The Seyi Tinubu property deal

Nigerians are understandably startled by the story published by Bloomberg newspaper last week that Seyi Tinubu, eldest son of the President-elect, had in 2017 bought a property in London for $11 million. Tucked away in the tony neighbourhood of North London, the property was formerly owned by another Nigerian, Kola Aluko, who had earlier been declared wanted by the EFCC for money laundering.

Aluko and another Lagos businessman, Jide Omokore, have been under investigations for their business transactions with former Petroleum Minister Diezani Alison-Madueke. Bloomberg describes the property as a private three-floor residence in St. John Wood, with an eight-car driveway, two gardens, electric gates and a gym. The report says that Seyi used an offshore shell company, Aranda Overseas Corporation, to pay for the purchase which was facilitated through Deutsche Bank.

Many Nigerians have been investing heavily in the London property market for many decades, and every year, millions of pounds are transferred from Nigeria to UK banks to pay for the mortgage and taxes on these assets. This exerts much pressure on our foreign reserves and the exchange rate of the Naira.

Payments of school fees for children in foreign schools and servicing of mortgage for their properties abroad constitute major sources of capital exportation by Nigerians. At a time, it was a matter of social status for a Nigerian to boast that he has a flat in West London. I recall that bragging about his father’s flat in London was my university roommate’s favourite pastime. There’s nothing I have not seen in this country!

It is all the more distressing that many of the Nigerian owners of these London properties are politically exposed persons (PEPs) whose sources of wealth are dubious. Seyi’s father is a PEP, which in financial regulation refers to an individual that occupies a prominent political, high profile or public office.

In financial regulation and according to Financial Action Task Force (FATF) on money laundering, a close relative of a PEP is also regarded as a PEP. In this case, Seyi Tinubu is a politically exposed person. A PEP generally presents a higher risk for potential involvement in bribery, corruption and money laundering by virtue of his or her position and the influence that the person may hold.

Every banker knows that a PEP is a potential compliance risk, and so every of their transactions, including requirements for account opening, must undergo stricter scrutiny and controls. Screening for PEPs is usually performed at the beginning of account opening, called standard due diligence or Know Your Customer (KYC). I can only hope that Deutsch Bank which facilitated the payment for Seyi’s house had done all the necessary KYC checks.

The Nigerian government has done a few things to fight corruption, one of which is the enactment of the Money Laundering Act. This is a very robust piece of legislation that imposes heavy penalty on any individual or corporate organization that engages in this crime. Section 15(2) of the Act prescribes that any person or body corporate, in or outside Nigeria, who directly or indirectly conceals or disguises the origin of; converts or transfers; removes from jurisdiction; or acquires, uses, retains or takes possession or control of; any fund or property, knowingly or reasonably ought to have known that such fund or property is, or forms part of the proceeds of an unlawful act; commits an offence of money laundering under the Act. This law also places heavy responsibility on the banks to assist in fighting money laundering.

Banks are also expected to train their officers on how to detect and report cases of money laundering, and the rule of thumb is that whenever a PEP spends so much to buy a house or car or any luxury item, an alarm bell should be sounding in the banker’s ears.

Bankers are particularly well-trained on how to detect suspicious transactions and make Suspicious Activity Report (SAR) and Suspicious Transaction Report (STR) under the laws designed to fight money laundering. As a banker, I attended so many courses on money laundering, and in one of them, the facilitator shouted out at us, ‘’as a banker, you can actually go to jail for doing little or nothing if your team is derelict in performing its due diligence.’’