NFIU Cracks Down on Fraudulent Wire Transfers
By Patience Ikpeme
The Nigerian Financial Intelligence Unit (NFIU) has announced stringent measures to combat the rise of fraudulent telegraphic transfers.
This initiative aims to identify and investigate individuals, groups, and entities involved in deceptive financial practices, ensuring that fraudulent activities are curtailed before they can negatively impact the financial system.
The advisory comes in response to numerous petitions from financial institutions, government agencies, and third parties. These entities have sought the NFIU’s assistance in tracing and recovering funds transferred from foreign sources to business partners in Nigeria.
“We have seen a worrying trend of forged documents being used by fraudsters to defraud unsuspecting members of the public,” an NFIU official said. The forged documents include fake SWIFT messages, Memoranda of Understanding (MoUs), and other supporting documents meant to deceive.
The NFIU has received multiple complaints involving entities claiming to be victims of criminal conversion of funds. These cases often involve the alleged violation of the right to withdraw large sums of money transferred from overseas business partners. The petitions, often backed by contradictory statements of accounts and forged documents, have raised significant concerns.
“False allegations and misrepresentation of material facts can lead to a loss of confidence in the banking system,” the NFIU warned. Such actions could damage the reputation of the financial industry and cause a decline in patronage.
The NFIU has issued several recommendations for financial institutions to mitigate the risks associated with these fraudulent activities. These include: banks should immediately conduct enhanced due diligence upon receiving notification of anticipated large inflows, ensuring the authenticity of the documents presented; financial institutions must quickly respond in writing to customers when forgery is suspected, stating the non-existence of such transactions to prevent the misuse of acknowledgment letters for fraudulent purposes, and banks are advised to file Suspicious Activity Reports (SAR) to the NFIU for any entity or individual presenting frivolous claims.
The NFIU urged the general public to be vigilant about fraudulent individuals and fictitious telegraphic inflows (wire transfers). “It’s crucial for potential investors to scrutinize business opportunities thoroughly before committing financial resources,” the advisory read. The public should also recognize the risks associated with unverifiable telex transfers.
The Unit also called on the Nigerian Bar Association (NBA) to sensitize its members about the importance of verifying and authenticating documents received from clients. Law firms must conduct due diligence on clients and their documents to prevent involvement in fraudulent activities.
Two notable case studies illustrate the severity of the problem: A legal firm filed a complaint in July 2020, alleging that Company F, nominated for a construction project, was unable to access €7.88 million transferred from a European bank due to a stop order and subsequent administrative errors. Despite rectifying these errors, the funds were never received by Company F’s bank.
In August 2020, XXX Nigeria Limited sought the release of $10 million frozen by a Nigerian bank. The company claimed the funds were for investment purposes, but NFIU analysis revealed that the transfer never occurred.
The NFIU’s investigation revealed several similarities among the fraudulent activities: most funds were allegedly transferred from top European financial institutions; the NFIU never received corresponding requests from foreign FIUs; many involved entities were briefcase companies without real business operations; documents provided were often forged, including SWIFT messages and legal agreements and entities involved were typically newly incorporated or not registered with the Corporate Affairs Commission (CAC).
The NFIU said it remains committed to safeguarding the integrity of Nigeria’s financial system. The Unit will generate intelligence reports on any fraudulent activities and share them with relevant law enforcement agencies domestically and internationally. Through these measures, the NFIU aims to restore confidence in the financial sector and protect it from fraudulent practices.
