Highlights Of The Money Laundering (Prevention And Prohibition) Act 2022
The Money Laundering (Prevention and Prohibition) Bill, 2022, was signed into law by President Muhammadu Buhari. 1. The Money Laundering (Prohibition) Act 2011 was repealed by the Money Laundering (Prevention and Prohibition) Act 2022 (the "Act") (the "2011 Act").
The Act's aims, according to section 1, include enhancing and strengthening Nigeria's current legal and institutional framework for fighting and preventing money laundering. We will closely highlight the Act's noteworthy provisions.
Virtual Assets
The Act includes provisions for virtual assets, which corresponds to the current growth of digital currencies such as Bitcoin and others. Section 30 of the Act defines virtual assets as "digital representations of value that can be digitally exchanged or transferred and utilized for payment or investment purposes," but excludes digital representations of fiat currencies, securities, and other financial assets.
Expansion of Financial institutions' reach
One of the Act's major highlights is the expansion of the definition of "financial institutions" to include virtual asset service providers, as well as "designated non-financial businesses and professions" to include businesses in the hospitality industry, dealers in mechanized farming equipment, farming equipment and machinery, dealers in precious metals and precious stones, dealers in real estate, estate developers, estate agents and brokers, high-value dealers, and molecular biologists.
Special Control Unit against Money Laundering (SCUML)
The statutory recognition of SCUML, which was established by the Federal Government in 2005 under the Federal Ministry of Industry, Trade, and Investment, is one of the Act's milestones. SCUML collaborates closely with the Economic and Financial Crimes Commission (EFCC).
The SCUML is in charge of ensuring that non-designated financial enterprises and professions comply with the Act's obligations.
Penalty for money laundering violations
It is important to bear in mind that under the 2011 Act, an individual who commits the act of money laundering faces up to 7 years in imprisonment or a fine of up to 100% of the profits of the offence, or both.
However, the 2022 Act makes such a person subject to imprisonment for at least four years or a fine of at least five times the amount of the proceeds of the crime, or both. Corporate bodies who commit money laundering offenses face a penalty of not less than five times the value of the profits.
New technology, goods, and business strategies are being evaluated.
Financial institutions, as well as non-designated businesses and professions, are required to detect and analyze money laundering and terrorism funding risks that may arise as a consequence of the development of new technology, business practices, and products. To carry out this commitment effectively, the relevant Institutions must conduct risk assessments and implement acceptable risk management and mitigation procedures.
Attorney-client confidentiality
Communications between an attorney and clients regarding briefs or instructions handled by the attorney are protected under Section 192 of the Evidence Act and Rule 19 of the Rules of Professional Conduct, 2007. As a result, such correspondence cannot be divulged by the attorney unless the client consents.
However, the Act states that attorney-client privilege does not apply to the following transactions: the purchase or sale of real estate, the purchase or sale of a business, the management of client money, securities, or assets, the opening or management of bank, savings, or securities accounts, the creation or management of trust companies or similar structures, or the proceeds of an unlawful act.
Casinos
The Act requires casinos to report data on consumer financial transactions to the Special Control Unit against Money Laundering.
Persons with political influence
According to the Act, financial institutions and non-designated financial enterprises and professions must develop methods for identifying whether a client or a customer's beneficiary is politically exposed.
Section 4(8) also stipulates that if a customer is a foreign politically exposed person, financial institutions or non-designated financial businesses and professions must seek and obtain senior management approval before establishing or continuing such business relationship, identify the source of income of such foreign politically exposed person or their beneficiaries, and conduct ongoing monitoring of the relationship.
The foregoing requirements also apply to domestic politically exposed people with whom there is a high-risk business connection.
Customer identification
The Act requires financial and designated non-financial firms and professions to take reasonable steps to identify and authenticate their clients, as well as anybody claiming to act on their behalf.
International money, securities, and cash transfers
Section 3(1) of the Act states that any transfer of funds, securities, or cash in excess of $10,000 to or from a foreign country by a corporate body must be reported to the Central Bank of Nigeria, the Securities and Exchange Commission, and the Economic and Financial Crimes Commission within one day (the 2011 Act required such transfers to be reported within seven days).
Separate transaction execution:
Any single transaction in excess of N5,000,000 or its equivalent for individuals and N10,000,000 or its equivalent for corporate bodies must be reported to the Nigerian Financial Intelligence Unit and Special Control Unit against Money Laundering ("SCUML") by financial institutions and designated non-financial businesses and professions. Section 30 of the Act defines "designated non-financial business and profession" as automotive dealers, hospitality businesses, casinos, clearing and settlement companies, consulting firms, real estate dealers, high value dealers, legal practitioners, licensed professional accountants, tax consultants, and so on.
It should be noted that Section 2(2) of the Act clearly forbids splitting a single transaction into two or more distinct transactions in order to avoid reporting such transaction. Prior to the Act's passage, some people used transaction splitting to avoid reporting transactions that fell inside the specified monetary levels.