The Central Bank of Nigeria has cautioned Commercial banks to pay more attention to transactions associated with the Benin Republic as reports suggest that the country has been allegedly involved in drug trafficking transit and consumption hubs in West Africa.
This was disclosed in an internal circular sent to Nigerian Commercial banks titled “Need to implement enhanced measures for customer onboarding and due diligence on existing accounts and transactions related to Benin republic”, signed by the Director of Banking Supervision, Asuquo Evelyn E. on 11 April 2022.
The CBN has since then called for additional measures such as the re-classification of related customers and conducting Enhanced Due Diligence on transaction details.
In the circular sent to the Banks, the information contained there read, “We write to bring to your attention an intelligence report availed to the Central Bank of Nigeria (CBN) which indicated that the Benin Republic is increasingly becoming a drug trafficking transit and consumption hub in West Africa.”
The Apex Bank proposed protection for the banks to avoid involvement in illicit transactions saying, “To ensure that Nigerian banks are not used as a conduit for laundering of such illicit funds, it has become imperative to intensify the Know Your Customer (KYC) and Customer Due Diligence (CDD) measures in your bank as required by regulation.”
The CBN added in the circular, “Consequently, you are required to implement additional measures on customers and business relationships linked to the Benin Republic. You are also required to re-classify related customers and transactions as high risk and conduct Enhanced Due Diligence (ED) procedures accordingly.”
What action has the Nigerian Commercial Banks taken!
Sequel to the directive, Nigerian banks have implemented the following measures to be applied during the account opening process involving the Beninese nationals, as well as fund transfers to and from the Benin Republic:
- Nigeria banks would take preemptive steps to determine the purpose of an account opening and the customer’s source of income.
- Enhanced Due Diligence would be applied to account opening for Beninese prospects and business ties with Beninese signatories, directors, and shareholders. Enhanced Due Diligence would also be applied to funds transfers to and from the prerogative, and the purpose for which the transfer is to be made must be stated.
- All questioning customers will be classified under the category of “High Risk” for money laundering and marked for that reason in the system.
- To authenticate the financial transaction relevant documents such as invoices and other contractual contracts must be gathered and provided to the Compliance Department for evaluation and approval before processing.
Keynote
- In the world of drug trafficking networks, Benin is increasingly becoming a hive. Benin’s contribution to the illicit trade had grown to about 1.3 tons by June 2021.
- Almost 42 tons of cocaine transited through or were intercepted in West African coastal states between 2019 and 2021, says the United Nations Office on Drugs and Crimes (UNODC). These include Benin, Cabo Verde, Côte d’Ivoire, Gambia, Guinea Bissau and Senegal.
- The U.S Department of States stated that “due to its strategic location, with a large port and substantial transportation links to Nigeria, Benin is a major transit point for criminal organizations illicitly trafficking narcotics, wildlife, and other contraband.”
- The US DOS included in its stamen that “Benin’s cash-based economy makes it difficult to track the sources of financial resources and facilitates corruption, money laundering, and other illicit economic activities. Weaknesses in the justice sector and rule of law remain, particularly the backlog of criminal cases and a lack of effective cooperation between national and regional actors to address transnational organized crime and corruption.”
- The Special Prosecutor of the Court for the Repression of Economic Offenses and Terrorism (CRIET) in Benin reported that on November 4, 2021, about 750 kg of cocaine was discovered in a warehouse in Cotonou.
- In December 2021, 2.5 tons of cocaine were stored in Sèmè-Kpodji, a suburb straddling Porto-Novo and Cotonou, waiting for redistribution or re-exportation. This is so far the biggest seizure in 2021. Others range from 10.5 kg of heroin to 557 kg of cocaine. Smaller quantities are intercepted at the airport while larger quantities are transported by sea.
- Since 2019, national law enforcement agencies have made many such big seizures of cocaine and other substances. These include 78 tons of various drugs, with three tons of cocaine shipped from Montevideo in Uruguay to Europe via Benin.
- Benin’s poor land and maritime border management, together with corruption at various law enforcement levels, continue to play a role in traffickers’ attempts to use the country for their illicit trade. Traffickers exploit such vulnerabilities. Even COVID-19-related travel restrictions didn’t disrupt the trade in Benin.
