Nigeria – The African most populated giant Nation well-known for wrong reasons

There is a paper entitled “The Devastating impact of Money Laundering and other Economic and Financial Crimes on the Economy of Developing Countries: Nigeria as a Case Study” by Yusuf and Ibrahim from the International Islamic University Malaysia. The paper makes very interesting reading. You are encouraged to read, if you have a moment to spare. You can google it up in PDF.

The paper argues that Economic and financial crimes represent a dangerous form of criminal behaviour that affects not only individual members of a society but also having deleterious effects on the economic, health and material welfare of the community as a whole. Economic and financial crimes are non-violent criminal practices which are tantamount to sabotage of the national economy. This is because of the impact of these offences on the social well being and economic foundation of any nation.

This paper examines the general consequences of economic and financial crimes especially money laundering on the economy of the developing countries using Nigeria as a case study. The study finds that the common characteristic of the effects of economic and financial crimes in the developing countries is its tendency to undermine a nation economy which in turn often results in decelerated improvement in the quality of life of citizens and paving way for economic cum political stagnation. This finding represents a major problem Nigeria like many other developing countries is presently grappling with as a result of the prevalence of economic and financial crimes. The paper concludes by recommending a strong legal regime coupled with political will to combat the menace and minimise its devastating consequences.

In Section 3.1 pertaining to CONSEQUENCES OF ECONOMIC AND FINANCIAL CRIMES IN NIGERIA, some very alarming figures are mentioned. The gloomy picture reminds us of many other African Countries like Congo, Angola, Zambia, Sudan and Zimbabwe with God Given Natural Resources. The paper states, “In spite of Nigeria’s enormous oil and gas deposit and abundant human resources, the nation is still a poor country with 80-90 million Nigerians out of the 140 million population living in abject poverty. For the past four decades, over $300 Billion was earned from oil exports but paradoxically Nigeria’s current per capital income is about 20% less than the 1975 level while the nation suffers under an excruciating external debt burden of about $33 Billion, equivalent of 60% of the nation’s GDP”.

The pathetic consequences of economic and financial crimes in Nigeria is well captured by Nuhu Ribadu, the former Executive Chairman of the Economic and Financial Crimes Commission (EFCC) Nigeria, when he disclosed thus; ” Without seeking to befog you with statistics, let me share a few example of what corruption has cost us as a people and as a nation. My pet example is the £ 20 Billion Pounds (about $500 Billion) of development assistance that has been stolen from this country since independence to date by past leaders of our country …the money could create the beauty and glory of Western Europe six times all over Nigeria. Nigerians line at the gate of Western Embassies daily in search of visas to flee the country, but the best way to appreciate this figure is to recall that it represents six times the value in money that went into rebuilding Europe via the famous Marshal at the end of the 2nd World War.

We all need to seriously introspect, reflect on the Africa’s current and future states. Bribery, corruption, money laundering and plunder of the African Mineral and Natural Resources by those entrusted with Political power need close monitoring and demand transparency and accountability from the Leaders. Stay well and be blessed. – Kemman Consultancy

Fraud – One of the Oldest Human Occupation

Apart from prostitution, fraud is also among the oldest human occupations. Ever since the Christian Biblical story of Jacob obtaining Isaac’s (his father’s) blessings by deceiving Isaac in connivance with his mother through a well orchestrated and executed fraudulent scheme of impersonating his brother Essau, the efforts and energies spent by some human beings to get something for nothing has been a recurring theme in literature.

Those who may have attended Sunday and Sabbath Schools or have read the Holy Book called the Bible, are reminded that the oldest fraud is told in the Book of Genesis Chapter 27. Under many modern States and using the current Statutes, Jacob and his mother Rebecca depending on so many factors including political will at the top could have been charged with conspiracy, impersonation with intent to defraud and indeed obtaining blessings by false pretenses.

Other professional colleagues may also argue that many penal and judicial systems in this unjust world, the duo would have been probably acquitted due to unending court gymnastics, adjournments, legal technicalities and political inclinations or connections to the corridors of power.

Fraud is a generic term for behavior, which involves deception by one party of another. Although the law relating to fraud differs in separate jurisdictions there are common threads, which identify behavior as fraudulent. These will include the practicing of a deception, the dishonesty of the person practicing the deception, the obtaining of property and/or the intention of interfering with another person’s lawful right to deal with property as he wishes. The number and variety of legal definitions of fraud and like criminal offences are too voluminous to repeat here and those can be discussed later.

Fraud involves deliberate criminal intent and deception. Fraud is any intentional act or omission designed to deceive others, resulting in the victim suffering a loss and/or the perpetrator achieving a gain. Some of the salient elements in Fraud are;

  1. Knowing submission of false representation or concealment (knowledge)
  2. Specific intent to deceive (deception)
  3. Detrimental reliance (losing money or assets)
  4. Potential/Damage/loss to other members, individuals, groups, Bank or financial institution or organization.

Fraud is defined as any loss or attempt to cause loss involving deception. I wish to submit that just like in corruption cases sheer dishonesty and greed, not necessarily the amount of salary or wages one gets per month counts. When it comes to the question of money, do not trust anyone, and not even yourselves. This is the reason we can have a very honest and trustworthy Government Office orderly and or messenger but have a greedy, craft and dishonest Church Bishop and Government Minister. We have heard of several high-ranking people involved in what my grandmother would only term as embarrassing and shameful activities.

