What You

(“Act” Or “Mla”)

Should
Know About
The Money
Laundering
Act 2022
(Prevention And Prohibition)
President Muhammadu Buhari recently assented to The five key objectives
and passed into law the Money Laundering (Preven- as stipulated in Section 1
tion and Prohibition) Act, 2022. of the MLA are:

The law strengthens the Provide for an effective and

comprehensive legal and
Anti-Money Laundering/ a institutional framework for
the prevention, prohibition,
Combating the Financing detection, prosecution and
punishment of money laun-
of Terrorism (AML/CFT) dering and other related

framework in the country,

offences in Nigeria;

and sets out containment Strengthen the existing

and punitive measures b system for combating
money laundering and relat-
against money laundering ed offences;

in Nigeria.
Make adequate provisions
The Act repeals the former Money Laundering (Pro-
c to prohibit money
hibition) Act, 2011 and provides comprehensive laundering;
legal and Institutional Framework for the prevention
and prohibition of money laundering in Nigeria and
establishes a department under the Economic and
Financial Crimes Commission (“EFCC”), which shall be Expand the scope of money
known as Special Control Unit Against Money Laun-
d laundering offences and
dering (“SCUML”). provide appropriate
penalties; and

Establish SCUML under

e the EFCC for effective
implementation of the
money laundering provi-
sions of the MLA.

What You Should Know About The Money Laundering (Prevention And Prohibition)
Act, 2022 (“Act” Or “Mla”)
Limitation on Cash Payments 1
The Act prohibits money laundering and criminalizes It is important to also note that FIs and DNFBs are
cash payments exceeding N5,000,000 or its equiva- required to continuously conduct due diligence on a
lent, in the case of an individual; or (b) N10,000,000 business relationship and scrutinize transactions
or its equivalent, in the case of a body corporate. undertaken during the course of the relationship by
Transactions above this threshold must now be assessing their source of funds; their business and
routed electronically or through a financial institu- risk profile; their transaction history; customers’
tion. The MLA specifically warns against splitting the existing records and keep up-to-date records of the
payment into two or more transactions separately customers’ data.
with intent to avoid the duty to report a transaction
which should be reported.2
Determination of Politically Exposed
Persons (“PEPs”)6
Duty to Report International Transfer In performing the due diligence obligations, the
MLA describes the procedures for politically
or Transportation of Funds, Securities exposed persons. PEPs under the Act are classified
and Cash 3 into two (2) categories: Foreign politically exposed
The Act prohibits money laundering and criminalizes persons and Domestic politically exposed persons.
cash payments exceeding N5,000,000 or its equiva- Regarding foreign PEPs, the MLA requires FIs and
lent, in the case of an individual; or (b) N10,000,000 DNFBs to obtain the approval of senior manage-
or its equivalent, in the case of a body corporate. ment before the establishment or continu-
Transactions above this threshold must now be ous establishment of existing business
routed electronically or through a financial institu- relationships; and take reasonable mea-
tion. The MLA specifically warns against splitting the sures to establish the source of funds
payment into two or more transactions separately of customers and their beneficiaries
with intent to avoid the duty to report a transaction identified as politically exposed
which should be reported. persons. 7 The above duties extend to
domestic PEPs where
there is a
high-risk business
Customer Due Diligence(“CDD”) 4 relationship with
Under the MLA, Financial Institutions (“FI”) and Des- such a person.8
ignated Non-Financial Businesses (“DNFB”) are
obliged to verify the identity of their customers
whether permanent or occasional, natural or legal
person or any other form of legal arrangements. The
FIs and DNFBs are also to take reasonable measures
to ensure that anybody appearing to act on behalf
of a customer is so authorized and verify the identity
of that person. 5

