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Article
Publication date: 2 January 2018

Ehi Eric Esoimeme

This paper aims to help build awareness with the regulatory, enforcement and customs authorities as well as reporting entities about money laundering risks and…

Abstract

Purpose

This paper aims to help build awareness with the regulatory, enforcement and customs authorities as well as reporting entities about money laundering risks and vulnerabilities of the Mavrodi Mondial Movement (MMM) scheme, and how to mitigate them.

Design/methodology/approach

The research took the form of a desk study, which analyzed various documents and reports such as the Financial Action Task Force (FATF) typologies reports in 2006, 2008, 2010, 2013 and 2014 on new payment methods (NPMs) which focused on the potential for NPM to be misused by criminals; the identification of risk factors which can significantly differ from one new payment product or service to another, depending on functionality; and risk mitigants which can be tailored to a particular new payment product or service to address its specific risk profile.

Findings

This paper presents the following findings and recommendations: high-risk customers such as politically exposed persons (PEPs) could exploit the non-face-to-face feature of MMM by using the identity of low-risk customers (e.g. pensioners) to open MMM accounts. The Bitcoin funding option may present a higher money laundering risk than Bank wire, MasterCard, Visa Debit and Interac. The electronic nature of Bitcoins provides in principle a good foundation for effective record keeping and the monitoring of transactions. The money laundering risks associated with Goldmoney are very minimal when compared to Bitcoin. MMM Nigeria is therefore recommended to adopt Goldmoney as its preferred method of online payment for MMM transactions.

Originality/value

While most publications on MMM are focused on fraud, this paper focuses on the money laundering risks and vulnerabilities associated with the MMM scheme.

Details

Journal of Money Laundering Control, vol. 21 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 3 January 2017

Ehi Eric Esoimeme

This paper aims to critically examine the Money Laundering (Prevention and Prohibition) Bill, 2016. It also aims to determine the level of effectiveness of the preventive…

Abstract

Purpose

This paper aims to critically examine the Money Laundering (Prevention and Prohibition) Bill, 2016. It also aims to determine the level of effectiveness of the preventive measures in the Bill.

Design/methodology/approach

The appraisal took the form of a desk study, which analyzed various documents and reports such as the Financial Action Task Force Recommendations 2012, Mutual Evaluation Reports conducted by the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) on Nigeria, the judgment delivered by Justice Gabriel Kolawole of the Federal High Court Abuja and the United Kingdom’s national risk assessment of money laundering and terrorist financing.

Findings

This paper determined that the Bill could achieve its core objectives if the following recommendations are implemented: section 15 of the Bill should be modified to include the definition of “Arrangement”; lawyers should be allowed to send their Suspicious Transaction Report to the Nigerian Bar Association, provided that there are appropriate forms of cooperation between the NBA and the Financial Intelligence Unit, and this approach is in line with the Financial Action Task Force Recommendations; the Bill should expressly prohibit retaliation by employers against whistleblowers and provide them with a private cause of action in the event that they are discharged or discriminated against by their employers, and this approach is being adopted by the US Dodd–Frank Act; a request for customer information, by the Director-General of the Nigeria Financial Intelligence Centre, should be made pursuant to an order of the Federal High Court obtained upon an ex-parte application supported by a sworn declaration by an authorized officer of the Centre, justifying the request for customer information.

Originality/value

This paper offers a critical appraisal of the Money Laundering (Prevention and Prohibition) Bill, 2016. The paper will identify the strengths and weaknesses of the Bill. This is the only paper to adopt this kind of approach.

Details

Journal of Money Laundering Control, vol. 20 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 28 January 2020

Ehi Eric Esoimeme

This paper aims to critically examine the modern slavery statements of Anglo American Plc. and Marks and Spencer Group Plc. to determine the level of effectiveness of the…

Abstract

Purpose

This paper aims to critically examine the modern slavery statements of Anglo American Plc. and Marks and Spencer Group Plc. to determine the level of effectiveness of the risk assessment and risk mitigation measures of both companies and provide recommendations on how the risk assessment and risk mitigation measures of both companies could be strengthened.

