By Abimbola Adeseyoju
One of the bigger challenges towards Anti-Money Laundering/Combating the Financing of Terrorism, ÈAML/CFT, compliance and a drastic reduction in money laundering, terrorist financing and other economic and financial crimes in Nigeria was tackled headlong in the last week of April, 2011. The Central Bank of Nigeria, CBN, then, pegged daily cash withdrawals or lodgments by any individual or corporate body to N150,000 and N1million respectively. This takes effect from June 1, 2012, about a year from now.
This latest move has continued to generate reactions from the generality of Nigerians. Interestingly, this is not the first time attempts have been made to move Nigeria towards a cashless society.
The Money Laundering Prohibition Act (MLPA) of 2004, currently before the National Assembly for possible update and amendments, took cognisance for this. The first edition of the law, prohibits anybody or body corporate in Nigeria from paying or collecting cash when buying or selling any item in value exceeding N500,000 for individuals and N2 million for organisations except through a transaction involving a financial institution.
Majority of Nigerians do not know about this. But ignorance of the law is not an excuse. It remains an offence in the country and violators face up to two years imprisonment or a fine of not less than N250,000 or both fine and imprisonment.
What really is the consideration for such a policy in a country such as Nigeria? The statistics are grim. In most markets in Nigeria, especially in the northern cities of Kano, Sokoto and Maiduguri, the only language the traders understand is: “cash and carry”. The traders have very little faith in keeping money in financial institutions and thus have private vaults in their shops.
Illiteracy, bounced-cheque syndrome and low level of enforcement of the law are also part of the problem. The point, however, is that the merits of a cashless society far outweigh the present system we operate. If we want to catch up with the rest of the world, then, we have to change our ways.
Historically, every country started as a cash economy but through conscious efforts at development, the adoption of new technology and innovative ways of doing things, some made progress while others continue to make excuses.
Today, a preponderance of card-based transactions is one of the hallmarks of development. We remain underdeveloped, live in a corruption-ridden and crime-infested society and cannot effect any meaningful economic development because of our uncontrolled appetite for mostly cash transactions.
Now is the time to cure the illness. And the CBN directive is a bold and positive step in the right direction. No doubt about it, one of the biggest impediments to the economic, political and social transformation of Nigeria is corruption. And why it has remained difficult to control and discourage is because of the cash economy we run. You know why? Cash is the blood wire of corruption, bribery and money laundering.
Remove cash and these vices will find it difficult to survive. Because then for every transactions without any cash input, the audit trail is very easy to reconstruct. And this is what those who give and collect bribe fear most. That is why nobody will collect bribe money through cheque payment.
He or she knows that when the chips are down, proving the case will not be difficult. The audit trail can easily be demanded from the financial institutions and presented in court as exhibits. The criminals do not want that. That is why they only do cash transactions. Cash transactions obliterates audit trail.
So for the corrupt civil servants, who will never do anything without 30 per cent or more kickbacks, the Ghana-must-go legislators who only approve budgetary allocation after cash exchange, just note that, time is running out. Your modus operandi is finally being dismantled.
Try and collect bribe or kickback through cheque payment and see if you will not go to jail. The Nigeria Police Force and other law enforcement agencies will also profit from a cashless society. It will be easier to convict criminals. What most people do not know is that financial/account/bank statement is a reflection of the owner’s livelihood, business activity, behaviour or pastime.
Through forensic analysis, the police, EFCC, (Economic and Financial Crimes Commission), NDLEA (National Drug Law Enforcement Agency) ICPC (Independent Corrupt Practices and Other Related Offences Commission) and other law enforcement agencies can have more convictions against criminals.
This policy if fully implemented, will also lead to the financial inclusion of all Nigerians. Currently, less than 40 per cent of bankable Nigerians adults own bank account. The rest, keep their money under their mattress, pillowcases and cooking pots.
The ultimate result of the CBN policy is that it will compel everybody to own bank account. We can then begin to initiate and implement realistic monetary and fiscal policies that will educe inflation and life more meaningful for the generality of Nigerians.
The challenge now is for all Nigerians to brace up for this new era in our economic development and for the deposit money banks to put in place necessary operational infrastructure to cope with the anticipated upsurge in the number of bank customers.
The CBN should take the bull by the horns and licence Islamic banks in the country to take care of those in the North that do not believe in our present conventional financial institutions.
It should also provide the regulatory framework and necessary infrastructure for the take-off of the much-anticipated mobile banking system. Finally, it should begin a massive and intensive awareness campaign to educate all Nigerians about the policy.
Adeseyoju, an anti-money laundering specialist, is the managing director of DataPro Limited