Why would such a situation arise? In white–collar crime, the potential rewards are much greater than in blue collar crime. The risk of detection is lower, successful prosecution is more difficulty as one is able to summon the whole mighty platoon of the best Legal brains in the Country, state counsels and Senior Legal men and women to raise preliminary issues in courts of law, apply a dozen of injunctions, a couple of Legally challenging objections and adjournments for years on end whilst the loot is diminishing and being shared.

The resultant effect is that the penalties are less severe. What do you expect with “deliberately ill equipped and with no adequate logistical, technological and financial resources” and largely ALLEGED and presumed to be often corrupt Law Enforcement Agencies and Officers who would rather have a drought and poverty stricken but hungry villager who has stolen a cob of maize or a village chicken (free-range chicken) be convicted for five years in prison with hard labor than let the twit swindler of colossal sums of money go scot-free under the pretext of the case being technical, complex or non-pursuable. These are all sound “business” propositions and reasons for fraudsters to put their efforts into fraudulent activities. Those engaged in such criminal activities are many. It is BIG business. To be continued. Like dirt, crime accumulates.

Why Banks carry out Enhanced Due Diligence (EDD) on Politically Exposed Persons (PEPs)

Some few salient points for further debate, discussion and dialogue. In my book, Financial Crime Risk Management and Compliance (2016) , I have provided some simpler working definitions for everyone to be on the same page.

Money Laundering (ML) is the process by which criminals attempt to conceal or disguise the ownership and origin of the proceeds of criminal activity so that the funds appear to be derived from legal sources. Money Laundering (ML) process therefore does not make the funds legitimate or become clean, it just makes them appear to be legitimate or clean. It still remains dirty money.

Customer Due Diligence (CDD) is a process where Financial Institutions such as Banks, Insurance Companies, Securities, FinTech companies and Broking firms collect, maintain, periodically review and update information and data about their individual clients, corporate, commercial and Institutional customers. Customer Due Diligence (CDD) process is a Legal and Regulatory requirement to allow an informed choice to be made whether to onboard a new customer, continue with an existing customer relationship, or provide a new product or service or in worst case scenario, deny/reject the service and exit the relationship and close the Client’s or Bank account. It is also one of the most powerful and available tools at the banks disposal to prevent and deter financial criminals and terrorist financiers from using the banks as conduits to conduct their illegal activities.

So that is what ‘Customer Due Diligence’ (CDD) means – it’s the information the Banks must have to get on their clients before they open accounts for them and the way in which Banks verify that the information is true. It’s worth running through the process at a high level.

In essence, at account opening the Banks must first and they actually do screen all potential new customers against the ‘Watch list’ which ALL Banks across Globe maintain. Those Databases and Watch lists contain listing of persons and entities who are banned by the UN and various other authorities of which the Banks take note, from receiving financial services. The level of AML risk in the relationship is assessed according to the criteria of country or geographic risk, customer risk (including business type risk) and product risk.

Thereafter, Banks requirements are that customers are assigned into either the Standard Due Diligence (SDD) or Enhanced Due Diligence (EDD) categories, with appropriate action on information and verification then taken in accordance with the detailed business (Corporate, Institutional or Retail Customers CDD procedures). Some Banks have Lower Levels of Due Diligence depending on the Customers.

As Regulated Institutions by the Securities and Exchange Commission, FIC, Central Banks, Commercial, Retail, Community and Merchant Banks are expected to have clearly documented AML, KYC and CDD Policies and Procedures.

Now, regarding the question pertaining to Politically Exposed Persons (PEPs). This is a category of high risk customer which receives particular attention amongst the various international standards and guidelines (FATF 40, BIS, Wolfsburg, EU Third Directive, USA Patriot Act) is that of Politically Exposed Persons (PEP’s).

A PEP is defined by many Financial Institutions and Regulators as “…an individual who is or has, at any time , been entrusted with prominent public functions and an immediate family member, or a known close associate, of such a person.”

From the definition above, you will agree that PEP is not equal to Politicians, it extends to those appointed to higher Offices such as Commanders of the various Forces. PEP covers spouses, Children, friends and business associates of high ranked Citizens in whose names, a deal or bribe can be bequeathed. Lol!

Why are PEPs considered higher risk from an anti-money laundering perspective? The reasons stem mostly from the high profile which such individuals hold. They tend to attract a great deal of interest from business people, some of whom may have criminal connections or may even be criminals themselves. They often have substantial decision making powers (or, in democratic states, the prospect of obtaining these powers through the political process) including the power to allocate vast state funds to particular companies through the award of government contracts, and this therefore makes them vulnerable to bribery and corruption.

In Zambia a former Minister in Zambia once disclosed to the Nation on TV that the money he used to make out of the Copper Mines, was enough for him to fly to London, drink tea and come go back to Zambia in the evening – paraphrased). One former Defense Minister then during some altercations with Secretary General of a Zambian Political Party told the nation that he did join Politics to enhance his businesses and make money. One old , but now late politician in Zambia confessed that very few join politics to serve the people, they join in order to eat. He called the trend as the “Politics of the Belly”. The list goes on.

