CISLAC launches report on real estate business used for money laundry - Basic Storylines
By Gabriel Ewepu – Abuja
As illicit financial inflow persists and goes the upward trend via corrupt practices in the country, the Civil Society Legislative Advocacy Centre, on Wednesday, launched report on real estate business used for money laundry with theme, ‘Nigeria’s Dirty Money and Real Estate: How Money Laundering through Real Estate Impacts Nigeria’s Fight against Corruption’.
In an address of welcome to the launch, the Executive Director, CISLAC, Auwal Ibrahim Rafsanjani, explained essence of the launch of report, which also serves as activities of CISLAC’s anti-money laundering programme which has been identified as one of its priorities given the crushing volume of resources that Nigeria loses through money laundering and illicit financial flows.
According to Rafsanjani, the project, which is a relatively new terrain in Nigeria, has brought CISLAC to work with multi-stakeholders in exploring aspects of corruption, monitor trends and typologies and critically analyse the dealings of the private sector and how it affects the fight against the laundering of dirty money.
He also added that the report is one of the many successes CISLAC has achieved under the project and hope that the revelations and recommendations therein will contribute to your work and create avenues for continued advocacy and quest for good governance.
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The report made it clear that the Nigerian real estate sector has long provided opportunity for persons and companies to launder illegally acquired funds. The misuse of corporate vehicles for illicit purposes including money laundering facilitates the utilization of corruption proceeds and ill-gotten gains from other criminal activities.
The Nigerian real estate sector is the second most vulnerable to money laundering risk next to the Bureau De Change operators.
Analysis of money laundering cases through the Nigerian real estate sector shows some common denominators.
Today, we are gathered here to launch a report titled NIGERIA’S DIRTY MONEY AND REAL ESTATE: How Money Laundering through Real Estate Impacts Nigeria’s Fight against Corruption. This is one of our activities under the anti-money laundering programme which has been identified as one of our priorities given the crushing volume of resources that Nigeria loses through money laundering and illicit financial flows.
The laundering of large proceeds of crime through purchase of high value real estate abroad puts Nigerian enforcement is a very difficult position to trace the assets and confiscate them.
It is extremely concerning that the majority of the cases reviewed involve Nigerian politically exposed persons and their associates. This is often done through transfers of illicit funds via offshore assets involving real estate.
Sophisticated international financial advisory is often used to conceal the transactions and the real owners of these properties. Laundering of illicit
funds through real estate is sometimes fuelled into political endeavours with the aim to further consolidate political power and profit from political corruption.
He said: “The project, which is a relatively new terrain for us, has brought us to work with multi-stakeholders in exploring aspects of corruption, monitor trends and typologies and critically analyse the dealings of the private sector and how it affects the fight against the laundering of dirty money.
“This report is one of the many successes we have achieved under the project and we hope that the revelations and recommendations therein will contribute to your work and create avenues for continued advocacy and quest for good governance.
“Money laundering through real estate is not a recent phenomenon.; The Financial Action Task Force (FATF), posited that real estate accounted for a third of criminal assets confiscated worldwide between 2011 and 2013. There are growing concerns in many cities around the world that high-value residential real estates have become vulnerable to criminals using shell or offshore companies to conceal their identity.
“Due to the primary emphasis on the preservation of the financial sector integrity, complex nature of the real estate transactions and the level of anonymity permitted, criminals have had a field day erecting firewalls and creating diversions in the real estate market.
“The Panama Papers revealed how real estate gatekeepers, such as the secretive law firm Mossack Fonseca, were utilized to create offshore shell companies for the rich and powerful. The Miami Herald revealed over 215,000 legal entities were established by the law firm for over14,000 clients in 21 offshore havens. Needless to say, Nigerian nationals have been amongst the prime clients.
“While a study by International Monetary Fund (IMF) concluded that about $3.5-trillion is laundered worldwide, media and court reports point to the involvement of criminals running fraud syndicates and drug trafficking in buying up or developing property. It is therefore understandable why the spotlight has been turned onto this sector – particularly at professionals who facilitate the transactions.”
He also added that, “The report identifies crucial policy problems why Nigeria has not tackled money laundering through real estates while well acknowledging the detrimental impact of this criminal activity. The enablers are well known. Money launderers and criminals use third parties, professionals, family members and close associates to acquire high value real estate.”
Some of the recommendations made by the report include that Nigerian Dirty Money and Real Estates: How Money Laundering through real estate impacts Nigerian Fight Against Corruption 33 It is extremely concerning that the majority of the cases reviewed involve Nigerian politically exposed persons and their associates. This is often done through transfers of illicit funds via offshore assets involving real estate.
Sophisticated international financial advisory is often used to conceal the transactions and the real owners of these properties. Laundering of illicit
funds through real estate is sometimes fueled into political endeavours with the aim to further consolidate political power and profit from political corruption.
Nigerian law enforcement authorities, especially the anti-corruption agencies, are improving their responses to money laundering including through real estates. Non-conviction based approaches to asset seizures have yielded significant results and should be further utilised to their full potential.
Judiciary and law enforcement apply non-conviction based approaches, which allow lower burden of proof in contrast to criminal proceedings against offenders, to seizing and confiscating real estates.
New legal frameworks and policy guidelines are needed to i) strengthen institutional mandate of dedicated agencies such as SCUML,
- ii) provide clear guidelines for management of interim and final forfeitures including real estates to prevent value-depreciation, mismanagement and ‘re-looting’ of looted assets and iii) ensure improved exchange of intelligence between Nigerian law enforcers and international partners on the location and ownership of real estates of suspicious origin.
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The weak spot is still acting on actionable intelligence. The data shows that only a fraction of Suspicious Transaction Reports and other automated intelligence is actually acted upon. For example, the Code of Conduct Bureau provided only 3 reactive intelligence reports in 2018.
Even in cases when STRs are provided and detected, the investigation, prosecution and conviction rarely follows.
Real estate agents, legal and other professionals are not restricted by law to conduct sales or transfer of property from one party to another. They rarely report any suspicious transactions involving unexplained wealth. This applies especially to the involvement of politically exposed persons, where legitimate questions about the source of wealth to be invested in the property market must be asked and reported.
SCUML and other law enforcement must provide data on suspicious transactions involving real estate providers including the volume of seized assets based on this intelligence and the rate of investigations, convictions and prosecutions on anti-money laundering charges.
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