Finance

IMF Harps on Need to Step Up Fight Against Money Laundering

Published

7 years ago

August 14, 2017

A money changer holds Turkish lira banknotes next to U

IMF Harps on Need to Step Up Fight Against Money Laundering

Corrupt officials, tax cheats, and the financial backers of terrorism have one thing in common: they often exploit vulnerabilities in financial systems to facilitate their crimes, the International Monetary Fund (IMF) has noted.

IMF’s Managing Director, Christine Lagarde, stated this in an article on the fund’s blog.

According to Lagarde, money laundering and terrorist financing can threaten a country’s economic and financial stability while funding violent and illegal acts.

“That is why many governments have stepped up the fight against such practices, helped by international institutions such as the IMF. Measures against money laundering and the financing of terrorism, known by their acronym as AML/CFT, are designed to prevent the misuse of the financial system. They call for the detection, reporting, and confiscation of suspicious financial flows and for sanctioning of criminals.

These efforts have been part of the fund’s work for almost two decades—from analysis and policy advice, to country assessments against AML/CFT standards, to building institutional and operational capacity,” she added.

According to her, the IMF has contributed to the progress made so far by working closely with our members and the standard setter, the Financial Action Task Force (FATF).

But, she stressed that more work needed to be done to ensure that financial systems support needed economic growth without being misused. To achieve this, she highlighted three areas that must be given greater attention:

“First, we need to help countries intensify the fight against corruption and tax evasion. We will soon release new analysis that shows how systemic corruption can seriously undermine a country’s ability to deliver sustainable and inclusive growth.

“Large-scale tax evasion is also problematic, because it typically means less investment in health, education, and other public services. It also means higher economic inequality because the most vulnerable are most affected by lower social spending.

“AML/CFT measures can help break this vicious economic cycle. A good example is Greece, where the strengthening of the AML framework—with the help of the IMF—facilitated the seizure of hundreds of millions of euros in proceeds from tax crimes,” the IMF boss stated.

Secondly, she noted the need to promote more effective ways of combating the financing of terrorism. This means building on our experiences.

“Most recently in Sudan, we worked with the government to develop a framework for the implementation of targeted financial sanctions. But this is not enough. Governments need to increasingly harness the power of financial technology. While fintech can be misused—including through the anonymity of virtual currencies—it can also be a powerful tool to strengthen our defenses against terrorist financing.

“Think of machine learning and other artificial intelligence tools that could help detect patterns of suspicious financial flows, including very small transactions. And think of the “distributed ledger” technology that could help protect financial systems against cyber-terrorism.

“Third, we need to help ensure that small and fragile economies have access to correspondent-banking services that connect them to the global financial system. There has been a high degree of concern that global banks might cut their correspondent-banking business indiscriminately to minimise the risk of breaching AML/CFT rules.

“The good news is that FATF recently clarified regulatory expectations under the AML/CFT standard. This may reduce the likelihood of an indiscriminate withdrawal of correspondent-banking relationships,” she added.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Finance

Federal Government Credit Surges by 57% to N31.15tn in August, Says CBN

Published

1 day ago

September 30, 2024

Yetunde Olugbenga

The Central Bank of Nigeria (CBN) has disclosed that credit to the Federal Government increased by 57.11 percent to N31.15tn in August from N19.83tn reported in July.

According to the Money and Credit Statistics from the CBN, the federal government credit increased due to the continuous borrowing trends by the three tiers of government from commercial lenders over the past months.

The credit figure showed that in 2024, there were varying levels of borrowing from N23.52tn in January, N33.93tn in February, dropping to N19.59tn in March, N19.98tn in April, N28.38tn in May, and N23.93tn.

Due to the federal government’s continuous borrowing from CBN to fund capital projects, debt servicing, and other fiscal obligations, economic analysts disclosed that the long-term sustainability of this borrowing could lead to inflation that can cripple the country’s economy.

In terms of private sector credit, the report recorded that in January, private sector credit was N76.48tn but rose to N80.86tn in February, reflecting a dip of 1.03 percent, representing N777.13bn.

In March, credits dropped to N71.21tn from N72.92tn recorded in April. In May, credit increased to N74.31tn from N73.19tn recorded in June.

However, in August, private sector credit decreased to N74.73tn from N75.51tn reported in July.

In terms of currency in circulation, August recorded N4.14tn from N4.05tn in July, reflecting an increase of 2.25 percent.

It was noted that the combination of the federal government credit, private sector credit, and money in circulation, which amounted to N110.03tn in August, reflects the effect of government continuous borrowing on the country’s economy and how it limits private sector access to credit.

According to the Afrinvest research, the CBN was in a difficult position, trying to balance inflation control with growth stimulation.

In curbing excess liquidity and stabilising the exchange rate, the Monetary Policy Committee of the CBN recorded a 50 basis point to 27.25 percent on Tuesday in the monetary policy rate, which is the fifth consecutive rate hike this year, and cash reserve ratio for commercial banks was raised to 50 percent and for merchant banks to 16 percent.