PEPs, in the worst instances, they may even themselves be of a criminal disposition where upon they will be well placed to misappropriate public funds. Finally, of course, by virtue of their positions they will likely be in possession of sensitive non public information which can allow them to benefit in a criminal manner at the expense of others (e.g. insider trading).

And because PEP’s are aware of the scrutiny which their activities are likely to be subject to, their use of family members, associates and, in some cases, ostensibly unknown “fronts” and Chola boys/smurfs as conduits through which to conduct their transactions and escape scrutiny, is often widespread and , of course, open to abuse, should temptation get the better of them.

FATF Recommendation number 6 and other relevant standards state that financial institutions should, in relation to politically exposed persons, and in addition to performing normal due diligence measures must have appropriate risk management systems to determine whether the customer is a politically exposed person.

The Banks must Obtain senior management approval for establishing business relationships with such customers, take reasonable measures to establish the source of wealth (SOW) and source of funds (SOF); and Conduct enhanced on-going monitoring of the business relationship.

On this very website and other social media platforms, I have shared and will continue to share some practical examples of actual Court Cases of PEPs arrested, prosecuted and convicted for bribery, corruption and money laundering cases. I deliberately took examples from the Continent of Asia and shared recently. We have several in Africa and Latin America and will share those together with Europe and North America very soon.

Pan-Africanism and call for Unity in Diversity

There appears to be some new wave and breeze of yet another “dispensation” sweeping across the entire Continent of Africa. It may not happen just yet, soon or now, but the momentum has been fermenting, brewing and many can smell the Coffee before long.

I now share some among many critical VOICES on the Continent of Africa and for the Continent of Africa which we may need to pay particular attention to in 2020 and beyond. The Call for the Africans and Africans in Diaspora to Unite, the call for the Pan-African renaissance, Unity in numbers and diversity has been very strong. I will mention a few with shot bios. We can ADD some more on to this list and give reasons why we should pay particular attention to their uplifting message of encouragement and hope. In no particular order;

Julius Sello Malema – a South African politician who is a Member of Parliament and the leader of the Economic Freedom Fighters (EFF), a South African political party, which he founded in 2013. He previously served as President of the African National Congress Youth League from 2008 to 2012. His incessant call for the Africans to Unite is no longer a lonely voice.

Professor Patrick Loch Otieno Lumumba (PLO) – Advocate of the High Courts of Kenya & Tanzania. Law Lecturer at the Faculty of Law, University of Nairobi and the Director of The Kenya School of Laws since the year 2014. Former Director of the Anti-Corruption Bureau/Commission in Kenya and founder of PLO Lumumba Foundation. His voice on African history, passion for Pan-African Movement and Leadership is worth paying attention to.

Bishop Joshua Maponga, a Seventh Day Adventist (SDA) preacher and motivational speaker. Joshua Maponga III – graduated with a degree in Philosophy (BA theology) & Personal Ministries. Specialization include banking, non-profit organizations, project management, and branding. Has ministered in South Africa, Kenya, Zimbabwe, Nigeria, Botswana, and Lesotho. Joshua worked for ABSA, World Vision, SALGA, SAPS, SAPO, PRASA, and Milpark College. Philosopher, leader, musician, and social entrepreneur working with Vision Design House, Global Management Centre (UK), and EDSA (Entrepreneurial Development Southern Africa). His views on Ubuntu and African way of living, values and traditions including religion is interesting.

Gen. Paul Kagame (PK) – Current President of Rwanda. Assumed power as the sixth president in 2000, when the then President, Pasteur Bizimungu resigned. Before taking office, Paul Kagame had served as the Minister of Defense and later as the Vice President. His style of leadership as a strong man (discipline) is transforming Kigali and Rwanda.

Dr. John Pombe Magufuli – Current President of Tanzania. Chairman of SADC. He served as MP and Deputy Minister of Works, Minister of Works, Minister of Lands and Human Settlement, Minister of Livestock and Fisheries and as Minister of Works for a second time from 2010 to 2015. A former school teacher, industrial chemist. Dr – PHD holder “bull-dozing” and transforming Tanzania in his own unique way.

Dr. Amb. Arikana Chihombori-Quao – Her Excellence, Dr. Nkosazana Dlamini Zuma, asked Dr. Arikana Chihombori-Quao to become the African Union Ambassador to the U.S. Now President, Africa Diaspora Development Institute (ADDI), Dr. Arikana Chihombori-Quao, Ghanaian National, Zimbabwean by heritage, resident in US, but Pan African by thought and action. Medical doctor and activist, public speaker, educator, diplomat, founder of medical clinics, and an entrepreneur, CEO & founder of Bell Family Medical Centers in the US. in 2017. Her voice on the Francophone Africa is worth listening to.