Design/methodology/approach

The analysis took the form of a desk study, which analysed various documents and reports such as the UK Modern Slavery Act 2015, the UK Modern Slavery Act 2015 (Transparency in Supply Chains) Regulations 2015, the UK Guidance issued under Section 54(9) of the Modern Slavery Act 2015, the 2018 Global Slavery Index, funded by Forrest’s Walk Free Foundation, the Anglo American Plc. Modern Slavery Statement of 2017/18, the Marks and Spencer Modern Slavery Statement of 2017/18, the Financial Action Task Force Guidance on the Risk Based Approach to Combating Money Laundering and Terrorist Financing (High Level Principles and Procedures) 2007, the Financial Action Task Force International Standards On Combating Money Laundering and the Financing of Terrorism and Proliferation (The FATF Recommendations) 2012, the Australia Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (as amended), the Financial Transactions and Reports Analysis Centre of Canada Guidance on the risk-based approach to combatting money laundering and terrorist financing 2017 and the Central Bank of Nigeria (Anti-Money Laundering and Combating the Financing of Terrorism in Banks and Other Financial Institutions in Nigeria) Regulations, 2013.

Findings

This paper determined that the standard due diligence measures and the enhanced due diligence measures of Anglo American Plc. are not effective enough to identify/assess the risk(s) of modern slavery in the supply chains reason being that Anglo American Plc. does not use diverse methods/methodologies for her due diligence programme. This paper, however, determined that the standard due diligence measures and the enhanced due diligence measures of Marks and Spencer Group Plc. are effective enough to identify/assess the risk(s) of modern slavery in the supply chains because Marks and Spencer adopts diverse methods/methodologies for her due diligence programme. This paper also determined that both Anglo American Plc. and Marks and Spencer Group Plc. adopt diverse methods for the monitoring of their corrective action plans which are designed to mitigate the modern slavery risk(s) associated with high-risk suppliers. For example, Anglo American Plc. monitors anti-modern slavery compliance with the use of both internal Anglo American teams and third-party auditors to ensure that the identified issues are adequately addressed.

Research limitations/implications

This paper focuses on Section 54 of the UK Modern Slavery Act 2015 and the Modern Slavery Statements of Anglo American Plc. and Marks and Spencer Group Plc for the year 2017/18.

Originality/value

Several articles have been published on this topic. Among them, is an article by Stefan Gold, Alexander Trautrims and Zoe Trodd titled “Modern slavery challenges to supply chain management”, Supply Chain Management: An International Journal, Vol. 20 Issue: 5, pp.485-494 and an article by Stephen John New titled “Modern slavery and the supply chain: the limits of corporate social responsibility?”, Supply Chain Management: An International Journal, Vol. 20 Issue: 6, pp.697-707. The article by Stefan Gold, Alexander Trautrims and Zoe Trodd drew attention to the challenges modern slavery poses to supply chain management. Although the article briefly talked about the risk-based approach to monitoring supply chains for slavery, it did not discuss about the due diligence measures that UK firms are required to apply during risk identification and risk assessment, and the risk mitigation measures that will address the risk(s) that have been identified. The article by Stephen John New examines legal attempts to encourage supply chain transparency and the use of corporate social responsibility methods. Though the article mentions the UK Modern Slavery Act 2015, more attention was paid to the California Transparency in Supply Chains Act [S.B. 657], State of California, 2010), enacted in 2011 and in effect from 2012. The article analysed the California Act without critically discussing the risk assessment procedures for UK companies. In addition to discussing the different stages of the risk assessment/risk management process, this paper will examine the modern slavery statements of Anglo American Plc. and Marks and Spencer Group Plc. This paper will provide recommendations on how the risk assessment/risk mitigation measures of both companies could be strengthened. This is the only paper to adopt this kind of approach. The analysis/recommendations in this paper will help UK companies to design effective due diligence procedures for their supply chain.

