VARIOUS SCHEMES/TECHNIQUES OF MONEY LAUNDERING, NIGERIA

 The most common money laundering channels/schemes include the following:

• Real-Estate Laundering
• Casino Laundering
• Bank Laundering
• Trade-Based Laundering
• Layering
• Laundering Money Through Cash Businesses
• Structuring

Real-Estate Laundering

Real-estate laundering works because the deals involve large cash amounts as well as legitimate financial systems such as banks and mortgage companies. Criminals will often buy a piece of real estate using cash from illegal activity and then quickly sell it, depositing the proceeds into a legitimate bank account. They may have a third party buy the property or use shell companies to make the purchase. Once they have sold the property, tracing the origins of the purchasing funds becomes more difficult.

Although buying and selling real estate through cash transactions is not inherently illegal, it can catch the attention of the Economic and Financial Crimes Commission (EFCC) in Nigeria and the equivalent regulatory agencies in other countries. Multiple cash real estate deals are especially suspicious to law enforcement officials who are on the lookout for questionable financial transactions.

Casino Laundering

Casinos (the Pool or Sports betting) have a well-earned reputation as places to launder illegal funds. People come into these establishments with large amounts of cash and can disguise their dirty money as they gamble. They simply pay for their casino chips with their illegal proceeds, gamble a little and then cash in their chips. The result is that they walk in with dirty money and walk out with clean cash disguised as winnings.

Organized crime has long been associated with gambling establishments because these criminal organizations use casinos as part of their money-laundering operations. Casinos and betting companies are profitable businesses on their own as well as a great place to disguise the large amounts of dirty money that these criminal organizations collect.

Banks do monitor frequent deposits from gamblers to ensure that people and businesses are not using casinos to hide their illegal funds. These deposits are often a sign of money laundering activity.

Bank Laundering

Another money laundering example is bank laundering. Owning your own financial institution is one of the best ways to clean illegal funds on a large scale. If a money launderer owns a bank, mortgage company or stock trading company, they can move the money through their organization to another financial institution pretty easily. These transfers often take place in the form of currency exchanges that are extremely hard to detect by the other financial institutions involved and by regulatory agencies.

Bank laundering was one of the main reasonsThe Central Bank of Nigeria reviewed the CBN AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) Regulations, 2013 and its amendments to comply with provisions of the recently enacted Money Laundering (Prevention and Prohibition) Act, 2022, Terrorism (Prevention and Prohibition) Act, 2022 and relevant extant AML/CFT/CPF regulations. The law stipulated that financial institutions had to follow certain reporting requirements that help expose money launderers. Even with the AML Act, money laundering is still a big problem, but the accounting and reporting regulations have curbed many of the excesses.

Trade-Based Laundering

Trade-based money laundering is defined as “the process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimise their illicit origin.” This can include:

• over- and under-invoicing of goods and services;
• multiple invoicing of goods and services;
• over- and under-shipments of goods and services; and
• falsely described goods and services.

Companies can pull off this maneuver by lying about the price and quantity of imports and exports to make their profits look larger than they are. Financial criminals often use this practice in concert with other money-laundering techniques, which makes it even more difficult to trace the money’s origin.

Criminals frequently choose this tactic to launder their dirty money because it provides a solid paper trail that banks find hard to dispute. Invoices and bills of sale lend legitimacy to their efforts. In these money laundering cases, banks will sometimes flag a business that suddenly shows a large increase in profits and investigate them for financial crimes.

Laundering through Layering 

Layering is another popular and effective way for financial criminals to launder their illegal funds. The idea is to distance the money from its illegal origins by putting it through numerous transactions and various forms.

For instance, cash can become gold, then become real estate, and then become casino chips. This layering also means that the money usually goes around the globe, entering multiple countries and going through even more transactions. The overseas element makes enforcing AML regulations even more challenging, since multiple jurisdictions and different laws are involved.

Layering is a favorite method of white-collar criminals, including those practicing embezzlement, tax evasion and cryptocurrency fraud (including bitcoin scams). Layering makes it incredibly difficult to track the origin and journey of illegal funds, which means many money launderers go undetected.

Laundering Money Through Cash Businesses

Cash businesses, including car washes, laundromats and strip clubs, are favorites of money launderers. Although these common companies have legitimate operations, they can operate partially or mostly as shell companies whose real business is to launder illegal funds. After all, it’s hard to prove how much money actually goes through a laundromat each day or how much a strip club takes in.

Using a heavy cash business for money laundering leaves law enforcement agencies, with little evidence to act on. However, the tax boards at the federal and state levels, frequently look closely at these businesses’ cash records to detect suspicious activity. And law enforcement might compare a business to similar businesses to detect outliers, such as a small scale business that brings in twice as much cash as a similar SME down the street.

Laundering through Structuring

Structuring, also known as smurfing, is the money laundering practice of splitting large cash amounts into smaller chunks and depositing them into many different accounts, making detecting the illegal funds nearly impossible.

Criminals often use money orders and cashiers checks in structuring, but multiple deposits of these forms in a short period can trigger the suspicion of financial institutions, which may decide to launch a money-laundering investigation, even if current reporting requirements do not force them to do so.

Since financial institutions are always on the lookout for suspicious transactions, suspected smurfing may cause them to look more closely at individual accounts for other scams. Most money launderers use more than one method to wash illegal funds.