Money Laundering: CBN Indicts Banks
Banking
By Ayodele Aminu
The Central Bank of Nigeria (CBN) has accused banks of aiding money laundering by failing to comply with the provisions of the Money Laundering Act.
The apex bank also revealed that cheques totaling 12,526,643 amounting to N8,928.5 billion passed through the clearing house in 2003.
In its Annual Reports for the year 2003, the CBN said that efforts to ascertain the level of compliance with the money Laundering Act revealed some lapses on the part of banks.
"The CBN conducted surveillance to ascertain the level of compliance by banks with the provisions of the Money Laundering Act No. 3 of 1995, as amended.
"The efforts revealed some lapses on the part of banks. They included: non-disclosure of reportable transactions; incomplete or non-rendition of returns; and inadequate or poor customer identification," stated the CBN.
Following improvements in the payment system's infrastructure, banking habits as well as public confidence, the report explained, resulted in a 12.2 and 125.3 per cent increases respectively in both the volume and value of cheques that passed the clearing house in 2003. Both the volume and value were put at N12,526,643 and N8,928.5 billion respectively.
"Similarly, the volume of cheques cleared through the Lagos Clearing House (LCH) rose by 1.0 per cent over the level in 2002 to 6,679,654, while the value rose substantially by 271.2 per cent to N5,132.8 billion.
"The volume and value of cheques cleared through the Lagos Clearing House represented 53.2 and 57.5 per cent respectively of the total volume and value of cheques cleared in the system," the apex bank added.
While maintaining that a total of 92 Dutch Auction sessions were held in the year under review, the banking watchdog put the total sales at US$9,643.55 million.
This, it further explained, represented a daily average of US$37.10 million, compared with US$8,139.07 million recorded in the preceding year.
In return, the CBN said it bought a total of US$38.03 million from the market resulting in net sales in 2002.
The increased demand pressure in the foreign exchange market, according to CBN, was attributed to the speculative activities of operators in the last quarter of the year.
"Between January and December 2003, the marginal exchange rate at the DAS depreciated by 6.5 per cent to N129.3565 per US dollar.
"Similarly, the exchange rate in the bureaux de change depreciated by 2.7 per cent to N141.9946 per US dollar, from N137.7901 per US dollar in 2002.
The apex also put the value of currency in circulation at the end December 2003 at N502.6 billion, saying this represented an increase of 8.5 per cent over the level in 2002.
"In line with the policy of maintaining clean notes, the CBN withdrew dirty notes and issued new ones in 2003. Currency notes of various denominations worth N69.4 billion were issued," the report added.
Commenting on the Credit Risk Management System (CRMS) which it established to prevent predator borrowers from moving from one bank to another to secure loan using the same collateral, the banking watchdog stated that as at December 31 2003, only 69 banks rendered returns to the CBN.
"Overall, 28,886 borrowers with outstanding loan balances of N1.0 million and above were recorded in the CRMS. The data base has a total of 42,146 outstanding credits, worth N1,147.16 billion as at 31st December 2003," stated the report.
Noting that there were no new applications for banking license in 2003, the CBN stated that the number of banks' branches increased to 3,247 from 3,010 branches in 2002 following the opening of 237 additional bank branches and cash offices.
The apex bank put the number of banks that operated during the year at 89, noting that the licence of one bank (Peak Merchant Bank Limited) was revoked.
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