“While these policies may help control inflation, they also risk further tightening liquidity in the private sector and increasing borrowing costs, which could slow down economic growth,” Afrinvest warned.

To avert the risk associated with the measures to control inflation, Afrinvest suggested a more balanced approach to fiscal management in addition to the incitement of the private sector to achieve sustainable economic development.

Banking Sector

CBN Extends Suspension of Cash Deposit Processing Charges to March 2025

Published

1 day ago

September 30, 2024

Bassey Marshall

Central Bank of Nigeria - Investors King

The Central Bank of Nigeria (CBN) has extended the deadline for processing charges on cash deposits from September 30, 2024 to March 31, 2025.

The apex bank announced in a letter dated September 27, 2024, and addressed it to all commercial banks and financial institutions in Nigeria.

The letter, signed by the CBN’s Director of Banking Supervision, Adetona Adedeji, in Abuja, detailed that via this extension, the CBN hopes that depositors would dodge any additional charges when making substantial cash deposits.

According to the CBN, commercial banks and financial institutions were directed to continue accepting cash deposits from customers without charges.

The letter reads, “Further to our letter dated May 6, 2024, referenced BSD/DIR/PUB/LAB/016/023, the Central Bank of Nigeria hereby extends the suspension of processing charges on cash deposits above N500,000 for individuals and N3,000,000 for corporates. The previous suspension, set to expire on September 30, 2024, has now been extended until March 31, 2025.”

“This suspension pertains to the two percent and three percent fees outlined in the ‘Guide to Charges by banks, other financial institutions and non-bank financial institutions,’ issued on December 20, 2019.”

Investors King reported that on May 9, 2024, the CBN suspended processing fees on cash deposits until September 30.

A letter by the apex bank directed that the 2 percent and 3 percent fees charged on cash deposits above N500,000 for individuals and N3 million for corporates should be further suspended.

Banking Sector

Increasing Online Fraud Threatens Nigerian Banks’ Survival

Published

1 day ago

September 30, 2024

Ugwoke Ogbodo

Experts have said that the operations of commercial banks and their continuous existence may be severely affected if the worsening online fraudulent activities against financial institutions are not tackled.

They lamented that even though many commercial banks have increased their spending on technology, including cybersecurity, they still lose billions of naira to fraudsters, especially through their payment channels.

For instance, no fewer than six commercial banks have increased their spendings by 176.09 to N196.89 billion percent in the first half of 2024 compared to the same period in 2023 to prevent online fraud.

Notwithstanding this step, fraud within the banking halls surged by 589.01 percent during this period.

A recent Financial Institutions Training Centre (FITC) report revealed that banks suffered a total loss of N43.12 billion due to fraud in H1 2024, a jump from N6.26 billion recorded in H1 2023.

The report showed an 8,993.04 percent increase in fraud-related losses, from N468.49 million in Q1 2024 to N42.6 billion in Q2 2024.

In the period under review, FITC received 80 returns on fraud and forgery cases from 28 deposit money institutions.

Six banks including Access Holdings Plc, the parent company of Access Bank, Guaranty Trust Holding Company (GTCO), the owner of GTBank, Zenith Bank, Stanbic IBTC Holdings Plc, Wema Bank, and First City Monument Bank have increased their spendings on IT to the tune of N196billion.

While Access Bank led the way in IT and e-business expenses, spending N111.24 billion — a 265.13 percent increase from N30.47 billion in H1 2023, GTCO’s tech expenses rose 115.09 percent to N36.60 billion from N17.02 billion. Zenith Bank’s IT expenditure climbed 166.29 percent to N23.09 billion, compared to N8.67 billion the previous year. Stanbic IBTC’s expenses grew by 110.95 percent to N15.86 billion from N7.52 billion. FCMB increased its spending by 29.39 percent to N8.97 billion, and Wema Bank’s tech expenses rose by 59.41 percent to N1.13 billion.

Meanwhile, fraud cases continue to rise notwithstanding this huge expenditure.

Already, FITC has reported 23,004 fraud cases in H1 2024 alone.

It disclosed that the most prevalent types of fraud included computer/web fraud, mobile fraud, and POS-related fraud, following trends from 2023 and Q1 2024.

The analysis revealed a rise in fraud losses across all payment channels except for mobile fraud, which saw a decline.

Also, INTERPOL’s May 2024 report emphasised the growing threat of online fraud across Africa.

Expert firms such as FITC have said investment in technology alone would not address the menace as miscellaneous also account for major parts of the fraud.

An expert, Adedeji Olowe, founder and chief executive officer of Lendsqr, said that banks already have the tools to tackle fraud but that these tools are not being put to use.

Similarly, Pwapo of Resilience Technologies noted that overlapping roles within the banking sector create perfect conditions for some fraud types to thrive, adding that all these needed to be tackled to save financial institutions from further losses.