The Nigerian Financial Intelligence Unit (NFIU) is ramping up efforts to combat Financial Crimes and enhance the country’s financial Security using advanced Technology and strengthened collaborations. This initiative is part of a strategy to address Nigeria’s placement on the Financial Action Task Force (FATF) grey list, which points to deficiencies in Anti-money laundering (AML) and counter-financing of Terrorism (CFT) measures. Nigeria’s inclusion on the grey list has highlighted the need for immediate reforms to avoid further reputational and economic consequences.
During a high-level conference held in Lagos, organised in partnership with the London Stock Exchange Group (LSEG) Risk Intelligence, the NFIU announced the creation of a specialised unit, “Emerging Technologies and Innovations Sector.” This unit is dedicated to deploying advanced tools to track and prevent financial crimes. Efforts include automating processes and developing advanced software solutions to monitor suspicious activities. Recognising the complexity of financial threats, the NFIU emphasised the importance of collaboration in combating financial crimes. Partnering with organisations like LSEG Risk Intelligence provides access to advanced technological tools and data analytics to strengthen financial security systems.
Economic implications of greylisting and national response.
Moreover, the greylisting began in February 2023 and adversely affected Nigeria’s international reputation and foreign Investment inflows. To address these issues, the NFIU works closely with other government agencies, Private Sector stakeholders, and international partners to enhance interagency cooperation, improve information sharing, and build a robust framework to sustain long-term resilience against financial crimes. The FATF greylisting has significant economic implications for Nigeria, including reduced foreign direct investments and a decline in international confidence. Being on the list signals vulnerabilities in the country’s financial systems, discouraging businesses and Investors from engaging in the economy.
However, the public and private sectors are committed to reversing this trend by addressing the gaps identified by the FATF. The NFIU promotes a coordinated approach to tackling these issues, with initiatives like the Bank Verification Number (BVN) system as successful examples of public-private partnerships. The BVN initiative, developed in collaboration with The Central Bank of Nigeria (CBN) and commercial banks, has strengthened the country’s financial system by improving transparency and security. These efforts demonstrate the importance of leveraging Innovation and partnerships to overcome financial crime challenges.
Causes and impact of cybersecurity and ways to address it.
As Nigeria transitions to a cashless economy, the threat of Cybercrime has become increasingly significant. Cybercrime encompasses a range of illegal activities, including phishing, hacking, Social Media hijacking, fraudulent emails, and BVN scams. These crimes exploit technological vulnerabilities and unsuspecting individuals, posing a serious financial and personal security challenge. Several factors contribute to the prevalence of cybercrime in the country. High Unemployment rates, a growing desire for quick wealth, weak legal frameworks, and inadequate cybersecurity measures have created an environment where cybercrime thrives.
Meanwhile, the financial losses are staggering, with estimates reaching #250 billion in 2017 and #288 billion in 2018. Beyond monetary losses, cybercrime tarnishes the nation’s global reputation, discourages foreign investments, and creates a hostile environment for businesses, particularly small and medium-sized enterprises (SMEs). Despite its widespread impact, over 95% of cybercrimes in the country go unreported, making it difficult to gauge the full extent of the problem. To tackle this growing threat, a comprehensive approach involving individuals, businesses, the government, and international stakeholders is critical. Key measures include raising awareness about cybercriminal tactics, enhancing personal cybersecurity, and establishing anti-scam centres.
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Lastly, the CBN has taken proactive steps by introducing a risk-based cyber framework for deposit money banks and payment service providers. This framework aims to secure critical information assets, including customer data, accessible through the internet. Additionally, Nigeria can adopt strategies used in other countries, such as Singapore’s Anti-Scam Centre. The centre disrupts Scam operations by impeding fund transfers, freezing bank accounts, and recovering lost funds. These proactive measures have proven effective, recovering 35% of lost funds in just two months, far above average recovery rates.