1111103911703 ORGANISED CRIMES and the LAW a Comparative Study of Combating Money Laundering in...

ORGANISED CRIMES & THE LAW: A Comparative Study on Combating Money Laundering in Nigeria, India and Germany

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ORGANISED CRIMES & THE

LAW: A Comparative Study on

Combating Money Laundering in

Nigeria, India and Germany. ©2009 Adv. Chitengi Sipho Justine1

[email protected]

1.0 Introduction

Money laundering being a burgeoning threat

to the international economy as well as

national economies and systems of

governance, the fight against this menace

needs concerted efforts by all countries.2 It

may also adversely impact on investors’

confidence thereby affecting the growth of

the economy. Therefore, not only does it

result in loss of citizens’ rights but also has

the potential to ruin the moral fabric of the

society.3 Against the backdrop of sophistry

of money laundering (in nature, content and

character), different countries have taken

different approaches to legislate anti-money

laundering regimes (hereafter ‘AML

1 -------------------------------------------------------------

Justine Sipho Chitengi (PhD Cand;

LLM; LLB merit; BSc. Forestry;

PGC; CPD; PGC; PGC; AHCZ) is an

Advocate of the High Court for

Zambia and author of a number of

articles on Law and Policy. ---------------------------------------------------------- 2 A. Itzikowitz, “Combating Money Laundering: The South

African Solution” in Goo, Arner and Zhou, The

International Financial Sector Reform Standard Setting

and Infrastructure Development cited in R. Ezeani,

Impact of International and Domestic Laws on Money

Laundering Activities in the ECOWAS: A Legal Perspective

(2005) 2, available at

www.aeandelegal.com/dynamicdata/flash/MONEY%20LA

UNDERING%20in%20Ecowas%20reviewed.pdf accessed

on 30 September 2009. 3 A. Bharti et al, “The Economic Crimes Including Money

Laundering; Its Legal and Financial Implications” in

UNAFEI, Group 2 Resource Material Series No.67, 128th

International Training Course Reports [for India, Japan,

Albania, Laos, Vanuatu, and Bangladesh], 246. Copy is

available with the author.

Regimes’) compatible with their respective

national legal systems.4 However, following

the globalisation of money laundering there

is general agreement that one of the most

appropriate measures to obviate such threats

of this crime with its attendant nefarious

characteristics is for countries to borrow a

leaf from one another.5

2.0 Main Text

Therefore, as per the scope and gist, this

article critically compares the anti- money

laundering regimes of Nigeria, India and

Germany with specific reference to i)

predicate crimes; ii)suspicious transaction

reporting and other reporting; iii)obligations

imposed on non-financial businesses and

professions; and iv) financial intelligence

gathering. The paper will deal with the

aforementioned in four consecutive

segments under their respective headings,

and finally deduce a conclusion highlighting

the strengths and weaknesses of each

comparator country so as to suggest how

they may learn from one another.

2.1 Predicate Offences

Money Laundering is a peculiar crime in

that it is often the expression of other

underlying economic criminal activities such

as corruption or drug trafficking, inter alia.6

When these underlying crimes are

committed, it is the instrumentality of

4 A. Dadoo, Money Laundering (21 February 2008)

available at www.globalpolitician.com/24153-finance-

crime#0200001E and accessed on 3 October 2009. 5 Cf: I. S. King’wai (chairperson) et al, “Components and

Legal Frameworks for Combating Transnational Organised

Crime: Criminalisation of Participation in Organised

Criminal Groups/Conspiracy; Anti- Money Laundering

System; Asset Forfeiture System (For Assets Derived from

Organised Crimes)” in UNAFEI, Group 3, Phase 2

Resource Material Series No.58, 116th International

Training Course Reports [for Tanzania, India, Nigeria,

Japan, Pakistan, and Italy], 259. Copy is available with the

author. 6 N. S. Okogbule, “Regulation of money laundering in

Africa: the Nigerian and Zambian approaches” in Emerald

Insight, Journal of Money Laundering Control (2007) Vol.

