In this article, Timothy Gbeja discusses the Special Control Unit Against Money Laundering (SCUML) established by the Federal Ministry of Industry, Trade & Investment, to work closely with the Economic and Financial Crimes Commission (EFCC) in the battle against money laundering, focusing on the implications and reach of the exercise of SCUML’s powers on business organisations and individual rights

Corruption and Money Laundering
It is not news that corruption is a rot embedded deep in the very foundation of Nigeria’s political, social and economic systems. It is largely responsible for the all-round stunted growth of the country; the widespread hunger and poverty ravaging the majority of the citizenry and its proceeds are used to fund terrorism in the country. Over the years, perpetrators of corruption have utilised legitimate businesses to legitimise corruption proceeds, by investing in these businesses and consequently, reaping “legitimate” yields from the businesses. The act of investing the said corruption proceeds into legitimate businesses and making profit therefrom, is the most notorious example of what is known as “money laundering”.
There are, however, other sources of laundered funds such as drug trafficking, human trafficking, robbery, fraud, smuggling, tax evasion etc. The enactment of the Money Laundering (Prohibition) Act, 2011 (as amended) (MLPA) which repealed the 2004 Money Laundering Act has therefore been a welcome development in combating the scourge of corruption. In enforcing the MLPA, the Federal Ministry of Commerce and Industry also known as Federal Ministry of Industry Trade & Investment, which is the organisation saddled with the responsibility of monitoring DNFIs, established the Special Control Unit Against Money Laundering (SCUML). SCUML is commissioned to work hand in hand with the Economic and Financial Crimes Commission (EFCC), in the battle against money laundering.

Powers of SCUML
SCUML has the mandate to monitor, supervise and regulate the activities of all Designated Non-Financial Institutions (DNFIs) in Nigeria in consonance with the country’s Anti Money Laundering and Combating of the Financing of Terrorism (AML/ CFT) regime. Its mandate is statutory and the relevant provisions of the affected laws guiding it in performing its duties are listed and discussed briefly as follows: 1. MoneyLaundering (Prohibition)Act, 2011 (asamended) (MLPA) 2. Federal Ministry of Industry Trade & Investment AML/CFT Regulations for Designated Non-Financial Institutions (DNFIs) 3. Terrorism (Prevention) Amendment Act,2013(TPAA)
Brief Analysis of the Relevant Provisions of Law

1. MoneyLaundering (Prohibition) Act, 2011 (as amended)(MLPA) Section 25 of the MLPA provides thus: “Designated Non-Financial Institutions” include dealers in jewellery, cars and luxury goods, chartered accountants, audit firms, tax consultants, clearing and settlement companies, legal practitioners, hotels, casinos, supermarkets, and such other businesses as the Federal Ministry of Industry, Trade and Investment or appropriate regulatory authorities may from time to time designate”. Similarly, Section 5(4) of the MLPA provides thus “the Minister may make regulations for guiding the operations of Designated Non-Financial Institutions under this section.” The combined effect of the provisions of Section 5(4), and 25 of the MLPA cited above is that the Federal Ministry of Industry, Trade and Investment under the leadership of the Minister is empowered to make regulations guiding the operations of DNFIs in relation to ensuring compliance with the anti-money laundering laws. There is also the power to expand the list of DNFIs already provided in the MLPA. This birthed the Federal Ministry of Industry, Trade & Investment AML/CFT Regulations for DNFIs and the establishment of SCUML.

2. Federal Ministry of Industry Trade & Investment AML/CFT Regulations for Designated Non-Financial Institutions (DNFIs) (AML/CFT Regulations)

In Regulation 3.1 of these Regulations, the Minister of Commerce, relying on the powers conferred on him in Section 25 of the MLPA, has provided a more robust list of business sectors to be included as DNFIs. Regulations 2.3, 2.4, 2.5 and 2.6 authorise the regulatory agencies (including SCUML) to make requests for information from DNFIs and it is mandatory that such companies comply with the provisions of the Regulations by cooperating with the regulatory agencies and providing the requested information. So, for example, the law empowers the SCUML to demand to scrutinise or inspect a company’s records in an investigative capacity.

3. Terrorism (Prevention) Amendment Act, 2013 (TPAA)
Section 2 (5) (h) of the TPAA provides thus: “Subject to the provisions of this Act, the law enforcement agencies shall have powers to – (h) request or demand for, and obtain from any person, agency or organisation, information, including any report or data that may be relevant to its functions; The above-cited provision of the TPAA authorises law enforcement agencies to demand for information that may be relevant to its functions from any organisation which clearly includes those listed in Regulation 3.1 of the AML/CFT Regulations. This provision makes it mandatory for every DNFI to submit any report or data requested by SCUML which are relevant to its functions under its establishing Act.

