FinCEN Advisory

This Advisory is being issued to inform banks and other financial institutions operating in the United States of serious deficiencies in the counter-money launderingsystems of the Federal Republic of Nigeria. The impact of such deficiencies onthe scrutiny that should be given to certain transactions or banking relationshipsinvolving Nigeria, in light of the suspicious transaction reporting obligations offinancial institutions operating in the United States, is discussed below.
Nigeria is a large Western African nation, currently undergoing transition to acivilian republic form of government, following more than 16 years of military rule.It has a landmass of 923,768 square kilometers and a population of more than 120million. Nigeria’s oil sector provides 20% of its $110 billion GDP and 95% of itsforeign exchange earnings.
The counter-money laundering regime embodied in the legal, supervisory, andregulatory systems of Nigeria suffers from serious systemic problems as follows:

• Nigerian law fails to criminalize the laundering of illicit proceeds, other than proceeds derived from narcotics trafficking. Nigerian banks are not required to report all suspicious transactions; banks are exempt from making a suspicious transaction report for any transaction which they decline to conduct or which is discontinued prior to completion.
• There is no penalty under Nigeria’s laws for failing to comply with the suspicious transaction reporting obligation.

These deficiencies, among others, have caused Nigeria to be identified in June2001 by the Financial Action Task Force on Money Laundering (the “FATF”) asnon-cooperative “in the fight against money laundering.” The FATF, created at the1989 G-7 Economic Summit, is a 31 member international group that works tocombat money laundering.
According to the 2001 International Narcotics Control Strategy Report(“INSCR”), issued by the U.S. Department of State, Nigeria remains a worldwidehub for narcotics trafficking and money laundering activity. Nigeria is also notoriousfor various financial fraud schemes, which often involve the international wiretransfer of funds and which are estimated to cost American citizens and businesseshundreds of millions of dollars annually.
The Government of Nigeria has recently begun to cooperate with the FATF’sreview process and has pledged to take measures to address its criminal problemsand bring the Nigerian anti-money laundering regime into compliance with internationalstandards. Nigeria is, however, only beginning the movement toward reformand it may be some time before tangible results are realized. Nonetheless,Nigeria’s legal, supervisory, and regulatory systems create significant opportunitiesand tools for money laundering and increase the possibility that transactionsinvolving Nigerian entities and accounts will be used for illegal purposes.
Thus, banks and other financial institutions operating in the United Statesshould carefully consider, when dealing with transactions (especially those involvinglarge sums of money, whether in cash or by wire transfer), originating in orrouted to or through Nigeria, or involving entities organized or domiciled, orpersons maintaining accounts, in Nigeria, how the lack of adequate counter-moneylaundering controls in Nigeria affects the possibility that those transactions arebeing used for illegal purposes. A financial institution subject to the suspicioustransaction reporting rules contained within 31 C.F.R. Part 103, and in correspondingrules of the federal financial institution supervisory agencies, shouldcarefully examine the available facts relating to any such transaction to determine ifsuch transaction requires reporting in accordance with those rules. Institutionssubject to the Bank Secrecy Act but not yet subject to specific suspicious transactionreporting rules should consider such a transaction with relation to their reportingobligations under other applicable law. All institutions are particularly advisedto give enhanced scrutiny to transactions or relationships that do not involveestablished, and adequately identified and understood, commercial or investmententerprises, as well as to transactions involving the routing of transactions fromNigeria through third jurisdictions in ways that appear unrelated to commercialnecessities.
It should be emphasized that the issuance of this Advisory and the need forenhanced scrutiny for certain transactions or relationships does not mean that U.S.financial institutions should curtail legitimate business involving Nigeria.
To dispel any doubt about application of the “safe harbor” to transactionswithin the ambit of this Advisory, the Treasury Department will consider any reportrelating to a transaction described in this Advisory to constitute a report of asuspicious transaction relevant to a possible violation of law or regulation forpurposes of the prohibitions against disclosure and the protection from liability forthe reporting of suspicious transactions contained in 31 U.S.C. 5318(g)(2) and(g)(3).
United States officials stand ready to provide appropriate technical assistanceto Nigerian officials as they work to remedy the deficiencies in Nigeria’s countermoneylaundering systems that are the subject of this Advisory.

James F. Sloan
Director