10 No. 4, 449-463 at 451.

mailto:[email protected]

http://www.aeandelegal.com/dynamicdata/flash/MONEY%20LAUNDERING%20in%20Ecowas%20reviewed.pdf


http://www.globalpolitician.com/24153-finance-crime#0200001E



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money laundering that the proceeds are

sought to be disguised to enable the

perpetrators enjoy these profits without legal

jeopardy. These underlying offences are

known as predicate offences. According to

the United Nations Office on Drugs and

Crime, a predicate offence is “...the criminal

activity from which the proceeds of the

crime are derived, with money laundering

being the derivative crime.”7

Different countries take different approaches

when legislating on predicate offences. On

the one hand there are those that explicitly

list specific criminal activities as predicate

offences. One major defect with such

approach is that it limits the scope of illegal

activities that could precipitate money

laundering, thus creating an avoidable

loophole for accused persons to escape

justice.8 On the other hand, there are

countries that criminalise laundering of

proceeds obtained from any criminal act

whatsoever.9

2.1.1 Nigeria

The Nigerian AML Regime is largely

governed by three statutes namely; the

Money Laundering Prohibition

(Amendment) Act (hereafter MLPAA),10

the

Advanced Fee Fraud and Other Fraud

Related Offences Act11

and the 2004

Economic and Financial Crimes

7 UNODC, “Predicate Offence” in UNDOC, Money

Laundering Terms Dictionary (2005). Accessed on 30

September 2009, at http://www.babylon.com/definition/Predicate_offence/English 8 A. Adekunle, “Seizure of Proceeds of Criminal Activity:

Trends in Recent Financial Crimes Legislation in Nigeria”

in Modern Practice Journal of Finance and Investment

Law (1999) Vol. 3, No. 2, 250 at 262. 9 R. Ezeani, Impact of International and Domestic Laws on

Money Laundering Activities in the ECOWAS: A Legal

Perspective (2005) 3, accessed on 30 September 2009 at


UNDERING%20in%20Ecowas%20reviewed.pdf 10 Of March 2004 amending the Money Laundering

(Prohibition) Act No 7 of 2003 (hereinafter MLPA) 11 No 3 of 1995.

Commission (Establishment) Act (hereafter

2004 EFCCEA).12

Under this AML Regime,

predicate offences include any criminal

activity such as common theft.13

The author opines that this approach is good

for Nigeria as it keeps her in tandem with

international trends of widening the

definition and scope of money laundering.

Secondly, it a positive approach as it hits at

the laundering of the proceeds of any crime

so as to principally cripple its financing and

logistic support which is the main aim of

such international instruments as the United

Nations Convention on Transnational

Crimes and successful national legislation in

countries like the United Kingdom.14

2.1.2 India

India is a bit similar to Nigeria in that the

fundamental Act itself, 2002 Prevention of

Money Laundering Act (hereinafter 2002

PMLA)15

takes a general definition of “any

crime” and does not restrict itself to specific

predicate offences; yet, other statutes

supplement it by explicitly identifying

specific activities that constitute predicate

offences. They include terrorist activities as

per the 1967 Unlawful Activities

(Prevention) Act (hereafter UAPA),16

and

illicit traffic in drug and psychotropic

substances as per the 1985 Narcotic Drugs

and Psychotropic Substances Act

(hereinafter 1985 NDPSA).

This approach is commendable because it

casts the net wide enough to capture all

illicit activities, and at the same time

provides itself with checks and balances not

to lose focus. Such approach could have

been prone to the criticism for ambiguity

12 Repealing the December 2002 edition 13 R. Ezeani, op cit, 3. 14 Proceeds of Crimes Act No c. 29 of 2002. 15 (28 November 2002), Section 3 16 Section 21




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and unpredictability in the law had it not

been for the supplementary statutes.

2.1.3 Germany The German AML Regime is premised on

Section 261 of the Criminal Code (Money

Laundering; Disguising of Illegal Assets). It

categorically identifies only 4 specific types

of crimes as the money laundering predicate

offences namely;17

i) all major crimes

(Verbrechen), i.e. all offences carrying a

minimum of one year's imprisonment such

as human trafficking; ii) all less serious

crimes (Vergehen) of illegal trade in

narcotics and precursors;18

iii) certain

Vergehen involving property, fraud,

document and corruption offences

committed on a commercial basis by a

member of a gang formed for recurrent

commission of such offences; and iv) all

Vergehen committed by a member of a

criminal association within the meaning of

Section 129 of the Criminal Code such as

gambling.