Details

Journal of Financial Crime, vol. 27 no. 2
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 27 June 2020

Ehi Eric Esoimeme

This paper aims to help build awareness with financial institutions about the money laundering risks posed by individuals who have been unknowingly recruited as Money…

Abstract

Purpose

This paper aims to help build awareness with financial institutions about the money laundering risks posed by individuals who have been unknowingly recruited as Money Mules and the measures that financial institutions can adopt to detect illicit funds which are being received into the bank accounts of low risk or medium risk customers who are unknowingly recruited as “Money Mules”.

Design/methodology/approach

The research took the form of a desk study, which analysed various documents and reports such as a 2019 report on Money Mules by the European Union Agency for Law Enforcement Cooperation (EUROPOL); a 2019 and 2020 report on Money Mules by the Federal Bureau of Investigation (FBI) and the Better Business Bureau (BBB); the Financial Action Task Force Guidance on the Risk Based Approach to Combating Money Laundering and Terrorist Financing (High Level Principles and Procedures) 2007; the Financial Action Task Force Recommendations 2012; the United Kingdom’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017; the United States Federal Financial Institutions Examination Council Bank Secrecy Act/Anti-Money Laundering Examination Manual 2014; Transparency International Corruption Perceptions Index 2018; The UK Proceeds of Crime Act 2002 (as amended); the Joint Money Laundering Steering Group JMLSG, Prevention of money laundering/combating terrorist financing: Guidance for the UK financial sector Part I June 2017 (Amended December 2017); the United States Codified Bank Secrecy Act Regulations (31 CFR); the Nigerian Money Laundering Prohibition Act 2011 (as amended); and the Joint Money Laundering Steering Group JMLSG, Prevention of money laundering/combating terrorist financing: Guidance for the UK financial sector Part II: Sectoral Guidance June 2017 (Amended December 2017).

Findings

This paper determined that financial institutions may be able to prevent proceeds of crime from being laundered by individuals who have been unknowingly recruited as Money Mules if they focus monitoring resources on the emotionally vulnerable customers like newcomers to the country, unemployed people who may have lost their jobs because of a pandemic like COVID-19, students and those in economic hardship; pay very close attention to the country of origin where the funds emanate from; pay very close attention to the country where the funds are being transferred to; and pay close attention to frequent large cash deposits followed by wire transfers.

Originality/value

While most articles focus on the money laundering risk(s) associated with Money Mules and the measures that individuals can use to ensure that their bank accounts are not used by criminals to launder illicit funds, this paper focuses on the different mechanisms that banks can use to detect illicit funds which are being received into the bank accounts of low risk or medium risk customers who are unknowingly recruited as “Money Mules”. This paper recommends a proportional approach that balances anti-money laundering measures, financial inclusion and human rights. The mechanisms/measures which have been extensively discussed in this paper will help banks to identify, assess and understand their money laundering and terrorist financing risks as it relates to Money Mules and take commensurate measures to mitigate them.

Details

Journal of Money Laundering Control, vol. 24 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 20 January 2020

Ehi Eric Esoimeme

The purpose of this paper is to critically examine the anti-money laundering measures of the UK and Nigeria, to determine what the best approach is. The best approach is…

Abstract

Purpose

The purpose of this paper is to critically examine the anti-money laundering measures of the UK and Nigeria, to determine what the best approach is. The best approach is likely the one that strikes a fair balance between protecting the financial system against money laundering and promoting financial inclusion.

Design/methodology/approach

This paper relies mainly on primary and secondary data drawn from the public domain. It also relies on documentary research.

Findings

This paper critically analysed the anti-money laundering measures of the UK and Nigeria to determine that the anti-money laundering measures of Nigeria does not strike a fair balance between protecting the financial system against money laundering and promoting financial inclusion because it does not expressly provide for verification of a customer’s identity at the account opening stage for low risk accounts. The paper, however, determined that the anti-money laundering measures of the UK does strike a fair balance between protecting the financial system against money laundering and promoting financial inclusion because it requires customer identification and verification before the establishment of a business relationship for customers who want to open a basic bank account.