Professor Arthur G.O. Mutambara – Former Deputy Prime Minister (DPM) of the Republic of Zimbabwe – An independent technology & strategy consultant. A Robotics & Mechatronics Professor. His concentration in the areas of Artificial Intelligence (AI), Intelligent Algorithms (IA), Augmented Reality (AR), Big Data, Internet of Things (IoT), Internet of Everything (IoE); and their impact in Mining, Manufacturing, E-Commerce, Media, and Medicine. A Chartered Engineer, a Fellow of the Institute of Engineering and Technology (IET), a Professional Engineer, a Fellow of the Zimbabwe Institute of Engineers (ZIE), a Fellow of the Zimbabwe Academy of Sciences (ZAS), and a Senior Member of the Institute of Electrical and Electronic Engineering (IEEE). Ex-Director of Electronic Payments at Standard Bank in South Africa. In USA he was a Research Scientist at the National Aeronautics and Space Administration (NASA), Visiting Professor at the Massachusetts Institute of Technology (MIT), Professor at the Florida Agricultural and Mechanical University – Florida State University (FAMU-FSU) College of Engineering, and a Management Consultant with McKinsey & Company. He has written two electrical engineering books that are widely used in engineering graduate schools in the US, Europe, China, Japan and Africa: Decentralized Estimation and Control for Multisensor Systems, and Design and Analysis of Control Systems. Prof Mutambara holds a PhD in Robotics and Mechatronics and an MSc in Computer Engineering, both from the University of Oxford, where he was a Rhodes Scholar. He graduated with a BSc (Honours) in Electrical Engineering from the University of Zimbabwe. In 2007, Mutambara was accorded the World Economic Forum (WEF) Young Global Leader status, and subsequently attended WEF events, from 2007 to 2013, in Davos (Switzerland), China, India and Africa. His voice on the Fourth Industrial Revolution in Africa is imperative. Let us ADD more names please.

The Presidential Royal Asian Tigers Greed

Over the last 30 years, the amount of money laundered has steadily been increasing. The United Nations Office on Drugs and Crime approximately estimated that the amount of money laundered globally in one year is 2 – 5% of global GDP, or $2 trillion in current US dollars. Less than one percent of this global illicit financial flow is ever seized and frozen. We might wonder whether criminals are not losers. This is of serious concern to regulators and financial investigators as the proceeds of money laundering fuels serious transnational crime, as research by Celent showed.

To give an insight into different types of Money Laundering, their techniques and the efforts to combat them, Finance IQ examined Asia’s biggest money laundering cases ever. I will add on by sharing the initial series of alleged corrupt Leaders and Money Laundering Cases hopping that those who seek Political Power and Leadership may deeply reflect on Subtle Salient Lessons Learnt from the these Greedy Asian Tigers and avoid overstaying in the Office and avoid falling in the same trap. You leave the dancing floor while the audience is clapping for you.

Ex- President Chen Shui-bian served as President of Taiwan from 2000 to 2008. Despite allegations of corruption during his two terms, Presidential immunity prevented prosecutors charging Chen while he was in office. Upon stepping down in May 2008, legal proceedings against him soon began.

In his defense, Chen stated that “Money is dry, and cannot be laundered. The money is clean, it is not dirty, and does not need laundering.”

Chen received a life sentence in September 2009 after being found guilty on charges of money laundering, bribery and embezzlement of government funds totaling NT$490m, (USD 15m). His wife, Wu Shu-Chen, already jailed for perjury in the case, was also sentenced to life for corruption. Speaking of the sentencing, court spokesman Huang Chun-ming described Chen’s corruption as having done, “grave damage to the country.”

As is the case with many Political Leaders, Chen argued that both the charges and trial were politically motivated, leading him to appeal against the verdict. This resulted in one of the lesser corruption charges that he had embezzled USD 330,000 of diplomatic funds, being overturned by insufficient evidence. While Chen’s sentence has since been reduced to 19 years in prison, both Chen and Wu remain in prison today.

Ferdinand Marcos was a lawyer who ruled as President of the Philippines from 1965 to 1986 before being overthrown by a popular people’s revolt. He was number two (2) on Transparency International’s most corrupt leaders list having laundered billions of dollars of embezzled public funds through the United States, Switzerland, and other countries, during his 20 years in power.

His wife, Imelda, famously left over 2,500 pairs of shoes in her closet when the pair fled Manila. The Amount Laundered has been estimated to be between USD5Billion and USD10 Billion. What was the Punishment? Marcos died of a heart attack in 1989 while in exile in Honolulu, Hawaii, awaiting his trial.

President Suharto ruled Indonesia for 31 years, between 1967 and 1998. Soon after his forced resignation, Time magazine published an article alleging it had traced some $15 billion in wealth accumulated by his family in 11 countries. The magazine also documented more than $73 billion in revenues and assets that had passed through the Suharto family’s hands during his tenure as President of Indonesia.

Suharto amassed an estimated personal wealth of between USD$15 and $35bn which was laundered. The immense scale of his alleged corruption led Transparency International to rank him number one (1) in their league table ranking the most corrupt individuals of all-time.

Suharto stepped down as President on May 21, 1998, amidst growing civil unrest, political discord, and accusations of corruption. Only once out of power did legal action begin against him; a legal action that was however impeded by the former leader’s fading health who was considered too old to be brought to trial. He died in 2008.

To the frustration of his opponents, the apparent reluctance of the judiciary to prosecute Suharto left him free of the prosecution to the very end. In 2008, a civil court judge acquitted Suharto of corruption charges but ordered his charitable foundation, Supersemar, to pay USD 110m. While it was found that money had been diverted from a scholarship fund for underprivileged children, the judge ruled that Suharto and his family were not directly responsible for the embezzlement.

Transparency International described the actions of Former President Suharto as a demonstration of how corruption on such scale, “undermines the hopes… of developing countries”.


Make a one-time donation

Make a monthly donation

Make a yearly donation

Choose an amount


Or enter a custom amount


Your contribution is appreciated.

Your contribution is appreciated.