The author is of the opinion that this

approach of clearly listing which exact

criminal activities constitute predicate

offences has both pros and cons. The major

advantage is that it enhances predictability

in the law by eliminating ambiguity and

uncertainty, while the main disadvantage is

that the scope of the AML Regime is

relatively narrowed resulting in some

probable money laundering activities go

unpunished. However, repeated national

surveys have shown that though the number

charges generated on these predicate

17 The European Commission, “Money Laundering: How to

Improve EU Rules for Prevention” in Europa Internal

Market, Single Market News (October 1998) Special

Feature No. 14, 2. Copies of the report are available via the

DG XV's website:

http://ec.europa.eu/dg15 accessed on 28 September 2009. 18 Sentence No 1 of Section 29(1), the Narcotics Act

(Betäubungsmittelgesetz) or Section 29(1) of the

Commodities Control Act (Grundstoffüber-

wachungsgesetz)

offences has been relatively small (average

20 annually), the rate of convictions has

been almost 100%.19

Therefore, the author is

of the view that Germany’s approach on

predicate offences is the best of the three

because prosecution of economic crimes is

very expensive; therefore, it must be about

successful prosecutions and not so many

cases that end unsuccessfully.

2.2 Suspicious Transaction Reporting and

Other Reporting(s)

By norm and practice, the Commercial

Crimes Units of each country are

empowered to receive suspicious transaction

reports (STRs) and other types of reports on

behalf of the prosecution authorities. In

conformity with their respective legal

systems, different countries define STRs

differently. Some adopt a wider definition

than others. Consequently, for those with

narrow definitions, the obligation to

generate STRs is circumscribed as those

reports only arises if the offence suspected is

a money laundering predicate offence. The

same applies to the proscription of bank

secrecy rules and lawyer/client

confidentiality. The rules only fall away if

money laundering predicate offence is

involved.

2.2.1 Nigeria

Due to its wider view of money laundering

to cover laundering of proceeds of all

crimes, Nigeria’s AML Regime has widened

the latitude of matters to be reported. In

Nigeria every suspicious transaction must be

reported regardless of whether it involves

laundering of proceeds of a crime or

not.20

Incidental to this, the Nigerian AML

Regime has four philosophies underlying its

19 Per German Criminologist, Michael Kilchling quoted by

P. Reuter and E. M. Truman, “Combating Predicate Crimes

Involved in Money Laundering” in Chasing Dirty Money:

The Fight Against Money Laundering (2004) IIE

Publications, Washington D.C, 105, at 118. 20 See R. Ezeani, op cit, 9.

http://ec.europa.eu/dg15


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reporting system.21 Firstly, the law creates

control mechanisms to discourage huge

financial transactions being conducted with

the use of cash. Section 1(1) of PLMAA

stipulates that no person or body corporate

shall make or accept cash payment of a sum

exceeding N500, 000 or its equivalent in the

case of individuals, while in the case of a

corporate body the amount is limited to N2,

000,000 unless the transaction is done

through a financial institution. In doing so,

financial institutions act as government

agents for monitoring and regulating

transactions involving huge sums.

Secondly, and further to the above, PLMAA

section 2(1) directs financial institutions to

disclose any financial transaction exceeding

a particular sum of money. It stipulates thus:

“A transfer to or from a foreign country of

funds or securities of a sum exceeding

US$10,000 or its equivalent shall be

reported to the Central Bank of Nigeria.” It

goes further to provide that a report made

pursuant to the above provision shall

indicate the nature and amount of the

transfer, the names and addresses of the

sender and receiver of the funds or

securities.22

The author submits that this

provision is vital in the prevention of money

laundering as perpetrators feel deterred from

using of such financial institutions for

money laundering, since publicity or the fear

of publicity would expose their nefarious

activities.

Thirdly, in a bid to curb money laundering,

like other comparator countries, Nigeria

obligates financial institutions to enforce the

“Know-Your Customer” (hereinafter KYC)

requirements. This requires all financial

institutions (including Bureaux de Change)

to know the true identity of their customers

and report to the relevant authorities any

21 Cf: Okogbule, op cit, at 453. 22 MLPAA, Section 2(2)

suspicious transactions concerning those

clients’ accounts.23

Financial institutions are

therefore expected to be vigilant in reporting

all unusual and complex transactions

notwithstanding any oath, contractual

obligations, or arrangements with the

customer and such reporters are immune

from civil and criminal liability for those

reports done in good faith though no offence

of money laundering was actually

committed and they did not know precisely

the nature of the underlying criminal

activity.24

Fourthly, the PMLA imposes an obligation

of record keeping imposed on such financial

institutions. In Nigeria records of

transactions and customer identity are to be

kept for 10 years, and any banker or person

engaged in financial activities, who destroys

records before the end of the prescribed

statutory period is guilty of an offence.25

In

the author’s considered opinion, this is

another area where the Nigerian AML

Regime has taken a huge vital strides as it

has even gone beyond FATF

Recommendation that Banks and Financial

institutions maintain records of their clients’

identification and transactions for up to 5

years during the operational life of the

concerned account(s).