1. Section 2 of the MLA 6. Section 4 (8)(9) of the MLA

2. Section 2(2) of the MLA 7. Section 4 (8) of the Act
3. Section 3 of the MLA 8. Section 4 (9) of the Act
4. Section 4 of the MLA
5. Section 4 (1)(d) of the MLA
Cash transactions by DNFBs. 9 Suspicious Transaction Reporting 10
DNFBs and Professions that make use of cash trans- FIs and DNFBs are mandated under the MLA to
actions are now required to submit a declaration of report transactions that are deemed to be suspi-
their activities to SCUML within Three (3) months cious to SCUML immediately. FIs and DNFBs have a
from the commencement of the Act (i.e between duty to duty to look out for and report transactions
May 13 2022 – August 13 2022). For DNFBs whose that involve a frequency which is unjustifiable or
business involves cash transactions, prior to any unreasonable; or surrounded by conditions of
transaction which involves a sum exceeding unusual or unjustified complexity; or appears to
US$1,000 or its equivalent, they are now required to have no economic justification or lawful objective’
ensure their customers fill a standard data form, and or inconsistent with the customers’ known
attaching proof of identification such as internation- transaction patterns. Reports are also compulsory
al passport, driving license, national identity card or where a transaction evokes reasonable suspicion of
such other document bearing his photograph. being proceeds of crime, unlawful act, money laun-
dering or terrorist financing.
Under the MLA, DNFBs are also required to record
all cash transactions in a chronological order in a
cash transaction register and forward same to
Duty to Keep and Preserve Records
11
SCUML within Seven (7) days from the date of the
transaction. These records shall be preserved for at
DNFBs and FIs are obligated to keep all necessary
least Five (5) years. Failure to comply with the
records on transactions, both domestic and interna-
requirements of customer identification and the
tional, for at least five years following completion of
submission of returns amounts to an offence, pun-
the transaction. The records are to be made swiftly
ishable upon conviction by a fine of N250,000 for
available to the competent authorities and such
each day during which the offence continues; and
other regulatory authorities or judicial persons,
suspension, revocation or withdrawal of license by
upon request. This is also in line with the provisions
the appropriate licensing authority.
under CAMA that requires companies to file annual
file annual returns and preserve records for six years.

9. Section 6 of the MLA 12. Section 375 (2) of Companies and Allied Matters Act (CAMA 2020).
10. Section 7 of the MLA
11. Section 8 of the MLA
Duty to Have Anti-Money Laundering to the following specific transactions: (a) the
Programs and Policies 13 purchase or sale of property; (b) the purchase or sale
of any business; (c) the managing of client money,
The MLA mandates FIs and DNFBs to develop securities or other assets; (d) the opening or man-
programmes to combat the laundering of the agement of bank, savings or securities accounts; (d)
proceeds of a crime or other unlawful acts. In event the creation, operation or management of trusts,
of non-compliance, CBN, SEC, National Insurance companies or similar structures; or (e) anything
Commission or SCUML may impose a penalty. produced in furtherance of any unlawful act.16

The compulsory programs may include: (a) hiring

compliance officers at management level at its
headquarters, every branch and local office (b) regu- Liability of Directors and employees of
lar training programmes their employees (c) have FIs and DNFBs 17
central databases (d) having an internal audit unit. Where funds are blocked by an order of the Federal
High Court at the request of the Unit or the Commis-
sion because of the impossibility of ascertaining the
origin of the funds within the period of stoppage of
Mandatory Disclosure of Lodgments the transaction and there is evidence of conspiracy
and Transfers with the owner of the funds, the FIs or DNFBs
FIs and DNFBs are to report in writing to the SCUML involved shall not be relieved of liability and criminal
within seven days, any single transaction, lodgement proceedings for all offences arising there from, may
or transfer of funds in excess of — (a) N5,000,000 or be brought against the director and employees
its equivalent, in the case of an individual; or (b) involved in the conspiracy.
N10,000,000 or its equivalent, in the case of a body
corporate. Failure to comply is a crime and liable on
conviction to a fine of at least N250,000 and not
more than N1,000,000 for each day the contraven-
tion continues.

Restriction on Lawyer-Client Privilege 14

Before now, all communications made by a client to
his lawyer in the normal course of professional
employment are privileged. Such communications
cannot be disclosed by the lawyer except with the
15
consent of his clients or as may be permitted by law.