Your contribution is appreciated.

DonateDonate monthlyDonate yearly

The Ugly Ones are NOT YET born

The late Pablo Escobar, famous for the wrong reasons, was regarded as the richest and most successful criminal in world history. In 1989, Forbes magazine declared Escobar as the seventh (7th) richest man in the world. He had an estimated personal fortune of US$9 billion then.

Pablo and his brother’s drug operational emporium were so successful that at its height they were spending US$1,000 a week just purchasing rubber bands to wrap the stacks of cash. As with many drug barons, they had more illegal money than they could deposit in the banks. They opted to store the bricks of cash in their warehouses, annually writing off 10% as “spoilage” when the rats crept in at night and nibbled on hundred US dollar bills.

The bloody leader was one of the most profitable of the Medellin drug gangs. Bribery, Corruption and intimidation characterized Escobar’s dealings with the Colombian system. He had devised an effective, inescapable policy in dealing with law enforcement, the government, and general citizenry which was referred to as “plata o plomo,” (literally silver or lead, colloquially [accept] money or [face] bullets). It has been well documented that Escobar bribed countless government officials, judges, and other politicians.

As expected, this weird policy of “silver-money or copper-bullet” resulted in the senseless deaths of hundreds of individuals, including civilians, police officers, state officials and innocent bystanders.

The “son of a gun” used banks and staff under duress to launder his gang’s cash. It is worth noting that money laundering represents the proceeds of some very unpleasant activities indeed and sources! Drugs, corruption, illegal arms deals and other serious predicated serious offenses.

Pablo Escobar is suspected to have money laundered between US$5-US$10 billion. His Punishment was confinement in what became his luxurious private prison for several months in 1992. He escaped after hearing he would be transferred to another prison and was killed soon after. Several such types will follow his modus operandi and his unpleasant and untimely end of his life.

Genesis of Money Laundering – “Plata o Plomo”

In the field of Financial Crime Risk, operations, compliance, management, detection, investigations and prevention, the Professional and Certified Anti Money Laundering specialists (CAMS) and crime professionals have not yet all formally agreed on when or where the concept and act of “#money laundering” came from or invented.

Some have argued that money laundering was not invented during the “#Prohibition” era in the United States, but many techniques were developed, finetuned, panel beaten, and refined then. Many methods were devised to disguise the origins of money generated by the sale of then-illegal alcoholic beverages. Many have Followed Al Capone’s 1931 conviction for tax evasion. The term “money laundering” itself does not derive, as is often said, from the story that Al Capone used Laundromats to hide ill-gotten gains.

We all must remember though that one mobster Meyer Lansky transferred funds from New Orleans, Louisiana – home of the famous Bourbon Street and the French Quarters – slot machines to accounts overseas. Again, after the 1934 Swiss Banking Act which created the principle of bank secrecy, Meyer Lansky bought a Swiss bank where he did transfer his illegal funds through a complex system of shell companies, holding companies and offshore accounts. Yet others have stated and categorically so that it was Meyer Lansky that perfected money laundering’s older brother, “capital flight,” transferring his funds to Switzerland and other offshore places.

Others have argued that the first reference to the term “money laundering” itself appeared during the Watergate scandal. US President Richard Nixon’s “Committee to Re-elect the President” moved illegal campaign contributions to Mexico, then brought the money back through a company in Miami. It was Britain’s Guardian newspaper that coined the term, referring to the process as “laundering.”

Still, the AML story may not be complete without the mention of one well known but notorious character Pablo Escobar. The bloody leader was one of the most profitable of the Medellin drug gangs. At one time his gang was so successful that they were spending $2,500 of dollars a month on rubber bands to wrap around their bundles of cash (US Dollars).

Bribery, Corruption and intimidation characterized one Pablo Escobar’s dealings with the Colombian system. He had an effective, inescapable policy in dealing with law enforcement and other government officials, referred to as “plata o plomo,” (literally silver or lead, colloquially [accept] money or [face] bullets).

Pablo’s violent policy of modus operandi resulted in the deaths of hundreds of individuals, including civilians, police officers and other government officials or anyone who stood in their way or bystanders. It has been well documented that Escobar bribed countless government officials, judges, and other politicians!

The “son of a gun” used Financial Institutions, mostly banks to launder his money mostly in cash. It is worth noting that money laundering represents the proceeds of some very unpleasant activities indeed and sources. Drugs, corruption, illegal arms deals and other serious predicate offenses of money laundering the impact of which is debilitating on any society.

Customer Due Diligence (CDD) – Final Rule

The regulatory landscape of Know Your Customer (KYC) Policies and Customer Due Diligence (CDD) requirements and expectations for Financial Institutions like Banks, Brokers, FinTech and Insurance Companies are always a moving target.

In another write-ups I alluded to the Banking mandatory requirement of conducting Customer Due Diligence (CDD). For practical purpose and simplification, CDD was said to be a deliberate but elaborate process where Financial Institutions such as Banks, Insurance Companies, Securities and Brokering firms collect, maintain, periodically review and update information and data about their individual clients, corporate, commercial and Institutional customers.

Customer Due Diligence (CDD) process was also said to be a Legal and Regulatory requirement in most Jurisdictions (Countries, Nations and States) to allow an informed choice to be made whether to on-board a new customer, continue with an existing customer relationship, or provide a new product or service or in worst case scenario, deny/reject the service and exit the relationship and close the Client’s or Bank account.