2.2.2 India

Section 12, 2002 PMLA and Rule 8 of

Notification No. 9 of 2005 impose an

obligation on banking companies, financial

institutions and intermediaries of the

securities market to verify the identity of

clients, maintain records and furnish

information to the authorities whenever

there are suspicious transactions.26

23 Ezeani, op cit, 4 24 Ibid, 6 25 Ibid, 4 26 FIU-IND, “Banking Company: Suspicious Transaction

Report” in Electronic File Structure, 2, available at


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Suspicious transactions entail any

transactions which a reasonable person

acting in good faith would conclude that

they; gives rise to a reasonable ground to

believe that they involve proceeds of crime;

or appear to be made in circumstances of

unusual or unjustified complexity; or appear

to have no economic rationale or bona fide

purpose.

The author submits, therefore, that with

respect the reporting of suspicious

transactions, India has the most effective

and comprehensive laws with very clear and

detailed broad categories of reasons for

suspicion.

2.2.3 Germany

The cornerstone of the German AML

Regime is the obligation on credit and

financial institutions (including 'bureaux de

change') to require identification of all their

customers when beginning a business

relationship (particularly the opening of an

account or offering safe-deposit facilities),

when a single transaction or linked

transactions exceed €15,000 or when they

suspect laundering.27

However, German

legislation does not establish a specific

sanction for the failure to report suspicions

of money laundering, though it provides

administrative sanctions (a fine up to

€50,000) for informing the customer or a

party other than a public authority of the

filing of a report and for other types of

administrative offences.

If the financial institution does not report

probable suspicions it becomes liable for an

offence of negligent money laundering for

which penalty is up to 2 years of

imprisonment or a fine, and an offence of

www.pfiuindia.gov.indownloadsSTRBank.pdf and accessed

on 3 October 2009 27 The European Commission, op cit.

obstruction of punishment, for which the

penalty is up to 5 years of imprisonment or a

fine.28

Though some authors have argued

that in practice, administrative sanctions are

available for serious cases of non-

reporting,29

the author contends that

Germany should consider amending its

legislation to specifically impose a sanction

for failure to report suspicious transactions.

2.3.0 Obligations on Non-Financial

Businesses and Professions Combating money laundering and indeed

any other white collar/organised crime

demands the crossing out of the financial

trading businesses to other businesses and

professions as evidenced in the United

Nations Convention against Transnational

Organized Crime which requires member

States to establish:

“...a comprehensive domestic

regulatory and supervisory regime for

banks and non-bank financial

institutions and, where appropriate,

other bodies particularly susceptible to

money-laundering, within its

competence, in order to deter and

detect all forms of money-

laundering....”30

Furthermore, FATF Recommendations

require member states to empower their

competent authorities to extend their

mandate to obtain financial intelligence

from non- financial institutions and other

professions.31

28 J. A. A. Méndez et al, Germany: Report on the

Observance of Standards and Codes- FATF

Recommendations for Anti-Money Laundering and

Combating the Financing of Terrorism (July 2004) IMF

Country Report No. 04/213, IMF Publication Services,

Washington DC, 4, para 18. 29 Ibid. 30 The Palermo Convention, 2000, Article 7. 31 Cf: L. Fernandez, “Investigating Money Laundering 2”

(September 2009) Lecture Materials: The Law Related to

Anti- Money Laundering and Organised Crime, Masters

Degree Program, South African- German Centre of

Excellence, UWC, 2.


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2.3.1 Nigeria

The 2007 US DoS Report32

notes that under

the MLPAA and the 1995 Foreign Exchange

(Monitoring and Miscellaneous Provisions)

Act, Nigeria’s AML Regime extends to non-

financial businesses and professions such as

hotels, legal practitioners, and other

businesses designated by the Federal

Ministry of Commerce. The laws also

require the designated non-financial

institutions to furnish the authorities with

details of their financial transactions,

especially STRs, and reports involving the

transfer of funds or securities exceeding

$10,000 to or from foreign countries. The

report, however, noted that the oversight of

compliance by the Ministry of Commerce

has not been rigorous or effective, hence,

recommended further strengthening of the

supervision of non- financial institutions by

removing the oversight function from the

Ministry of Commerce.33

The author is of the view that PLMAA

Section 16 impliedly imposes an obligation

on all persons (including non- financial

business entities) not to assist, condone, or

acquiesce the commission of money

laundering. If they do not do so, they risk

being held complicity to the offence with a

stiffer penalty than that for the launderer

himself.34

Perhaps the rationale for such

disparities is to deter non- financial

businesses and professions like lawyers

from rendering the much needed expertise to

the launderers for purposes of perpetrating

the crime as enunciated by the Germany

Federal Constitutional Court.35

Moreover, it

32 Cited in Financial Standards Foundation, Nigeria: Anti-

Money Laundering/Combating Terrorist Financing

Standard (2008) available at www.eStandardsForum.org

accessed on 3 October 2009, 1, para 3. 33 Ibid. 34 PLMAA, Section 14(1) 35 See A. Bussenius, “Money Laundering by Defence

