By Nat Cole, Certified Anti-Money Laundering Specialist (CAMS)
The largest Nigerian bank and the ONLY one currently allowed by the US Feds to have an office in the US was assessed civil money penalty by the United States of America Department of Treasury Financial Crimes Enforcement Network, (FinCEN) without the bank admitting or denying the determinations by FinCEN. The civil penalty assessed amounted to 3.4% of the bank’s assets. The Bank, United Bank of Africa UBA) has a Branch office in New York and it was only this Branch that was involved in the FinCen action. The total amount assessed was 1.785 Billion Naira.
On the face of it, i.e. without the benefit of UBA’s explanation for the apparent flagrant failures in the bank’s system for dealing with Money Laundering issues, it would appear that the bank might have knowingly or unknowingly aided 419 fraudsters and the ever present corrupt Nigerian political leaders in defrauding the Nigerian people.
If all the issues below seem to have escaped the Economic & Financial Crimes Commission (EFCC) in Nigeria it must be doing a great job indeed. What a job! Surely UBA is not alone in this and only got the attention because it is the only Nigerian Bank operating in the US. So, how big is this type of problem for a country that wants to deal head on with corruption? Have EFCC of recent ever sanctioned a Nigerian Financial Institution for aiding corruption and money laundering despite the attention these have attracted in the media in Nigeria, with all these high profile corruption/money laundering cases? Ghana-must-go bags are not involved in these cases because they are illicit funds sent through Nigerian and Foreign Banks mostly via wire transfers. Despite these, EFCC appears not to be dealing with those that ensures these folks loot Nigerian treasury. Is Nigeria really serious about combating corruption but no sanction or penalty imposed for those that knowingly or unknowingly aid such and provide the conduit?
It was determined that the failure by the UBA’s US Branch to establish and implement an effective anti-money laundering program resulted in extensive violations in its failure to report suspicious transactions of approximately $197,000,000. A Federal Branch of a foreign bank in the US is required to implement an anti-money laundering program that conforms to the rules of the office of the Comptroller of the Currency.
It was determined by FinCEN that there were serious failures in the Bank’s internal controls. Some of which were highlighted and they include the following:
1.The Branch failed repeatedly over the course of multiple examinations to implement internal controls that are reasonably designed to assess the risks of potential money laundering or other suspicious activity and ensure the detection and timely reporting of suspicious transactions.
2.The Branch failed to implement effective procedures for conducting due diligence on the Branch’s customers.
3.Failure by the Branch to have effective procedures to obtain critical information to establish risk profiles including obtaining information on customer’s business activities, source of funds, financial capacity etc.
4.As of June 2006, the Branch did not have procedures for identifying Politically Exposed Persons (PEPs) and any procedures for managing the risks associated with such individuals. This is despite the fact that the Branch processed transactions for high level PEPs, including senior political figures in Nigeria.
5.The Branch failed to implement effective procedures
to manage the risks associated with
(a) foreign correspondent bank accounts,
(b) embassy and foreign consulate accounts
© foreign based cash intensive businesses
(d) Money service Businesses
(e) Import and Export Companies
(f) Jewelry and Precious Metals dealers
(g) Foreign Exchange houses
(h) Off shore corporations
6.The policies and procedures for investigating suspicious activities were far too general and according to FinCEN did not provide adequate instructions to Branch personnel.
7.The Branch lacked effective procedures to detect and respond to suspicious activities involving wire transfers and dollar pouch transactions from other foreign banks.
8.There were no written procedures specifying the responsibilities of compliance and operations personnel.
9.Operations personnel had the authority to approve suspicious transactions without compliance involvement and approval.
10.The Branch compliance personnel had the authority to REMOVE PERSONS FROM THE WATCH LIST without approval from appropriate level of management at the Branch.
11.Independent testing of the Branch was not effective to ensure compliance with the US Bank Secrecy Act. (BSA).
12.The Branch failed to report transactions that it either knows, suspects or has reason to suspect are suspicious. Usually a suspicious transaction is the one that could involve funds derived from illegal activities, or is “conducted to disguise” the illegal source or that has no apparent business purpose and the Branch has no reasonable explanation for the said transaction. Usually these types of transactions has to be reported no later than 20days after obtaining facts but under no circumstance would the filing be done later than 60 days after the initial detection.
(a) The UBA Branch failed to timely file 140 required suspicious activities reports between 2005 and February 1, 2008.
(b) 29 reports were filed at least six (6) months late
(c) 5 reports were filed over 3 years late including approximately $120 million of suspected proceeds of corruption in Nigeria.
(d) It also failed to timely file reports on proceeds of advance fee frauds also known as 419, structuring or wire transfers to avoid reporting
The delays by the Branch of UBA to timely file the suspicious activities report significantly impaired the usefulness of the information because it failed to timely report it for action by US law enforcement agencies.