Oh, yes, if you keep on robbing people, Companies and Banks at gun point, you keep on swindling and embezzling funds from your employers and neighbors, officially abuse your official position and office, solicit for and receive bribes from individuals and companies or plunder the National coffers and want to haul the loot all the way to the offshore bank accounts, the banks reserve the legal right to refuse to take and deposit your dirty money, or to take your criminal proceeds (cash, check or transfer, Certificate of Title for your 48 houses)

If indeed the officials from the bank become aware of your financial criminal activities and conduct, they are legally obligated to formally file Suspicious Activities Reports (SARs)  to the Financial Intelligence Unit (FIU) or Financial Intelligence Centre (FIC) or any appropriate Law Enforcement Officers as per requirements of the local laws.

It has been noted that CDD is also one of the most powerful and available tools for all Financial Institutions to prevent and deter financial criminals and terrorist financiers from using the banks as conduits to conduct their illegal activities including those who are involved in money laundering activities.

KINDLY TAKE NOTE: As of May 11th 2018, the Customer Due Diligence (CDD) added new CDD –  FINAL RULE: This is a Requirement that Financial Institutions (Banks, Brokers) must collect and verify the personal Information of the REAL People (Beneficial Owners) who own, control and profit from Companies when those Companies open Bank Accounts. This requirement is designed to enhance financial transparency and safeguard the Financial System against illicit use. This is a 2-Pronged approach.

CONTROL PRONG: An Individual with significant responsibility to control, manage and direct a legal entity customer, including the Managing Director and Chief Executive Officer (MD/CEO) must be identified and verifie

OWNERSHIP PRONG: Each Individual, who directly or indirectly, through any contract, arrangement, understanding, or relationship own 25% or more of the Equity Interests or Shares of a Legal entity customer (Company, Firm, Corporate) must be identified – at least up to 4 such individuals.

Essentially, the Offshore Account holders and those appearing in Panama Papers can clearly be identified and or investigated. Equally important is the realization that in order for Banks and other Financial Institutions to assist Government to fight the funding of Terrorism Financing and Money Laundering Activities, most National and Federal Laws require that all Financial Institutions must obtain, verify and record information that identifies each person who opens an account.

In a lay man/woman’s language, what this means is that when you open Bank account, the Bank will ask you for your Names, Physical and Mailing addresses, Date of Birth, and other Information that allows the Bank to identify you such as Social Security Number (SSN), National Registration Card (NRC), Passport, or Driving Licenses. Those Documents MUST not be forged or Manufactured from the black market or streets as knowingly uttering a Forged Document is a serious criminal offence, in addition to perjury, forgery and impersonation).

Even amid COVID-19 pandemic, several African Countries have joined the frenzy in ensuring that BENEFICIAL OWNERSHIP STRUCTURE AND CONTROL PRONGS of Corporate /Commercial Companies are prioritized and made cardinal in order to know the BIG Guys behind the smokescreen and Front or Shell Companies using Smurfs or small boys and girls in financial criminal activities such as money laundering, corruption, bribery, abuse of office etc.

In Zambia for example, there is Corporate/Commercial Companies (Amendment) Bill, 2020, [N.A.B. 12, 2020] dated 7th October 2020, which is currently at first reading before the Zambian Parliament. The Bill seeks to amend the Companies Act, 2017, so as to:

• revise the definition of beneficial ownership; and

• provide for the definition of substantial economic benefit and substantial interest

The shareholding structures and Politically Exposed Persons (PEPs) hiding behind their low-profile associates, relatives and extended family members now will have to be properly documented through proper KYC and CDD “unwrapping process” for anyone claiming to be doing business in Zambia and Africa. This is the way to go.


Make a one-time donation

Make a monthly donation

Make a yearly donation

Choose an amount


Or enter a custom amount


Your contribution is appreciated.

Your contribution is appreciated.

Your contribution is appreciated.

DonateDonate monthlyDonate yearly

Indonesia’s Ex-President Suharto’s greed

Surprisingly, it is not only in Africa where some Political Leaders want to cling on to power for more than three (3) decades in Office, Asia has had its own share of such leaders.

The immense scale of Suharto’s dishonest conduct and greedy behavior of his alleged corruption led Transparency International to rank him number one (1) in their league table ranking the most corrupt individuals of all-time.

Suharto stepped down as President on May 21 1998, amidst growing civil unrest, political discord and accusations of corruption. As is the case with many corrupt Political Leaders of the world, they are only dragged to court only once out of power. Legal action was started against Suharto which was however impeded by the former leader’s fading health.

To the frustration of his opponents, the apparent reluctance of the judiciary to prosecute Suharto left him free of prosecution to the very end. In 2008, a civil court judge acquitted Suharto of corruption charges but ordered his charitable foundation, Supersemar, to pay USD $110m.

Whilst it was found that money had been diverted from a scholarship fund for underprivileged children, the judge ruled that Suharto and his family were not directly responsible for the embezzlement.

Transparency International described the actions of Former President Suharto as a demonstration of how corruption on such scale, “undermines the hopes of developing countries”.



Make a one-time donation

Make a monthly donation

Choose an amount


Or enter a custom amount


Your contribution is appreciated.

Your contribution is appreciated.