Counsel: The Decision of the Federal Constitutional Court”

is equally an offence under for non-

financial institutions or professions to

conspire with, aid, abet or counsel any

person to launder money,36

punishable with

compulsory winding up in serious cases.37

The author opines that such provisions are

good deterrent measures in the fight against

financial crimes and conform to well-known

principles governing corporate criminal

liability.38

However, for developing

countries like Nigeria, such penalty is too

harsh as one of the social implications of

such a winding up would be unemployment.

In a country where the rate of

unemployment is already very high, such

measures are likely to aggravate socio-

economic problems instead of remedying

the same mischief.39

2.3.2 India

The 2002 PMLA makes it obligatory for

financial institutions and their intermediaries

(who may be non- financial businesses or

profession) to maintain a record of all

probable suspicious transactions or series of

transactions, the nature and value of which

is prescribed by the Central Government.40

It is also a mandatory requisite for these

institutions to validate and preserve the

records of identity of all its clients in the

prescribed manner for a period of five years

from the date of cessation of transactions

between them; and be ready to tender such

records within a prescribed time and manner

once called upon by the designated

authorities.41

in Germany Law Journal (1 September 2004) vol. 5, No. 9,

490. 36 PLMAA Section 17 (a) 37 Ibid, Section 18(1) (2) 38 L.C.B. Gower et al, Gower’s Principles of Modern

Company Law (1979), 4th ed., Stevens & Sons, London,

126 39 Cf: Okogbule, op cit, 454. 40 Section 11 41 See Dadoo, op cit for a lengthy discussion of section 11.


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Further, when read together, Sections 8A

and 38 of the 1985 NDPSA also criminalise

the concealing or disguising of the true

nature, source, location and disposition of

any property, not necessarily by financial

institutions alone, with the knowledge that

such property is derived from an offence.

These provisions actually apply the

international principle of dual criminality in

that it prohibits the aforementioned vices as

criminalised in India or “any corresponding

law of any other country.” The author

submits that this is a positive feature of the

Indian ant- money laundering regime as far

as non- financial businesses or professions

are concerned as the law essentially imposes

obligations on the non- financial institutions

even for breaches committed outside abroad.

The author is of the view that India’s AML

Regime on non- financial businesses and

professions is sufficient and favourable. For

example, on the footing of the 1967 UAPA’s

alone so many companies have been wound

up with their directors imprisoned in certain

cases for non-compliance with its Sections

21 and 24. These sections make a

punishable offence the holding of proceeds

derived from terrorist activities, and impose

a duty on Directors of financial and non-

financial companies compulsorily transfer

shares of all members suspected of terrorist

activities into the name of the government,

respectively.42

In fact, India is known for its record of

prosecuting directors of both financial and

non- financial businesses for economic

crimes as evidenced by a long list of cases

such as Standard Chartered Bank v.

Directorate of Enforcement;43

State of

Maharashtra v. Syndicate Transport Co. (P)

Ltd;44

M.C.D. v. J.B. Bottling Co. Pvt. Ltd;45

42 Cf: Muralidhar and Deva, op cit, 9. 43 (2005) 4 SCC 530 or AIR 2005 SC 2622 44 AIR 1964 Bom 195.

and Emperor v. Dhanraj Mills Ltd, inter

alia,46

where the obligations on non-

financial businesses have been re-echoed.

2.3.3 Germany

In Germany, the law concerning non-

financial institutions is entrenched in the

new requirements detailed in the

Geldwäschegesetz (hereinafter “GwG”)47

and in line with the second EC Money

Laundering Directive which obligate

additional professions outside financial

institutions (in particular, lawyers, estate

agents, notaries, tax consultants and

accountants) to the identification and

reporting requirements. In practice, the

provision is almost obsolete as almost

negligible reports are made annually; in

2002 only three such reports were made.48

The author opines that this may be

attributable to the fact that prosecuting legal

entities is problematic because traditionally

only natural persons are subject to

prosecution under German criminal law.