Research limitations/implications

This paper focuses on the anti-money laundering and financial inclusion measures in the UK’s Payment Accounts Regulations 2015 and the Central Bank of Nigeria’s (Anti-Money Laundering and Combating the Financing of Terrorism in Banks and Other Financial Institutions in Nigeria) Regulations, 2013.

Originality/value

This paper offers a critical analysis of the anti-money laundering and financial inclusion measures of the UK and Nigeria as provided in the UK’s Payment Accounts Regulations 2015 and the Central Bank of Nigeria’s (Anti-Money Laundering and Combating the Financing of Terrorism in Banks and Other Financial Institutions in Nigeria) Regulations, 2013. The paper will provide recommendations on how the measures could be strengthened. This is the only article to adopt this kind of approach.

Details

Journal of Money Laundering Control, vol. 23 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 17 January 2020

Ehi Eric Esoimeme

This paper aims to critically analyse the existing framework on assets tracing and recovery in Nigeria. It will thereafter provide analysis of the asset and recovery…

Abstract

Purpose

This paper aims to critically analyse the existing framework on assets tracing and recovery in Nigeria. It will thereafter provide analysis of the asset and recovery measures of advanced countries such as the USA and the UK. The results from the analysis will yield maximum insight and help the Nigerian Government to make better policies and laws on assets tracing and recovery.

Design/methodology/approach

This paper will rely on primary and secondary data drawn from the public domain. It will also rely on documentary research.

Findings

This paper determined that the Nigeria asset recovery scheme is likely to be more effective if Nigeria adopts the approach of the UK and the USA.

Research limitations/implications

This paper will suggest new ways for assets tracing and recovery. The suggested approaches/methods are being used in advanced countries such as the UK and the USA.

Originality/value

Previous research papers have extensively discussed the problems faced with assets tracing and recovery from a prohibitive and investigative standpoint. This paper will discuss the topic from a preventive standpoint with little focus on investigative mechanisms.

Details

Journal of Financial Crime, vol. 27 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 2 October 2017

Ehi Eric Esoimeme

Following the drop in crude oil prices from a peak of US$114 per barrel in July 2014 to as low as US$33 per barrel in January 2016, the country’s reserves have suffered…

Abstract

Purpose

Following the drop in crude oil prices from a peak of US$114 per barrel in July 2014 to as low as US$33 per barrel in January 2016, the country’s reserves have suffered great pressure from speculative attacks, round tripping and front loading activities by actors in the foreign exchange (forex) market. The fall in oil prices also implied that the Central Bank of Nigeria’s (CBN) monthly foreign earnings had fallen from as high as US$3.2bn to current levels of as low as US$1bn. The net effect of these combined forces unfortunately is the depletion of the nation’s forex reserves. As of June 2014, the stock of forex reserves stood at about US$37.3bn but has declined to around US$28.0bn as of today. To avoid further depletion of reserves, the CBN adopted a number of policies including the prioritisation of the most critical needs for forex. This paper aims to critically analyse the effects of these policies on financial inclusion, anti-money laundering (AML) measures and human rights. Its aim is also to determine whether CBN’s Forex Policy does strike a fair balance between financial stability, inclusion, AML measures and human rights.

Design/methodology/approach

This paper relies mainly on primary and secondary data drawn from the public domain. It also relies on documentary research.

Findings

This paper determined that the CBN forex policy does not strike a fair balance between financial stability, inclusion, AML measures and human rights.

Research limitations/implications

This paper focuses on the effect of the most recent CBN Forex Policies on financial inclusion, AML measures and human rights. It does not address the older policies. Also, it does not address other vulnerable groups like low-income households. Its focus is on the under-served group.

Originality/value

While many have written papers on CBN’s forex policies, none of those papers critically analysed the effects of these policies on financial inclusion, AML and fundamental rights. The Lagos Chamber of Commerce and Industry, for example, analysed the impact of these polices on the financial services sector; the manufacturing sector; food and household products; tyre and rubber industry; pharmaceutical sector, oil and gas sector; free trade zone sector; furniture manufacturers; and foam manufacturers. It made no mention of inclusion, money laundering and fundamental rights. Also, Vincent Haruna analysed the effect of these policies on Nigerians, particularly those engaged in international trade, and those who have children studying abroad. He neither specifically addressed financial inclusion nor did he make any mention of human rights and money laundering.

