- Seeks ABCON advice on Market Intelligence
The Central Bank of Nigeria (CBN) has advised the Association of Bureaux De Change Operators of Nigeria (ABCON) to play stronger role in the bureaux de change industry by embracing on effective self-regulation.
Speaking during the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) Mutual Evaluation Exercise Sensitisation workshop for South West Bureaux de Change (BDCs) in Lagos, CBN Deputy Director, Other Financial Institutions Supervision Department, Mustafa Haruna, said there was need for BDCs to ensure compliance with extant Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) laws and regulations to mitigate the risks and vulnerabilities in the sub-sector.
He said that ABCON should develop and implement a Code of Conduct for members to promote ethical practices and transparency in the sector while also continually advising the apex bank on market intelligence on key industry issues.
Also speaking, ABCON President, Alhaji (Dr.) Aminu Gwadabe, said that ABCON had consistently advised BDCs to put in place and implement, a system of internal policies, procedures and controls including Know Your Customer, Customer Due Diligence and reporting of all suspicious transactions to regulators.
He said that ABCON is also training BDCs on regular basis on the need to keep transaction records, and get a designated compliance officer that has day-to-day oversight over AML/ CFT programme. He said the Compliance Officers have been taught the rules in preparing Suspicious Transaction Reports (STRs), and rendering STRs’ returns to the Nigeria Financial Intelligence Unit (NFIU).
The ABCON boss said the group had over the years, established itself as a key player in the BDC industry, and has also made several commitments and sacrifices to ensure that the sector continues to thrive and its members follow global best practices in the retail of foreign exchange to end users.
He said that BDCs have met and will continue to meet a number of compliance requirements specified by Financial Action Task Force (FATF) and local regulators. The operators, he added, have conducted enhanced due diligence, a major compliance requirement on some high-risk customers. The collation and reporting of foreign currency transactions and suspicious transactions by BDCs are now fully automated.
He said that ABCON had in February, launched its Live Run Automation Portal in Lagos. The technology automates all BDC Operations with those of Nigeria Inter-Bank Settlement System (NIBSS), NFIU and the CBN to improve the level of compliance of the BDCs with set regulations.
The platform allows BDCs send their reports online real time, thereby removing the challenge of manual rendition of reports that has been confronting operators for decades. The project is also boosting the perception towards BDCs in Nigeria especially in the eyes of international investors.
Continuing, the CBN Director Haruna said the BDC sub-sector is a critical component of the Nigerian financial market adding that the cash-based nature of the transactions and other identified deficiencies make it highly vulnerable to ML/TF risk.
He said: “Simply put, money laundering is the process of making dirty money look clean. It is the concealment of the true nature, source, location, disposition, movement, rights with respect to or ownership of property knowing that such property is derived from criminal offense”.
The CBN director said that the ultimate goal of money laundering process is integration. Once the funds are in the financial system and insulated through the layering stage, the integration stage is used to create the appearance of legality through additional transactions.
Explaining how BDCs can be used to perpetrate money laundering, he said the operators can be used to transfer or remit funds, use of fronts or third parties to buy or sell forex, purchase of forex multiple times contrary to regulatory limits, bulk purchase or sale of forex and third party funding of BDCs’ weekly forex purchase through the CBN window.
According to him, there could also be huge unexplained transfer of funds into naira or domiciliary accounts of BDCs, multiple ownership of BDCs to mop up forex, huge forex purchase using naira cash and purchase of forex in exchange for jewelry or real estate to mention but a few.
He listed the red flags that BDCs should watch out for to include reluctance of customer to produce identity documents or BVN information, customer is know as Politically Exposed Person, customer reluctant to discuss the nature of his/ her business and customer exhibits a lack of concern regarding transaction costs or willing to sell forex at ridiculously cheap rates.