This MLA excludes the application of lawyer-client

privilege and the invocation of client confidentiality

13. Section 10 of the MLA 16. Section 11 (4) of the Act

14. Section 11(4) of the MLA 17. Section 13 of the MLA
15. Section 192 of the Evidence Act, Rule 19
of the Rules of Professional Conduct, 2007
Establishment of the Special Control Unit
Against Money Laundering (“SCUML”)
The Special Control Unit Against Money Laundering (“SCUML”) was first established by the Federal Government
of Nigeria in 2005 under the Federal Ministry of Industry, Trade and Investment, and it works in collaboration
with the Economic and Financial Crimes Commission (EFCC). The Act gave statutory backing to the establishment
of SCUML and charged it with the responsibility of supervising the DNFBs and FIS in their compliance with the
Act, relevant laws and applicable regulations. Other functions of SCUML as provided in the Act are:

(a) Registration and certification of designated (c) Conducting off-site, on-site and on the spot
non-financial businesses and professions in checks, inspection of designated nonfinancial
accordance with the provisions of the Act, rele- businesses and professions for the purposes of
vant laws, and applicable regulations; money laundering control and supervision;

(b) Taking the necessary enforcement actions to (d) Receiving cash -based transaction reports
ensure compliance with the Act, relevant laws, and currency transaction reports from designat-
and applicable regulations; ed non -financial businesses and professions.

Jurisdiction to try offences under

the MLA
The Federal High Court located in any part of
Nigeria regardless of the location where the
offence is committed shall have jurisdiction to
try offences under this Act or any other related
enactment; and hear and determine proceed-
ings arising under the Act. The Federal High
Court exercises jurisdiction whether or not the
offence was commenced or completed in
Nigeria where the alleged offence was com-
mitted in Nigeria; on a ship, vessel or air craft
registered in Nigeria; by a citizen or non-citi-
zen of Nigeria if the person’s conduct would
also constitute an offence under a law of the
country where the offence was committed; or
outside Nigeria where the alleged offender is
in Nigeria and not extradited to any other
country for prosecution.
Expanded Scope of Designated Conclusion
Non-Financial Business and Profession The MLA strengthens the existing system for com-
and Property bating money laundering and related offences. It is
commendable that the MLA provides for a periodic
The MLA expanded the scope of Designated
reporting on money laundering to the President as
Non-Financial Business Profession to include: (a)
this would serve as a measure for tracking the effec-
business involved in the hospitality industry, (b)
tive implementation of the provisions of the Act.
dealers in mechanized farming equipment, farming
equipment and machineries, (c) dealers in precious
A major difficulty that the Act is the restrictions and
metals and precious stones, (d) dealers in real estate,
granularity of reporting and compliance that it intro-
estate developers, estate agents and brokers, (e)
duces which may invariably stifle ordinary business
high value dealers, (f) mortgage brokers, (g) practi-
operations in Nigeria. Nigeria is ranked 131 among
tioners of mechanized farming, (h) trust and compa-
190 economies in the ease of doing business,
ny service providers, and (i) pools betting. (j) legal
according to the latest World Bank annual ratings.
practitioners and notaries, (k) licensed professional
The rank of Nigeria improved to 131 in 2019 from
accountants, (l) mortgage brokers, (m) supermar-
146 in 2018. As much as the intention of the Act is to
kets, (n) tax consultants, (o) trust and company
combat money laundering and related offences, the
service providers, (p) casinos (q.) consultants and
harsh restrictions and mandatory obligations on
consulting companies (r.) clearing and settlement
transactions may affect the growth of the ease of
companies, (s.) hotels; and such other businesses
doing business in Nigeria.
and professions as may be designated by the Minis-
ter responsible for Trade and Investment.

The Act also expanded the meaning of property to

include virtual assets, defined by the Act to mean a
digital representation of value that can be digitally
traded, or transferred, and can be used for payment
or investment purposes but does not include digital
representation of fiat currencies, securities and other
financial assets.
Disclaimer
Nothing in this article should be construed as legal advice from any of our lawyers or the firm. The article pub-
lished is a general summary of developments and principles of interest and may not apply directly to any specific
circumstances. Professional advice should therefore be sought before action based on any article is taken.

Authors

Barristers and Solicitors

11 Babafemi Osoba Crescent
Lekki Phase1, Lagos
234 803 641 0000
+234 1 2717769
Bukola Ogungbade Adetola Lawal +234 1 2707320 (Fax)
Associate Senior Associate [email protected]
[email protected] [email protected] http://www.gbc-law.com