Details

Journal of Money Laundering Control, vol. 20 no. 4
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 28 January 2020

Ehi Eric Esoimeme

The purpose of this paper is to propose a new approach to curbing pension fraud in Nigeria. The approach involves the use of anti-money laundering tools, procedures and…

Abstract

Purpose

The purpose of this paper is to propose a new approach to curbing pension fraud in Nigeria. The approach involves the use of anti-money laundering tools, procedures and expertise to advance the fight against pension fraud in Nigeria. The guidance is non-binding and does not override the purview of the National Pension Commission. The intention is to build on the revised procedures on the processing of death benefits and to complement existing circulars and guidelines issued by the National Pension Commission, including in particular the guidelines for compliance officers.

Design/methodology/approach

The analysis took the form of a desk study, which analyzed various documents and reports, such as the Financial Action Task Force (2012-2018), International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation (the FATF Recommendations); the Financial Action Task Force Guidance on the Risk-Based Approach to Combating Money Laundering and Terrorist Financing: High Level Principles and Procedures; National Pension Commission Regulations for Compliance Officers; the Joint Money Laundering Steering Group Guidance for the United Kingdom Financial Sector Part I, June 2017 [Amended December 2017] and the Federal Financial Institutions Examination Council (FFIEC) Bank Secrecy Act/Anti-Money Laundering Examination Manual 2014.

Findings

This paper determined that a strong due diligence process where the owner of the pension account and the next-of-kin/legal beneficiary are duly identified before the establishment of a business relationship is capable of reducing the risks associated with pension fraud to the barest minimum. This paper also determined that anti-money laundering measures, such as record keeping, suspicious transactions reporting, training for anti-fraud/money laundering compliance and an independent audit of systems and controls can help curb pension fraud.

Research limitations/implications

Pension fraud involves the use of deceit or misrepresentation in connection with a pension claim. There are many different kinds of pension fraud, but the type where the fraud is aimed at stealing a person’s pension funds is what this paper is concerned with.

Originality/value

Although most publications on pension fraud are focused on anti-fraud measures, this paper focuses on the anti-money laundering measures which can be used by Pension Fund Administrators to curb pension fraud.

Details

Journal of Financial Crime, vol. 27 no. 4
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 1 October 2018

Ehi Eric Esoimeme

This paper aims to compare the prepaid card laws/regulations in Nigeria, the UK, the USA and India with the aim of determining the best approach to regulating prepaid…

Abstract

Purpose

This paper aims to compare the prepaid card laws/regulations in Nigeria, the UK, the USA and India with the aim of determining the best approach to regulating prepaid cards, that is the approach that promotes financial inclusion and also makes the product less attractive for money laundering.

Design/methodology/approach

This paper relies mainly on primary and secondary data drawn from the public domain. It also relies on documentary research.

Findings

This paper makes the following findings and recommendations: Nigeria has the best approach to regulating providers of prepaid cards. Nigeria’s approach could foster financial inclusion and at the same time mitigate the money laundering risks associated with prepaid cards. Nigeria’s approach is not too strict like the Indian approach and it is not too relaxed like the UK and the USA approach. Operators, including mobile/telecommunications operators, wishing to operate money transfer schemes in Nigeria are allowed to do so with approval from the Central Bank of Nigeria and in strict conjunction with licensed deposit-taking banks or financial institutions. The UK, the USA and India are recommended to adopt Nigeria’s approach. The UK and the USA have the best approach to regulating agents of prepaid cards. Both countries require prepaid card providers to maintain a current list of agents and make it available to the relevant authorities upon request. The approach allows regulatory agencies to effectively monitor and supervise prepaid card agents. India and Nigeria are advised to clarify their approach regarding the regulation of prepaid card agents. The prepaid card laws/regulations of those countries should be modified to specify if the agent of a prepaid card provider is required to be licensed or registered by a competent authority or if the prepaid card provider (the principal) is required to maintain an updated list of agents which must be made accessible to a designated competent authority, when requested. The new changes will afford regulatory authorities the opportunity to effectively monitor and supervise prepaid card agents. India’s approach to thresholds would preclude most individuals in the intended target market from accessing basic financial products, as most people typically do not have residential addresses that could be confirmed by reference to formal documentation. India should adopt the “risk-based approach” and not the “wholesale de-risking approach”.

