Nigeria’s Financial Sector Being Exploited to Sponsor Terrorism, CISLAC Alleges

Nigeria’s Financial Sector Being Exploited to Sponsor Terrorism, CISLAC Alleges

On behalf of the Board, Management and Staff of Civil Society Legislative Advocacy Centre (CISLAC)/Transparency International in Nigeria (TI-Nigeria), it is a great honour to welcome you all to this crucial event themed “MULTI-STAKEHOLDER NATIONAL DIALOGUE ON PREVENTING TERRORISM FINANCING, AND VIOLENT EXTREMISM”

We are indeed excited to bring under one roof, state and non-state actors as part of the effort to drive a collective resolution and citizen-oriented approach towards the prevention of terrorism, terrorism financing and violent extremism, with specific focus on North-East Nigeria

This Dialogue remains critical to galvanise all-inclusive conversation on the thematic focus, giving the recurring threats to lives and property of many Nigerians, occasioned by terrorism and violent extremism that have hitherto bedeviled the country.

Distinguished guests, Ladies and Gentlemen, you would all agree with me that terrorism constitutes a global threat, and Nigeria, unfortunately, is one of the countries that faces a high level of terrorism.

While attempts to combat terrorism and violent extremism in the country continue, policy attention has been shifted towards many sources of terrorism financing, which have continued to fuel terrorism and other violent conflicts in Nigeria.

Without doubt, terrorism finance is the backbone of terrorist groups as funds go into buying

weapons, recruiting militants, and operating terrorist organisations. Just as the United Nations Office on Drugs and Crime (UNODC) puts it, “terrorist groups need money to sustain themselves and carry out terrorist acts”.

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Terrorist financing in this context, encompasses the means and methods used by terrorist organizations to finance their activities, leveraging funds from legitimate sources such as business profits and charitable organizations, or from illegal activities including trafficking in weapons, drugs or people, or kidnapping.

In effect, according to the United Nations Human Rights Council, terrorism diverts foreign investment, reduces capital inflows, destroys infrastructure, disturbs financial markets, impedes economic growth, and has significant negative impacts on social and cultural human rights. Hence, the prevention of terrorism is highly desirable and should be a top priority of our beloved country for sustainable development.

The increasing concerns about the financing of terrorist activities within the country, have triggered unfavourable indices from the 2023 Global Terrorism Index (GTI), which ranks Nigeria eighth among the top ten countries with the greatest levels of terrorism in the world

In March 2024, the Federal Government naming 15 entities including nine individuals and six Bureau De Change operators and firms that are said to be involved in terrorism financing has highlighted the pressing issue of terrorism and terrorist financing in the country.

As poor awareness at community levels hamper collective monitoring and timely response to warning signals of potential terrorist activities and violent extremism, the security situation in Nigeria has become increasingly complex and uncertain, as various non-state armed groups have emerged and consolidated coercive power to terrorize the population in Nigeria, as evident with the activities of the armed bandits, criminal gangs, separatist groups, religious fundamentalists, amorphous kidnappers, and many others often referred to in the Nigerian media as “unknown gunmen”.

The consequences of terrorism have continued to aggravate extreme poverty rates among Nigerians, internally displacement, devastated livelihoods, just as opportunities for broader growth, development and prosperity are destroyed.

Moreover, weak security and surveillance at national borders contribute to the issue of terrorism financing in Nigeria. This lack of control and monitoring allows terrorists, as well as small arms and light weapons, to infiltrate the country quickly. The former Chief of Defence Staff, Lucky Irabor, revealed that 137 out of about 261 borders in the North-East and North- West are unguarded. With such easy access, terrorist organisations conduct operations and finance their activities more efficiently. This stresses the imperative of strengthening security measures at borders by Nigerian authorities to prevent the inflow of funds and resources for terrorist activities.

Poor collaboration on the part of law enforcement and regulatory agencies has contributed to the problem of terrorist financing in Nigeria. Effective information sharing is crucial in combating terrorism financing, yet there seems to be a lack of coordination among various agencies and institutions. This hinders the ability to track and intercept suspicious transactions and apprehend those responsible for financing terrorism.

