Asset Tracing In Nigeria

When it comes to asset tracing in Nigeria, there are many and varied intricate challenges to address. It is because of this, that it is a professional and complex skill much in demand.

Foreign legal and political landscapes, advances in technology and online capabilities, and heightened sophistication within fraudulent activities, have all facilitated the movement of assets worldwide and heightened the importance of discovering them swiftly.

This ease of movement presents a challenge for clients looking to locate and recover assets. None more so than if these assets are moved to, or within an emerging market or developing economy, which presents many obstacles to an investigator.

In this insight, we examine asset tracing in Nigeria. We look at the challenges that this emerging West African economy presents, particularly as a country with strong links to the UK, and how we at Matrix Intelligence use our extensive expertise and global reach to address these and in so doing, achieve the right results for our clients.

Nigeria – Asset Tracing Background

When examining asset tracing in Nigeria, you are unfortunately presented with a landscape of fraudulent activity and complex corruption.

This is a country infamous internationally for creating a form of bank fraud known as the ‘Nigeria scam’, or advance fee fraud, where the sender offers commission to an individual to help transfer a large sum of money. In addition, Lagos has become a hotbed of bitcoin and cryptocurrency scams.

Additionally, it is well-documented in news stories and investigations, including the Pandora Papers, that significant amounts of ‘dirty’ monies have routinely left the country bound for so-called financial safe-havens in the UK, US and Switzerland.

It is with this background of prevalent financial crime, that we at Matrix Intelligence must look to formulate an efficient and effective investigative strategy to trace assets within the country on behalf of our clients.

The Nigerian legal landscape

There are four types of law in the Federal Republic of Nigeria:

• English Law – derived from Colonial Nigeria.
• Common Law – development from post-Colonial independence.
• Customary Law – derived from indigenous traditional practices.
• Sharia Law – used only in Northern Nigeria, which is predominantly Muslim.

The country has a written constitution that was established in 1999 and is the supreme law of the country.

Law is enacted through different courts, ranging from the highest within the legal system, the Supreme Court, through to the Court of Appeal, the Federal High Court, State Courts, the High Court, Customary Court of Appeal and the Sharia Court of Appeal.

The main issue from an asset tracing point of view, is corruption amongst some judicial members, as well as cartel intimidation and tactical delays in criminal hearings.

Governance in Nigeria

Nigeria operates a Federal Republic form of Government, akin to that of the USA. Executive power is exercised by the President who is Head of State and Government. There is a Senate and a House of Representatives, combined into a National Assembly; the latter being the law-making body in the country.

The most populous country in Africa (202m population), it is made up of 36 states and one Federal Capital Territory, Abuja. The states are grouped into six geopolitical zones, North West; North East; North Central; South West; South East and South South.
There are 774 local Government areas, each administered by a local government council. Local government represents the third tier in Nigeria, following State and Federal.

It is a multi-national state with more than 250 ethnic groups speaking 500 languages. The three largest are Hausa in the North; Yoruba in the West and Igbo in the East. Together they comprise 60% of the population.

The political landscape is dominated by the All Progressives Congress Party (APC). A general election is to be held in 2023, but this has been set against a background of violence, further corruption and intimidation.

Together, these provide a backdrop of regional, political and cultural divide and unrest when it comes to legislation and information, presenting a challenge in an asset tracing investigation.

Challenges of Asset Tracing in Nigeria

Although considered an emerging market by the World Bank, and with the 25th largest economy in the world, Nigeria ranks 154 out of 180 countries in the Corruption Perception Index (CPI). It is currently the second most corrupt country in West Africa, behind Guinea-Basseau.

According to YIAGA Africa, $582billion has been lost to corruption since independence in 1960.

The fact that Nigeria ranks so highly, and that these losses are so vast, is testament to a number of endemic weaknesses, coupled with the pervasiveness of corruption across all areas of society, from civil servants and politicians, to traditional chiefs and peasants. These not only perpetuate such statistics, but in turn present significant challenges for asset tracing in the country.

