The report of the 2022 National Inherent Risk Assessment of Terrorism Financing in Nigeria by the federal government has revealed how terrorists use fintech platforms, point of sale (POS) operators, and non-governmental organisations (NGOs) to move funds.
The report identified areas of terrorist funding through abuse of formal financial sectors, and it is feared that this could be an indication of the growing sophistication of some of the terrorist group’s financing capabilities.
The assessment relied on data from intelligence, security, and law enforcement agencies, the Central Bank of Nigeria, the Department of State Services, the Economic and Financial Crimes Commission, the Nigeria Financial Intelligence Unit, and various regulatory and supervisory agencies.
Other contributors to the report are the Corporate Affairs Commission, Defence Intelligence Agency, Federal Ministry of Justice, Nigerian Army Intelligence Corps, Nigeria Customs Service, Nigerian Extractive Industries Initiative, Nigeria Immigration Service, Nigeria Police Force, Nigeria Security and Civil Defence Corps, Office of the National Security Adviser and the Special Control Unit Against Money Laundering.
The report revealed that terrorism funding has been conducted using bureau de change (BDCs), wire transfers, and designated financial businesses and professions (DNFBPs).
“The findings of this report indicate that TF in Nigeria is generally associated with the use of cash.
“This notwithstanding, field information flowing from law enforcement investigation as well as financial data have revealed constant interactions between the use of cash by terrorist actors and financial institutions, Bureau de Change, fintech firms, and Designated Non-Financial Businesses and Professions.
“The inherent vulnerabilities of each sector were assessed by the extent to which products and services offered are found in domestic investigations or STRs in relation to TF. Current accounts products associated with Bureau De Change and NPOs/NGOs corporate customers have been observed to be connected with TF activities.
“The use of bank accounts in the movement of TF funds has featured prominently in both intelligence and investigations related to TF.
“Financial data have also shown that the illegal currency exchangers commingle transactions in their personal accounts as well as entity accounts held and controlled by them with that of their BDC activities,” the report read in part.
The government said a larger percentage of transactions linked to terrorist financing was initially carried out in cash which was sourced from both legitimate and illegitimate activities.
According to the report, however, cash collected is usually placed into the financial system directly through bank deposits and indirectly through POS transactions and transactions with DNFBPs.
The investigation also showed that about 19 companies have been linked to terrorism financing in the last three years.
‘’Illegal money exchangers have been featured in several TF investigations,” the report further read.
“Within a three-year period beginning from 2019, about 19 companies linked to these illegal money exchangers have used their companies to commingle funds considered to be linked to TF.
’Illegal money exchangers are not under any form of regulations and as such, they implement any preventive measures. The activities of the illegal money exchangers provide a channel for moving illegally obtained funds for TF.’’
The government said keeping the country’s financial system from becoming an enabler of terrorist financing continues to be its priority.