Therefore, officers of a company who are

responsible for acts done in the name of the

company are sought to be made personally

liable for acts which result in criminal action

being taken against the Company; and this

only happens in very special circumstances

which do not include money laundering so

far.49

With reference to professions like

lawyers, the situation is still problematic

because the threshold to impugn the blame

is too high. A lawyer is only under duty to

report if he actually knows, and not only

suspecting, that his/her client is involved in

money laundering that lawyer.50

45 1975 Cri LJ 1148 (Del) (FB) 46 AIR 1943 Bom 182. 47 Money Laundering Act as amended on 8 August 2002. 48 Méndez et al, op cit, 8, para 41 49 R. Klinger and A. Sebok, “Survey Response, Laws of

Germany” in Fafo, Commerce, Crime and Conflict: A

Survey of Sixteen Jurisdictions (2006) Fafo AIS, Germany,

8- 10. 50 Bussenius, op cit, 490


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2.4.0 Financial Intelligence Gathering

Financial intelligence gathering has been

defined as: “investigations in which – on

behalf of law enforcement- financial

expertise is used in order to gather, check,

refine, process and analyse (financial)

information.”51

Statements from informers,

as well as publicly accessible information

may be used by the Financial Intelligence

Units (hereinafter FIUs). The FATF

Recommendations which leave it up to the

individual countries decide the kind of FIUs

that they consider appropriate.52

As such

some countries allow their FIUs to accept

information obtained through under-cover

agents’ ‘sting’ operations53

while others do

not.

Ordinarily, FIUs are the central authorities

mandated with receiving of STRs and other

reports though it is acceptable in some

countries to have various government units,

permanent or temporary investigative

groups/wings helping the FIUs.54

2.4.1 Nigeria

Upon promulgation of the 1995 MLD,

Nigeria established a Money Laundering

Surveillance Unit in the Central Bank of

Nigeria55

which was later replaced with a

much more effective one called the


Commission in 2002 tasked with the

gathering of financial intelligence, inter

alia.56

The Commission has power to

conduct investigation as to whether any

person has committed an economic or

financial crime. It also has power to conduct

investigations into the properties of any

51 M. Pfeiffer “Financial Investigations and Criminal

Policy” (1988) 2 Journal of Money Laundering Control,

Washington D.C, 33 at 34 52 Cf: Fernandez, op cit, 3. 53 Ibid, 9 54

FATF, Recommendation 27. See also Fernandez, op cit, 2. 55 King’wai op cit, 255 56 Economic and Financial Crimes Enforcement

Commission Act of 2002, Preamble.

person if it appears to it that the extent of the

properties and life style of the person are not

justified by his official income. In the

exercise of these powers the Commission is

under the control of the Attorney General of

the Federation who may from time to time

give directions to the Commission. The law

makes it mandatory for any officer of a bank

or other financial institution to take

reasonable care to comply with the

Commission57

as failure to do so is an

offence punishable by imprisonment.58

2.4.2 India

The Government of India set up Financial

Intelligence Unit (hereinafter referred to as

“FIU-IND”) on 18 November 2004 as an

independent body to report directly to the

Economic Intelligence Council (EIC)

headed by the Finance Minister.59

The FIU-

IND operates as a repository for (STRs)

which are then forwarded to a department

within the Ministry of Finance

investigations and decision on whether to

prosecute or not.60

This is a unique feature

about India’s AML in this context as it

delegates powers to “subjective” agencies to

use their discretion whether or not to

prosecute. In fact there are a number of

other national agencies responsible for

overseeing specific pieces of legislation

governing economic crimes with too wide

latitudes of discretion; such as the

Commissioner of Customs, and the

Narcotics Control Bureau, inter alia. The

flaw is that such wings not under obligation

57 Ibid. 58 Ezeani, op cit, 8- 9 59 FIU-IND, op cit 60 ASIA/PACIFIC GROUP ON MONEY LAUNDERING

(APG), “India: Anti- Money Laundering and Combating

the Financing of Terrorism” in 1st

APG Mutual Evaluation

against the FATF 40 Recommendations and 9 Special

Recommendations (13 July 2005), para 10,

www.apgml.orgdocumentsdocs8India%20Mutual%20Evalu

ation%20Executive%20Summary.pdf accessed on 3

October 2009. See also T. Jyoti, Crime and Money

Laundering- The Indian Perspective (2004) Oxford

University Press, London, 9.