• Prevalence of cash – Only 40% of Nigerians allegedly have bank accounts and even in 2021, card payments have not taken off as a common payment method. Only 3% of the country owns a credit card. Cash movement within the country is therefore exceptionally high.Not only does this make it hard for investigators to follow the ‘money trail’ but it also gives rise to the serious ongoing issue within the country of banking fraud, bribery and criminal cartels. Banking customers have been prevented from making daily cash withdrawals of more than N500,000 but in today’s technological world, people are finding new ways to hide their money.
• Inadequate land registry records – It is a system based largely on paper records and held at State level. Transfers often go unrecorded, either to avoid registration fees or to hide ownership. Real estate is an area therefore extremely vulnerable to money laundering.
• Tax avoidance and evasion – This is rampant within the country, again at all levels. Looking at tax payment by individuals engaged in employment in Nigeria, the figures are woeful. For example, in 2018, the Nigerian Bureau of Statistics (NBS) had the employment population at 69.5m but the individual tax-paying population estimated at 19m which means 50.5m Nigerians in employment were not paying tax.According to a report by the IMF, Nigeria and other Sub-Saharan countries lose about $730m a year due to tax evasion. If individuals and/or companies are not declaring tax and therefore business interests/activities, it makes the job of asset tracing and ownership even more complex.
• Shadow economy – Characterised as activities occurring outside the legal framework, often crime, money laundering, fraud, scams and the black market. Nigeria’s shadow economy which includes substantial networks of organised crime accounts for more growth than the formal sector in terms of output and employment. Indeed, it is estimated to account for 48% of GDP.The growth of the shadow economy has been exacerbated by rising unemployment and lack of job opportunities in the country due to the global pandemic and falling oil prices. Oil of course being Nigeria’s biggest export. According to the World Bank, the economy shrunk by 1.8% in 2020. In addition, high inflation is likely to have pushed approx. 7million more people into poverty over the last few years.For an asset tracing case, it is a further obstacle in terms of undeclared income and movement of cash.
• Quality and accessibility of data – Within many Government departments as well as agencies such as the land registry and intelligence, the data is often not there, out of date or paper-based.This demonstrates a tendency towards secrecy, non-compliance and internal weakness that is prevalent at many levels. Furthermore, much of the time data needs to be requested in writing which can be a timely and costly exercise for investigators.
• Judicial challenges – There is a need to speed up court decisions overall. Many lawyers will use delaying tactics through appeals where cases are dismissed due to apparent lack of evidence. Judges seem reluctant to use their powers to restrict these adjournments which they could do under the Administration of Criminal Justice Act 2015.
• Absence of asset recovery laws – There has been within the country, failures by the judiciary to enact the Proceeds of Crime Act , passed in December 2020 this seeks to manage recovered assets in Nigeria and is supposedly one of the key pillars of the anti-corruption strategy.

Asset Tracing tools in Nigeria

With the perception of corruption in Nigeria high, due to endemic issues and damning allegations about public finance management such as the James Ibori and Diezani-Alison Madueke cases, President Muhammed Buhari has openly declared a zero tolerance stance for corruption, an anti-graft war.

The country has initiated a number of legal acts and established independent anti-corruption agencies designed to address this and in turn hopefully aid with asset tracing and recovery.

There are two key government agencies responsible for administering money laundering and corruption related activities, namely:

• Economic and Financial Crimes Commission (EFCC) – designed to investigate financial crimes.
• Independent Corrupt Practices and Other Related Offences Commission (ICPC) – to tackle corruption through enforcement and preventative measures.

In addition, there are legislative processes in place to prohibit and condemn fraudulent activities, including the Criminal Code and the Money Laundering (Prohibition) Act 2011, which makes it illegal to make or accept cash payments of a sum over N5,000,000.

The Asset Tracing, Recovery and Management Regulations 2019 Act also outlines strict regulations and procedures to investigate, trace, seize and recover assets.

Whilst these initiatives are welcome, and can prove useful particularly when implementing Open Source Intelligence (OSINT) in an investigation, there are significant defects in terms of collaboration and co-ordination between agencies; with information not recorded or shared, coupled with formal hierarchal structures and no centralised database which slow down decision-making.

This is why we use a collaborative and strategic approach of both OSINT and Human Source Intelligence (HUMINT) when pursuing asset tracing cases within Nigeria. We have access to reliable local sources and investigators, and we are able to assist litigators with conducting preliminary research, retrieving documents from local registries, identifying corporate affiliations, and obtaining information on beneficial owners. Our sources work and live in the region.

Whilst Nigeria presents many complex challenges, we have the skills, experience and proficiency to meet these head-on ensuring that you have a thorough and legally sound investigation to identify and uncover your assets.

For more information on our asset tracing capabilities, contact us at: info@matrix-intelligence.com or online at www.matrix-intelligence.com