The lingering inter-agency rivalry among response agencies constitutes an impediment to intelligence gathering and information sharing for coordinated Response to potential violent signals. Unhealthy inter-agencies rivalry and struggles for superiority among response agencies competing for resources have been identified as major barriers to coordinated response to conflict warning signals at all levels. This in September 2022 had triggered a reaction from former Inspector-General of Police, Solomon Arase, who acknowledged that rivalry existed despite the fact that no individual agency could holistically handle security issues alone.

More importantly, the capacity gaps within law enforcement and regulatory agencies also hamper efforts to address the challenge of terrorism financing effectively. These institutions must be adequately equipped and trained to detect and disrupt the financial networks of terrorist organisations. Without the requisite capacity, it becomes incredibly challenging to investigate and prosecute individuals involved in financing terrorism.

I must stress the fact that poor governance and corruption drive terrorism and violent extremism, which are among observed cases in the North-East of Nigeria. They provide avenue to fund armed groups and criminal networks, prevent development of and weakan effective institutions of governance, depress social and economic development. Also, religious dimension, which has to do with extremism, hard beliefs and ideologies held and taught by some religious leaders have led to indulgency in the North East

Every state in Nigeria has a state of Assembly with members representing local governments

There are 109 members in the Senate, located in the Federal Capital Territory and 360 seats

in the House of Representatives. Every lawmaker represents a Constituency, they link national

and state politics to the grassroots, reinforcing the notion that politics is essentially local and

people-centred. However, inactive Legislative Constituency Offices across the country as a

primary mechanism in detection and reporting of violent signals contributes to major policy

neglect in reporting system and structure.

The financial sector, has been exploited for terrorism financing. The use of the financial sector indicates the increasing capabilities of some terrorist groups. These include the Bureau de Change operators, Point of Sale (POS) devices, wire transfers, and Designated Non-Financial Businesses and Professions, among other enabling platforms expanding the scope and depth of terrorism financing

It is worrisome that illegal money exchangers including Bureau De Change have been featured in several Terrorism Financing investigations. The 2022 National Inherent Risk Assessment of Terrorism Financing report reveals that between 2019 and 2022, about 19 companies were linked to illegal money exchangers who have used their companies to comingle funds considered to be linked to Terrorism Financing. Illegal money exchangers are not under any form of regulations and as such, they implement any preventive measures. The activities of the illegal money exchangers provide a channel for moving illegally obtained funds for Terrorism Financing.
While the Banking sector in particular has in recent times been subjected to strict regulations that intend to increase transparency and identify suspicious transactions, however, studies illustrate that the Banking sector continues to offer opportunities for terrorist financing, as current measures employed by banks have proven ineffective due to the knowledge gap that surrounds concrete methods terrorist financiers employ. For instance, in March 2024, the Economic and Financial Crimes Commission (EFCC) revealed that 70 percent of financial fraud in Nigeria were carried out in the banking sector. This includes the inside and outside related fraud. This disturbing report exposes the extent of illicit funds movement through the Banking sector.

Furthermore, over-sensationalised media reportage with profit-oriented tendency and deliberate information misrepresentation contribute to violent extremism and social instability at all levels. Factual misrepresentation and unverified information presentation by various media outfits trigger conflict insensitivity and violent response. Because of their roles in audience perception of events and issues, media framing and reportage are considered veritable instruments for violent prevention or de-escalation.

It is in light of this that CISLAC/TI-Nigeria is championing this critical Dialogue financed by GIABA-ECOWAS, bringing together highly valuable resources to reflect on the areas of challenges and next steps in our national security and development journey.

Our appreciation goes to the Inter-Governmental Action Against Money Laundering In West Africa (GIABA-ECOWAS) for this unique opportunity to open up inclusive Dialogue on issues germane to the progress and prosperity of our beloved country, Nigeria.

Again, you are all welcome and I wish us a fruitful deliberation.

THANK YOU!

BY AUWAL IBRAHIM MUSA (RAFSANJANI)