Research limitations/implications

Given their low-risk characteristics, closed-loop cards, specifically cards which do not allow reloads or withdrawals, remain outside the scope of this paper.

Originality/value

Although there have been researchers who adopted the comparative approach like Jean J Luyat and Will Cain, the comparative approach adopted by those researchers was not detailed enough and also was not aimed at seeking to answer the research question in Section 1 of this paper. Both writers focused on only the aspect of financial inclusion making the whole research a one-sided approach. Jean J Luyat focused on “how regulation had an impact on the development of prepaid cards in Japan and Europe”. He was able to discover that prepaid cards were growing rapidly in Japan but not gaining acceptance as a payment method in the European Union (EU) and France. He aligned such growth in Japan to different factors including regulation. He stated that Japan had a simple and flexible regulatory framework compared to the EU and France which have a complex regulatory system with strict prudential requirements. Nothing was said about the money laundering aspect of such regulation and neither was anything said about thresholds and other optional recommendations canvased by the Financial Action Task Force. The Electronic Money Directive referred to by Jean J Luyat has already been repealed and a second Electronic Money Directive is in place. A comparative approach is adopted in this research seeking to compare the approach in Nigeria with that of the UK, the USA and India. Each of these countries adopted different approaches. The results are to help answer the research question in Section 1 of this paper. The countries were selected on the basis of how strict their regulatory regime is. India’s regulatory regime is the strictest while the UK and the USA are the most lenient. Nigeria is caught in between strict/lenient.

Details

Journal of Money Laundering Control, vol. 21 no. 4
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 2 July 2018

Ehi Eric Esoimeme

This paper aims to examine the new anti-corruption policy of the National Judicial Council of Nigeria to determine the level of effectiveness of its preventive measures…

Abstract

Purpose

This paper aims to examine the new anti-corruption policy of the National Judicial Council of Nigeria to determine the level of effectiveness of its preventive measures and to provide recommendations on how the policy could be strengthened.

Design/methodology/approach

This paper relies mainly on primary and secondary data drawn from the public domain. It also relies on documentary research.

Findings

This paper determined that the anti-corruption policy of the National Judicial Council of Nigeria could achieve its desired objectives if the following recommendations are implemented: The Central Bank of Nigeria should permanently discontinue production of large denomination bank notes like the 1,000 naira notes and the 500 naira note. This policy will make it more difficult for corrupt judicial officers to smuggle significant amounts of cash out of Nigeria. The Constitution of the Federal Republic of Nigeria should be amended to allow ordinary citizens to participate in the criminal justice system. The jury system will speed up corruption trials, reduce bias, corrupt inducement of judges and enhance administration of justice in Nigeria. Statutes and civil procedure rules should require lawyers to certify “after reasonable enquiry” that motions have not been interposed for delay. As most courts experience high rates of adjournment because of medical illness, the adjournment policy of the National Judicial Council of Nigeria should be amended to require a doctors’ certificate and, if necessary, require the doctor to appear, with costs met by the lawyer. The National Judicial Council of Nigeria should be constitutionally mandated to provide the Attorney General of the Federation with a copy of any petition filed against a judicial officer by a member of the public.

Research limitations/implications

This paper focuses on the new anti-corruption policy of the National Judicial Council of Nigeria. It does not address the older policies.

Originality/value

This paper offers a critical analysis of the new anti-corruption policy of the National Judicial Council of Nigeria. The paper will provide recommendations on how the policy could be strengthened. This is the only paper to adopt this kind of approach.

Details

Journal of Money Laundering Control, vol. 21 no. 3
Type: Research Article
ISSN: 1368-5201

Keywords

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