Limitations to the Powers of SCUML to Demand Information from DNFIs Section 13 (1) (a-c) of the MLPA provides thus: “The Commission, Agency, Central Bank of Nigeria or other regulatory authorities pursuant to an Order of the Federal High Court obtained upon an ex-parte application supported by a sworn declaration made by the Chairman of the Commission or an authorised officer of the Central Bank of Nigeria or other regulatory authorities justifying the request, may in order to identify and locate proceeds, properties, objects or other things related to the commission of an offence under this Act, the Economic and Financial Crimes Commission (Establishment) Act or any other law – a) Place any bank account or any other account comparable to a bank account under surveillance; b) Obtain access to any suspected computer system; c) Obtain communication of any authentic instrument or private contract, together with all bank, financial and commercial records, when the account, the telephone line or computer system is used by any person suspected of taking part in a transaction involving the proceeds of a financial or other crime.” The implication of the above-cited provision is that the SCUML is not authorised on its own to obtain access to a DNFI’s financial/bank accounts, telephone lines and records, and computer systems, without an Order of the Federal High Court permitting it to do so. In practical terms however, the process of obtaining the Order will be without notice to the subject of the investigation.

SCUML and Legal Practitioners
Section 5 of the MLPA generally provides that DNFIs involved in cash transactions are to report their activities and full details of their clientele to the Ministry of Industry, Trade & Investment, who in turn forwards the information to SCUML and/or EFCC. In a successful challenge to the said Section 5 of the MLPA however, the Nigerian Bar Association (NBA) filed an Originating Summons dated 13th March, 2013 with Suit No. FHC/ABJ/CS/173/2013 at the Federal High Court, Abuja Judicial Division challenging the applicability of Section 5 of the MLPA to Legal Practitioners; and the inclusion of Legal Practitioners in the definition of Designated Non-Financial.

“Over the years, perpetrators of corruption have utilised legitimate businesses to legitimise corruption proceeds, by investing in these businesses and consequently, reaping “legitimate” yields from the businesses. The act of investing the said corruption proceeds into legitimate businesses and making profittherefrom, is the most notorious example of what is known as “money laundering””

Institutions in Section 25 of the MLPA. The NBA relied heavily on the provision of Section 192 of the Evidence Act 2011 (EA) which forbids and prohibits Legal Practitioners from divulging to any party the secrets or transactions or communications between them and their clients. In the Judgement delivered in December 2014, the presiding Judge, Honourable Justice Gabriel Kolawole, granted an Order perpetually restraining the Federal Government of Nigeria, the Central Bank of Nigeria (CBN) and SCUML, from enforcing the provisions of the MLPA against Legal Practitioners.

In giving this Order, the Court held that, the argument of the AttorneyGeneral as to the MLPA 2011 being an exception to privileged communication, has already been covered in the Evidence Act and the Rules of Professional Conduct for Legal professionals. Both legislations excluded communication made to further illegal purpose or information obtained by the Legal Practitioner evidencing a crime or fraud that has been committed during the course of his engagement by the client.

The decision of the Court in the NBA’s case referred to above should however, not be construed in the general sense to include Legal Practitioners doing other trades, because in that situation, the Legal Practitioner is obliged to comply fully with the provisions of the MLPA.

Conclusion
In closing, it is advised that DNFIs, in every manner practicable, cooperate with the agents of SCUML and other regulatory agencies, and submit the requisite documents and reports provided by statute, whether it is requested or not, by the agencies. It is further advised that DNFIs set up AML/CFT Compliance Departments to oversee and execute the AML/CFT Regulations, or consult a Legal Practitioner to offer guidance in this regard. In the current atmosphere, anything short of cooperation with the laws will be met with societal damnation and further engender social tensions. The perceived “infringement” on the privacy of DNFIs is a necessity, if we are to expunge the scourge of corruption and other financial crimes, and to block the money laundering escape route conveniently employed by perpetrators of such crimes.

Timothy Gbeja, Legal Practitioner, Consolex Legal Practitioners

"Exciting news! TheNigeriaLawyer is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest legal insights!" Click here! ....................................................................................................................... Unauthorized use and/or duplication of this material and other digital content on this website, in whole or in part, without express and written permission from TheNigeriaLawyer, is strictly prohibited _________________________________________________________________ [Register Now] ILA Nigeria Branch Marks 10 Years With Infrastructure Financing As Theme For 7th Annual Conference The International Law Association - Nigeria Branch 7th annual conference on public-private partnerships for sustainable infrastructure financing, April 4-5 in Abuja. Details: https://ilanigeria.org.ng/conference _________________________________________________________________

NIALS' Compendia Series: Your One-Stop Solution For Navigating Nigerian Laws (2004-2023)

Email: info@nials.edu.ng, tugomak@yahoo.co.uk, Contact: For Inquiry and information, kindly contact, NIALS Director of Marketing: +2348074128732, +2348100363602.