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Banks urged to closely monitor politically-exposed persons

By on June 15, 2014

The Central Bank of Nigeria (CBN) has advised financial institutions to keep close check on transactions involving high risk customers such as politically exposed persons (PEPs) and financially exposed persons (FEPs).

The Deputy Governor (Financial System Stability), Central Bank of Nigeria (CBN), Mr. Adebayo Adelabu, stated this in a keynote address titled: “Fraud and Corruption: The Role of Banks and Other Corporate Entities,” at the 2014 compliance conference organised by the Committee of Chief Compliance Officers of Banks in Nigeria (CCCOBIN) held in Lagos.

According to him, over 70 per cent of the proceeds of fraud, corruption and other economic and financial crime pass through financial institutions.

He pointed out that the criminals often collude with officers of legitimate organisations and financial institutions to perpetuate the crime.

Adelabu explained: “I am sure you agree with me that we have recorded high level of fraud with the collusion of bank officers. In fact, before I left banking, we started seeing the incidence of more internal fraud than external which is very difficult to curb. It is those that actually know your system, your control that can assist external fraudsters.

“If banks can find a way to minimise the cooperation of internal staff with the external fraudsters, I am of the opinion that there is going to be a significant reduction of fraud cases.”

He noted that while the crimes of fraud and corruption are international in coverage, their incidence have become predominant in third world countries, including Nigeria as a result of perverse incentives.

Furthermore, he stated that in a lot of jurisdictions, fraud and corruption are committed by those entrusted with positions or public funds, who override controls to perpetrate the crimes.

He pointed out that the proceeds realised from the illegal business could be used in funding activities that are dangerous and injurious to  the society.

“It is because of these negative and adverse consequences of these crimes amongst others, that regulatory bodies, domestic and international, have set up standards and regulations to curb the menace,” he added.

He listed some of the factors responsible for the prevalence of frauds and corruption  in the society to include: social value (placing high value on the accumulation of wealth without regard to its source); technological advancement (continuous advancement in technology without commensurate emphasis on capacity building); legal (inadequate laws or poor implementation of legal/regulatory provisions); individual attitudes (insatiable appetite for wealth; poor moral upbringing of children, and management (poor/faulty staff recruitment, amongst others.

 

 

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