DonateDonate monthly

Impact of COVID-19 on AML/CTF Regime

Authored by Diphat Tembo-CAMS, Director-Compliance and Prevention Department of the Financial Intelligence Centre-Zambia and Kunda Kalaba-CAMs, CFE, Managing Partner KEMMAN Consultancy. The Coronavirus-COVID-19 has infected more than 57,228,106 individuals globally, and killed over 1,365,461 people, since being identified in China at the end of 2019, spurring governments across the World introducing measures such as social distancing or refraining citizens from interacting with one another, among other drastic measures to curb the outbreak. According to Worldometer which is tracking live updates and sharing statistics and coronavirus news tracking the number of confirmed cases, recovered patients and deaths, as at November 20, 2020.

The number of confirmed cases has continued to rise and death-toll thereof. Some Countries have been more affected than others. Statistics are available online. News of Vaccine is doing the rounds. The World has noted that the Novel Corona virus has impacted the global economy, daily life and human health around the World. The virus has surely changed how people live, travel, shop, work and interact every day.

But in addition to the pressing threat the virus poses to human health, these rapid changes have also created conducive environments in which hackers, scammers and spammers, phishers, thieves, embezzlers, swindlers and the corrupt all thrive. There are reported cases where criminals have taken advantage of this fragile situation to advance their ill agenda.

The Financial Intelligence Unit (FIU) i.e. FinCEN of the United States of America on 16th March, 2020 FinCEN said that it had received multiple suspicious activity reports, or SARs, flagging attempts by fraudsters to exploit fears of the pandemic to sell sham cures, raise funds for fraudulent charities and dupe victims into handing over money by impersonating government officials, among other scams (ACAMS News, 18th March 2020). Others have been arrested. The continent of Africa is not spared from this global pandemic.

What if at all any, could be the impact of corona virus (COVID-19) in the Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) in the African Region and Zambia in particular? To begin with, the 39th Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) meeting which was scheduled to take place in Arusha, Tanzania from 29th March to 3rd April 2020 has been postponed to a later date to be determined due to COVID 19. Other similar Style Regional Bodies (SRBs) are likely to cancel or postponed conferences and meetings because of the spread of the virus which slowly is taking root in Africa. The SRBs meetings are attended by various stakeholders some of which come from countries already designated as high risk; not from Money Laundering (ML) or Terrorism Financing (TF) point of view this time around but from the COVID-19 perspective. The immediate impact of the postponement of these meetings are changes which are likely to take place on the timelines of Mutual Evaluations that the SRBs such as ESAAMLG is currently conducting and other projects the Regions are participating in.

From the domestic point of view, there is likelihood that some AML/CFT meetings will be cancelled due to COVID-19 in order to comply with Directives by the Ministry of Health on adhering to COVID-19 preventive measures. Further, some of the amendments to the AML/CFT legal framework addressing deficiencies which were identified during the mutual evaluation of Zambia in 2019 were supposed to be introduced in Parliament during the current siting. Addressing the identified deficiencies will have to wait.

Will COVID-19 have any negative impact on anti-money laundering/countering the financing of terrorism regime in Zambia? The response would be in the affirmative. The measures being taken to contain COVID-19 have direct impact on the overall AML/CFT regime. Regulatory Compliance – In accordance with the 4th round of mutual evaluations of AML/CFT measures, the Financial Action Task (FATF) has adopted complementary approaches for assessing technical compliance with the FATF Recommendations and for assessing whether and how the AML/CFT system is effective. Effectiveness assessment seeks to assess the adequacy of the implementation of the FATF Recommendations, and identifies the extent to which a country achieves a defined set of outcomes that are central to a robust AML/CFT system. The focus of the effectiveness assessment is therefore on the extent to which the legal and institutional framework is producing the expected results. FATF makes its assessment of effectiveness based on 11 immediate outcomes, each of which represents one of the key goals to be achieved by an effective AML/CFT system.

Immediate outcome 3 (IO.3) of the assessment. FATF assessment methodology updated in October, 2019 requires supervisors or indeed regulators to appropriately supervise, monitor and regulate financial institutions, Designated Non-Financial Businesses and Professions (DNFBPs) and Virtual Assets Service Providers (VASPs) for compliance with AML/CFT requirements commensurate with their risks. By and large, AML/CFT supervisors or regulators, on a risk-sensitive basis are supposed to supervise or monitor the extent to which financial institutions, DNFBPs and VASPs are complying with their AML/CFT requirements.

One of the effective tools/methods used for AML/CFT supervision is on-site inspection of reporting institutions. In the dawn of COVID-19, regulatory agencies or indeed supervisory authorities may have to consider halting or suspending this important approach to comply with policy directives or measures being pronounced in different jurisdictions to deal with COVID 19.

Further, there is high possibility of suspending planned AML/CFT workshops, trainings, spots inspections, conferences and meetings during this period. Covid-19 Situation Worsening. In an event that the situation worsens, which we all pray it should not as measures are being taken for flattening period although being threatened with a second wave, many reporting entities’ and supervisors’ employees may be asked to work from home. Such arrangements have their own challenges. Some employees may not have access to the required data bases or speed internet connectivity to enable them effectively perform their roles and functions in good time what with the frequent load-shedding and power outages. Economic and financial activities may slow down.

