Institutionalising the War Against Corruption: New Approaches to Assets Tracing and Recovery

Emerald, Journal of Financial Crime, Forthcoming

Posted: 12 Sep 2018 Last revised: 3 Apr 2019

See all articles by Ehi Esoimeme

Ehi Esoimeme

University of Wales System - Cardiff Law School

Date Written: September 2, 2018

Abstract

PURPOSE – The United Nations Secretary-General Antonio Guterres recently revealed that the flow of illegal funds, money-laundering and tax evasion, cost Africa fifty billion dollars every year. The Stolen Asset Recovery Initiative (Star) in Washington estimates up to forty billion dollars is lost each year to developing countries through corruption and only five billion dollars was returned in the 15 years till 2011. Most is never found. These revelations call for an entirely new approach/direction to be taken for the identification and recovery of criminal assets. The approach should be one that can curtail the flow of illegal funds, money-laundering and tax evasion. This paper critically analyses the existing framework on assets tracing and recovery in Nigeria. It will thereafter discuss the measures adopted by developed countries which Nigeria can use to effectively trace illicit assets.

DESIGN/METHODOLOGY/APPROACH – The analysis took the form of a desk study, which analyzed various documents such as the Constitution of the Federal Republic of Nigeria 1999 (as amended), the Economic and Financial Crimes Commission (Establishment) Act, 2004, the Administration of Criminal Justice Act 2015, the Advance Fee Fraud and other Fraud Related Offences Act 2006, the Mutual Assistance in Criminal Matters within the Commonwealth (Enactment and Enforcement) Act, 2004, the United Kingdom Proceeds of Crime Act 2002 (as amended), the United Kingdom Investigatory Powers Act 2016, the final rules issued by FinCEN under the Bank Secrecy Act to clarify and strengthen customer due diligence requirements, the Mutual Assistance in Criminal Matters Bill, 2016, the Proceeds of Crime Bill 2017 and the Financial Action Task Force Recommendations 2012.

FINDINGS – This paper determined that the Nigeria asset recovery scheme is likely to be more effective if the following recommendations are implemented:

I. The Proceeds of Crime Bill, 2017 should be given accelerated consideration in the Nigerian National Assembly based on its urgency and significance for the anti-corruption war. Civil (Non-Conviction Based) Judicial Forfeiture is an essential tool in the fight against corruption to deprive offenders of the proceeds of their criminal conduct; to deter the commission of further offences; and to reduce the profits available to fund further corrupt or criminal enterprises.

II.The Federal Government of Nigeria should introduce a Bill to the National Assembly that would provide a clear framework for the use of investigatory powers by law enforcement, the security and intelligence agencies and other public authorities. This includes the interception of communications, the retention and acquisition of communications data, the use of equipment interference, and the retention and use of bulk data by the security and intelligence agencies. The Bill must establish a number of safeguards against the arbitrary or unlawful use of investigatory powers by the Executive. The United Kingdom’s Investigatory Powers Act 2016, for example, established a number of safeguards for the retention and acquisition of communications data. Authorisations for obtaining communications data will have to set out why accessing the communications data in question is necessary in a specific investigation for a particular statutory purpose, and how it is proportionate to what is sought to be achieved.

III. The Central Bank of Nigeria should mandate financial institutions in Nigeria to use the blockchain technology for know your customer purposes. The blockchain technology will aid law enforcement agents to identify and trace proceeds of criminal activity.
IV. The Central Bank of Nigeria should issue a rule requiring the financial industry to identify the real owners of companies and propose a bill that would require companies to report the identities of their owners to the federal government.

V. Bureau De Change Operators, Estate Agents, High Value Dealers e.g. dealers in precious metals and precious stones and Gambling Operators should be effectively supervised and monitored for compliance with anti-money laundering and countering the financing of terrorism (AML/CFT) requirements, namely customer due diligence (CDD), recordkeeping, and reporting. This should be performed on a risk-sensitive basis.

VI. The Mutual Assistance in Criminal Matters Bill, 2016 should be given accelerated consideration in the Nigerian National Assembly based on its urgency and significance for assets tracing and recovery. A National Mutual Legal Assistance Legislation is necessary to address issues that treaties generally do not cover such as the procedures for obtaining a search warrant, compelling the attendance of a witness, or appealing a decision of judicial or law enforcement authorities.

RESEARCH LIMITATIONS – This paper critically analyses the existing legal and regulatory framework for assets tracing and recovery in Nigeria and suggests new ways to improve the asset tracing/recovery scheme in Nigeria.

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

Keywords: CORRUPTION, ASSET TRACING, ASSET RECOVERY

Suggested Citation

Esoimeme, Ehi, Institutionalising the War Against Corruption: New Approaches to Assets Tracing and Recovery (September 2, 2018). Emerald, Journal of Financial Crime, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3243108 or http://dx.doi.org/10.2139/ssrn.3243108

Ehi Esoimeme (Contact Author)

University of Wales System - Cardiff Law School ( email )

PO Box 427
Cardiff, Wales CF10 3AX
United Kingdom

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