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to report suspicious transactions to other

relevant authorities for effective gathering of

financial intelligence.61

2.4.3 Germany

The German FIU was only established on 15

August 2002 and joined the Egmont Group

in June 2003. It was formed as a distinct

entity within the BKA which provides for a

specific “police character” of the FIU. To

ensure a full range of expertise, the FIU has

opted for a multi-disciplinary approach and

has recruited consultants from the banking

sector and a firm of auditors. The FIU is

required to (1) collect and analyse STRs

filed, in particular checking against data

stored by other offices, and (2) report to the

federal and Land prosecuting authorities

without delay information that concerns

them as well as any connections between

criminal acts ascertained. Apart from these

“standard tasks”, within the FIU there are

specialisations in the areas of data

processing, operational/strategic analysis

and policy-making. The FIU does have

access to numerous sources of information,

whether financial, administrative, or law

enforcement to enable it to adequately

undertake its responsibilities.62

For purposes of financial intelligence

gathering, a search and seizure warrant may

be issued authorizing an appropriate person

(a) to enter and search premises specified in

the application for the warrant; and (b) to

seize and retain any material found there

which is likely to be of substantial value

61 I. Dettmann-Busch (Moderator) et al, Capacity Building

for FIUs: A Regional Exchange for Practitioners on

Financial Analysis Techniques and Global AML/CFT

standards (4 - 8 August 2008), FIU (Financial Intelligence

Units) Workshop on Financial Analysis Techniques,

organized by InWEnt and Capacity Building International

(Germany) in collaboration with the Asia/Pacific Group on

Money Laundering (APG) and the Office of Technical

Assistance (OTA) of the U.S. Department of the Treasury,

New Delhi, 2. 62 Dettmann-Busch (Moderator), op cit

(whether or not by itself) to the investigation

for the purposes of which the application is

made.63

Searches and seizures are, however,

subject to the constitutional safeguard of the

right to privacy which may limit, time,

space, and nature of article to be seized

(scope).64

The prosecutors are allowed to take drastic

measures against a lawyer who is suspected

of having committed money laundering by

accepting dirty money from a client. In this

situation the StPO (Criminal Procedure

Code) can justify not only searches and

seizures but also the surveillance of (taping

into) telecommunication lines in counsel´s

office.65

The author submits that such

unique empowerment on the part of

prosecutors has contributed to the strength

and effectiveness of the German FIU.

The major weakness that critics have

highlighted about Germany’s financial

intelligence gathering is that for instance,

there is no general provision in Germany in

relation to feedback, especially between the

FIU and the institutions filing the STRs

contrary to the FATF 40 Recommendations66

3.0 Conclusions

3.1 Nigeria

From the foregoing and indeed on a plethora

of literature, it is clear that though a

developing country, Nigeria has enacted

adequate and sufficient legislation to deal

with money laundering. This, coupled with

the apparent political will from the current

government has greatly enhanced the anti-

money laundering regime in Nigeria.

Nigeria has continued to constantly review

and her legislation in line with the trends in

63 Durchsungsbefehl, vide Paras 104 ff German Code of

Criminal Procedure. 64 Fernandez, op cit, 8- 9 65 StPO, Sections 97, 100a, and 102. See also Bussenia, op

cit, 2. 66 Méndez et al, op cit, 10, table 2.


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money laundering activities. More

importantly, Nigeria has significantly

improved her laws in the area of compliance

and prevention resulting in the FATF

removing her from the non-cooperative

countries and territories (NCCT) list in May

2006 after having placed her on that list for

5 years.67

These are very positive features

about Nigeria’s AML Regime. Unlike

Germany which does not explicitly stipulate

specific sanctions for non- reporting of

suspicious transactions68

, Nigeria has clear

laws on sanctions for not reporting

suspicious transactions. For instance, in the

early 2000 banks like Devcom, Manny Bank

& Trust Bank have been charged for non-

compliance with money laundering

provisions; and some car dealers such as

Carlink and Alpha Motors, inter alia, have

been shut down.69

3.2 India

India has adopted the most comprehensive

and elaborative laws in terms of substance,

content and procedure but relatively weak in

terms of enforcement. For instance, though

the anti- money laundering Act was only

enacted in 2002, as early as 1985 India had

already criminalised the concealing or

disguising of the true nature, source,

location and disposition of any property

derived from illicit activities70

which in

essence is money laundering. Secondly,

India has a very robust (quick action)

responsive approach to legislating on money

laundering so as to be in tandem with

international trends and keeping abreast new

techniques being devised and employed by

67 Financial Standards Foundation, op cit, 1. 68 Méndez et al, op cit, 10, para 40. 69 See back page of The Guardian Newspaper of Friday 30

