Anti-Money Laundering: How to build an effective compliance framework– Andersen

In a bid to address growing concerns about money laundering challenges rocking Africa’s fintech sector, Andersen, an independent tax and business advisory firm with a worldwide presence has recommended mechanisms that can enable businesses and organisations to build an effective compliance framework.

According to Andersen, “the ability of a business or professional to correctly identify, assess, and comprehend the money laundering and terrorist financing risk elements present in its business is one of the key success criteria of any anti-money laundering and counter-funding of terrorism framework”.

Before 2022, the anti-money laundering and counter-funding of terrorism framework in Nigeria was regulated through the Money Laundering Prohibition Act 2011 and Terrorism Prevention Act 2011.

However, President Muhammadu Buhari, enacted the following three laws with an effective date of 12 May 2022 to implement the financial action task force recommendations on the framework and address the deficiencies found in Nigeria’s 2nd round of Mutual Evaluation.

“Building an anti-money laundering framework is the first step toward achieving regulatory compliance, safeguarding reputation, and putting measures in place to fight money laundering and terrorism financing.

“Businesses can lower the risk of regulatory non-compliance by proactively analysing the recently implemented legislation to see how they affect their operations besides the new filing requirements and deadlines,” Andersen stated.

The enactment of MLA 2022 provides a comprehensive legal and institutional framework for the prevention and prohibition of money laundering in Nigeria.

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According to Andersen, the elements of an effective anti-money laundering program include the existence of policies and procedures that clearly document the business’s position on issues along with the components of its framework program.

The governance of the framework program indicates the commitment of the board and management of the company to the program, as well as its risk assessment geared towards identifying the risk in the entity’s operation and risk mitigation methods.

Also, the design and implementation of a know your customer (KYC) program to the extent that allows the business to identify and understand customer activity. The design and implementation of controls to screen customers against the relevant sanctions lists so as to identify potentially sanctioned persons and activities.

The design and implementation of the framework transaction-monitoring program and the extent to which it identifies potentially suspicious activities, and the level of compliance with applicable local anti-money laundering filing requirements, such as Suspicious Activity Report (SAR) and Currency Transaction Report (CTR) filings, among others.

“When correctly applied, an anti-money laundering framework helps the integrity and stability of the company and lessens the adverse effects of unlawful economic activity. The framework must prevent, identify, and report the entry of unauthorized funds into the company as well as the sponsorship of terrorist persons, groups, and activities to be effective.”