigerian Bar Association, Institute of Chartered
Accountants of Nigeria, Association of National

Accountants of Nigeria, Chartered Institute of
Taxation of Nigeria, Hotel Owners Association of

Nigeria, NGO networks and coalitions, etc. There is
still a problem with the power of SCUML to regulate

the activities of Nigeria Bar Association (NBA) for

instance.
The NBA has taken the Federal Government to

court on the move by SCUML to ensure that they file

records of monies they collect from clients. This
would be achieved if the comply with the directives

that financial institutions, including banks, must

“obtain

evidence of registration” of DNFBPs with

SCUML

“prior

to

establishing

business

relationships” with such DNFBPs.The first court

and Court of Appeal ruled in favour of the NBA

arguing that NBA is a constitutional recognised
div and since the 1999 constitution did mandate

them to register law firms with SCUML, they will
not do so from the point of law. This is serious

problem to quest to monitor the finances of law
firms. The EFCC through collaboration with the

NFIU is able to get the financial records of any
person who is a subject of investigation.

As one of the Competent Authorities in Nigeria’s

AML/CFT/CPF, the Unit is supposed to provide

information to all law enforcement agencies as the
NFIU does. In the year 2022, SCUML provided

information and analysis to support investigation
on 2,091 entities, out of which 2,074 reports were

from the EFCC. Furthermore, SCUML received

requests for information on some DNFBPs from

Law Enforcement Agencies. SCUML also requested
for information on DNFBPs from other agencies

and their activities. 422 came from the EFCC. There
is need for other law enforcement agencies to enjoy

the information provided by SCUML for their
investigation should they need such as well.
Several DNFIBPs in Nigeria are registered with

SCUML; registration with the Unit is a requirement

all banks demand before opening an account for
any company or organisation. The challenge largely

is that most SROs only report to the Unit what they
wish to, the Unit till now without the help of the

EFCC and the NFIU does not have the capacity to
independently know the true position of these

DNFBPs. As stated from the onset SCUML under the
Money Laundering (Prevention and Prohibition)

Act, 2022 is now a Department under the EFCC. The
EFCC is a law enforcement agencies and it role is to

enforce Nigeria’s AML/CFT/CPF is to investigate

infractions and prosecute same. SCUML is a

regulatory div that seeks to get DNFBPs comply

with the regulations on Nigeria’s AML/CFT/CPF.

It is clear from the number of staff and coverage of

SCUML that the Unit should have more office across

Nigeria. There is a need for the Unit to have office
in all states in Nigeria if it is to play more effective

role in regulating the activities of DNFBPs which
are scatter across Nigeria. The staff strength of the

Unit need to be increased as well for the task it is
saddled with.

CONCLUSION

It is important to say that there is no official figure

as to the total number of DNFBPs in Nigeria. The

number we have is based on those who have
registered with SCUML. This implies that SCUML is

the officially recognized div that provides the

number of DNFBPs in Nigeria. SCUML has indeed
brought DNFBPs in Nigeria to comply with the need

to register with it before they can have accounts
with banks and other financial institutions and

comply with the relevant sections of the Money
Laundering Prohibition and Prevention Act (2022)

on reporting transactions, doing due diligence on
customers and keeping proper record of clients.

From the records of registration of DNFBPs it is
evidently clear that the Unit has achieved a major

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milestone in the quest to have a register of DNFBPs

in Nigeria. This is a first step in FATF
Recommendation 23 that requires Competent

Authorities to have DNFBPs have a register to have
vital details about customers that patronize them.
This is an aspect of FATF Recommendation 23 on

Know Your Customers (KYC). SCUML is to ensure

that all DNFBPs in Nigeria carry out due diligence
in their all their transactions with all customers.

This the Unit is able to achieve through it on the site
visits to DNFBPs. This is to ensure that all DNFBPs

keep a record of all Cash Based Transactions
(CBTRs) with the address of persons that made

such transactions. Failure for the DNFBPs to do this
is a violation of the extant law. In this regards, the

Unit has done creditably well, however, bringing

DNFBPs into full compliance of Nigeria’s

AML/CFT/CPF required a lot to be done. This is a
major component of developing a Beneficiary

Ownership Register for Nigeria which is a global
requirement that shows that a country is serious

about fighting economic and financial crimes and

serious organised crimes.
It would interest the readers to know that SCUML

in 2023 published it National Risk Assessment for

Non-Profit Organisation in Nigeria: National
Terrorist Financing: NPO Risk Assessment of Non-

Profit Organisations Sector in Nigeria. The Risk
Assessment is in compliance with Terrorist

Financing Risk Assessment Guidance (FATF, 2019)
and brought Nigeria in compliance with

Requirements of FATF Recommendation 8 1 (a-c)

which states:
Recommendation 8 (1a): Identify which subset of

organizations fall within the FATF definition of

NPO. Identify the features and types of NPOs which
by virtue of their activities or characteristics, are

likely to be at risk of terrorist financing abuse.
Recommendation 8 (1b): Identify the nature of

threats posed by terrorist entities to the NPOs
which are at risk as well as how terrorist actors

abuse those NPOs.
Recommendation 8 (1b): Identify and take

effective action against NPOs that either are

exploited by, or actively support, terrorists or
terrorist organisations should aim to prevent and

prosecute, as appropriate, terrorist financing and

other forms of terrorist support (FATF Best
Practice Paper on Combating the Abuse of Non-

Profit Organisations (Recommendation 8, pp.7-8).
By conducting the National Terrorism Financing

Risk Assessment of the Non-Profit Organizations

(NPOs) in Nigeria, the country achieved an

important milestone. The report makes the
mon

itoring and supervision of “At

-

Risk NPOs”

easier, and as such is step in countering terrorism
financing by NPOs in Nigeria.

Recommendations

Based on the findings and conclusion drawn from

the work, it recommended that:
1. For effective functioning, SCUML should be made

an independent Unit just as the Nigerian Financial
Intelligence Unit (NFIU) was removed from the

EFCC in 2018. This would make the Unit contribute
more as it is the case with the NFIU.
2. In order to have SCUML become an independent

div, the Money Laundering (Prevention and

Prohibition) Act, 2022 needs to be amended.

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