June 2003 quoted in R. Ezeani, Impact of International and

Domestic Laws on Money Laundering Activities in the

ECOWAS: A Legal Perspective (2005) available at


UNDERING%20in%20Ecowas%20reviewed.pdf accessed

on 30 September 2009. 70 1985 NDPSA, Section 8A

launderers. For instance, the UAPA which

was enacted in 1967 initially intended to

punish unlawful activities of individuals and

associations, has since September 21, 2004,

been extensively amended include terrorist

activities as predicate offences of money

laundering, yet there has not been tangible

enforcement of the same.71

3.3 Germany

The German AML Regime is the most

successful of the three in terms of repressive

measures as it has proven to be effective and

efficiently implemented as evidenced in

successful prosecutions.72

Germany has

adopted a very comprehensive set of

repressive measures with regard to money

laundering. 73

However, there are a few

deficiencies that must be addressed in order

for Germany to comply with some of the

FATF standards; such as the absence of

specific sanctions for not reporting

suspicious transactions. A specific sanctions

regime for non- compliance with the

identification requirements in case of

suspicious transaction should be

incorporated within the legal framework.74

REFERENCES

(A) PRIMARY SOURCES

Table of Cases Cited

1. Emperor v. Dhanraj Mills Ltd, AIR

1943 Bom 182.

2. M.C.D. v. J.B. Bottling Co. Pvt. Ltd,

1975 Cri LJ 1148 (Del) (FB)

3. Standard Chartered Bank v.

Directorate of Enforcement, (2005) 4

SCC 530 or AIR 2005 SC 2622.

71 Cf: Judge Dr. S.Muralidhar and S. Deva, “Survey

Response, Laws of India” in Fafo, Commerce, Crime and

Conflict: A Survey of Sixteen Jurisdictions (2006) AIS,

New Delhi, 9. 72 Méndez, op cit, 9, para 44 73 Ibid, 1-2. 74 Ibid, 10, table 2.




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1. United Nations Convention on

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International

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(Prohibition) Act No 7 of 2003

Advanced Fee Fraud and Other Fraud

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Commission (Establishment) Act of

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edition

Foreign Exchange (Monitoring and

Miscellaneous Provisions) Act of

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Enforcement Commission Act of 2002.

Narcotic Drugs and Psychotropic

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November 2002.

Rule 8 of Notification No. 9 of 2005.

Unlawful Activities (Prevention) Act

of 1967.

3. Germany:

Code of Criminal Procedure

(Durchsungsbefehl).

Commodities Control Act

(Grundstoffüber-wachungsgesetz).

Criminal Code (Money Laundering;

Disguising of Illegal Assets).

Money Laundering Act as amended on

8 August 2002 (Geldwäschegesetz).

http://ec.europa.eu/dg15


of 13

Narcotics Act

(Betäubungsmittelgesetz).

4. United Kingdom

Proceeds of Crimes Act No c. 29 of

2002.

(B) SECONDARY SOURCES

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Japan, Albania, Laos, Vanuatu, and

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7. I. S. King’wai (chairperson) et al,

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of 13

Against Money Laundering (2004) IIE

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Domestic Laws on Money Laundering

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Seminars, Workshops, Presentations and

News papers

1. I. Dettmann-Busch (Moderator) et al,

Capacity Building for FIUs: A

Regional Exchange for Practitioners

on Financial Analysis Techniques and

Global AML/CFT standards (4 - 8

August 2008), FIU (Financial

Intelligence Units) Workshop on

Financial Analysis Techniques,

organized by InWEnt and Capacity

Building International (Germany) in

collaboration with the Asia/Pacific

Group on Money Laundering (APG)

and the Office of Technical Assistance

(OTA) of the U.S. Department of the

Treasury, New Delhi.

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“Components and Legal Frameworks

for Combating Transnational

Organised Crime: Criminalisation of

Participation in Organised Criminal

Groups/Conspiracy; Anti- Money

Laundering System; Asset Forfeiture

System (For Assets Derived from

Organised Crimes)” in UNAFEI,

Group 3, Phase 2 Resource Material

Series No.58, 116th

International

Training Course Reports [for

Tanzania, India, Nigeria, Japan,

Pakistan, and Italy], 259. Copy is


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NEY%20LAUNDERING%20in%20Ecowas%2

0reviewed.pdf







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