Among businesses, the impact of COVID-19 will vary significantly by sector and by companies. It seems quite likely at this point that travel and tourism sector, entertainment, automotive, oil and gas, and healthcare industries will be most affected due to disruptions in supply and demand. As a result, there is likely to be less financial transaction activity in the banks. From the reporting entities or accountable institutions point of view, both human resources and Software/programs/data/systems are relied upon in order to detect and action alerts and cases of Currency Transaction Reports (CTRs), Suspicious Transaction Reports (STRs) or Suspicious Activity Reports (SARs). In such an environment, there is a possibility for the number of STRs, SARs and indeed CTRs, sent by reporting entities especially banks to drop significantly.

There shall also be a decline in the cross-border currency and Bearer Negotiable Instruments (BNI) declaration reports as a result of bans or travel restrictions imposed by different jurisdictions. Wire transfers are likely to drop amidst disruptions in the global economy, balancing out the surge in cash withdrawals, online banking and cryptocurrency-related activity.

The compliance levels for reporting entities or accountable institutions which manually attend to reporting obligations is likely even to go down. The foregoing entails that, the number of analyzed STRs and disseminated intelligence reports to competent authorities is likely to drop significantly. However, it is expected that those institutions that have invested in acquiring transaction monitoring systems, will continue to detect and filter STRs including submission of CTRs to Financial Intelligence Units (FIUs).

During this period, competent authorities are advised to be vigilant, alert and pay particular attention to some procurement transactions related to COVID-19 kits and equipment. The United Nations on Drugs and Crime (UNODC) says approximately 10 to 25 percent of all money spend on procurement globally is lost to corruption. In the European Union (EU), 28 per cent of health corruption cases are related specifically to procurements of medicines. We do not yet have the percentages in healthy related procurement in Africa and Zambia in particular. Suffice to state that we still have ‘bad boys’ who may wish to take advantage of this desperate situation to enrich themselves by engaging in corrupt and fraudulent activities.

As soon as COVID-19 was designated as being a pandemic, financial crooks i.e. “bad boys” started exploiting it and there are reports about frauds linked to CVOID-19 stimulus packages in many countries where the pandemic has been rampant. This calls for concerted efforts by all competent authorities and Law Enforcement Agencies (LEAs) to cooperate and make the environment hostile to these “bad boys” who would want to take advantage of the situation-COVID 19. Indeed, COVID-19 will definitely adversely affect the AML/CFT processes.

The week ending, 19th March, 2020, many Zambians received text messages from their respective banks advising or asking customers to stay away from branches. The messages encouraged the customers to handle their transactions through non-face-to-face interface due to the outbreak of COVID 19 in Zambia. Although it is a good measure to counter further spread of COVID-19, competent authorities may be aware that non-face-to-face financial transactions are inherently considered ‘high risk’ as compared to the physical presence of the customer in the brick and mortar banking hall and talking to the bank staff directly.

Save the foregoing, consideration of Recommendation 15 (New Technology) of the FATF, shows that there are mitigation measures provided therein to deal with risks associated with non-face-to face transactions. But not all reporting entities appreciate money laundering/ terrorist financing (ML/TF) risks they are exposed to because not all reporting entities have conducted ML/TF institutional assessments associated with new technologies. It is in such an environment where criminals would want to exploit weaknesses in the AML/CFT regime. During this period, reporting entities i.e. (Financial Institutions and Designated Non-Financial Businesses and Professions (DNFBPs) are encouraged to use Digital Identification documents (IDs), biometric Customer Due Diligence (CDD) which can be carried out through webcams, etc.).

According to the FATF, digital identification (ID) systems have the potential to improve customer ID and verification procedures by: minimizing weaknesses in human control measures; improving customer experience and generating cost savings; and improving financial inclusion. However, some risks, like cyberattacks and security breaches, present challenges for entities’ implementation of digital ID systems. The question is to what extent are our financial institutions and DNFBPs innovated around these technologies and systems supposed to be attending to Digital ID and biometric CDD? That is a topic for another day.

Quick Wins to Consider

• Reporting entities or accountable institutions should start testing and implementing business continuity/contingency plans, which include alternate workplace arrangements such as split work sites, working from home, and rotating shifts for all types of employees

• Compliance and Money Laundering Prevention/Reporting Officers – [MLPRO] of reporting entities should reassess their approach to monitoring transactions to account for dramatic shifts in customer behavior amid the global pandemic of the new coronavirus disease

• Regulators or indeed AML/CFT supervisors should find creative ways to monitor compliance, regulate the industry and enforce the AML regime if necessary, whilst at the same time being sensitive to the challenges facing the industry in these difficult and challenging times. During this period supervisors may opt to rely on ‘monitoring’ and ‘offsite inspections’ which may not be as effective as on-site inspections, if the reporting entity does not submit complete or comprehensive information for the supervisors to review or analyse.

• During this period, competent authorities and reporting entities are advised to be vigilant, alert and pay particular attention to some procurement transactions related to COVID-19 kits and equipment. ‘Bad boys would want to take advantage of the situation to involve themselves into corrupt activities to enrich themselves.

• Competent Authorities including, Prosecutors should cooperate and go after the would-be fraudsters exploiting the pandemic-COVID-19. FIUs could be good source of information on such perpetrators.

Views expressed in this correspondence represent Authors’ Thoughts and do not in any way represent those of the Institutions Authors work for.