Money Laundering Overview

Study Notes

Purpose of Money Laundering: To avoid prosecution, increase profits illegally, avoid seizure of wealth, appear legitimate, and manage tax evasion.
Effects of Money Laundering on the Economy: Facilitates criminal ambition, disrupts the economy, and encourages financial crimes.
Stages of the Money Laundering Process:
- Placement: The initial introduction of illegal funds into the financial system.
- Layering: The process of disguising the origin of the funds, making it difficult to trace.
- Integration: The return of the funds to the legitimate economy.
Sources of Funds for Money Laundering: Drug production and trafficking, human trafficking, corruption proceeds, embezzlement, and misappropriation of public funds.
Vulnerability of the Insurance Industry to Money Laundering:
- Acceptance of Cash Premiums: Makes it difficult to trace the source of funds.
- Bogus Claims: Money launderers can purchase a legitimate business, then create a fraudulent claim to recover their investment.
- Variety of Insurance Products: Some products, like those with cash surrender value, are vulnerable to money laundering.
Suspicious Transactions:
- Currency Transaction Report (CTR): Report any currency transaction exceeding N5 million for an individual or N10 million for a corporate body.
- Suspicious Transaction Report (STR): Identify and report any suspicious transaction that lacks an obvious economic rationale.

Counterproliferation: Combating the proliferation of weapons, including weapons of mass destruction, long-range missiles, and conventional weapons.
Counterproliferation Financing: Measures to combat proliferation by analyzing and preventing related financial transactions.
Proliferation Financing: Providing funds or financial services for the development, acquisition, or use of prohibited weapons.
How To Prevent Proliferation Financing:
- Internal Risk Assessment: Conduct a risk assessment to identify potential vulnerabilities and mitigate exposures.

Specific Provisions for Insurance Institutions: Design comprehensive AML/CTF training programs, appoint a Chief Compliance Officer and a Reporting Officer, conduct internal reviews of the AML/CTF program, and maintain records of all transactions for at least 5 years.
Benefits of AML/CTF Compliance: Attract and enhance patronage, enhance AML/CTF compliance management, lower the frequency of sanctions, and reduce risks.

Failure to develop an AML/CTF program - N1,000,000 fine.
Failure to file CTR/STR within 7 and 30 days - between N500,000.00 and N1,000,000 for each day of contravention.
Dealing with an anonymous person - N10m to N50m fine and 2 to 5 years imprisonment.
Obstruction of officers - N1m fine and 2 to 3 years imprisonment.

Podcast Beta