Cryptocurrency: Fear Grips FG Over Terrorist Financing,Money Laundering

The Federal Government has raised serious concern over the
gradual penetration of the country’s currency market by
cryptocurrency, saying the development could facilitate possible
terrorist financing and money laundering.

Cryptocurrency, otherwise known as virtual currency, according
to online reports, is a form of “digital currency in which
encryption techniques are used to regulate the generation of units
of currency and verify the transfer of funds, operating
independently of a central bank”.

The nature of the currency, its operations as well as global
acceptability, were the subject-matter of a two-day conference
organised by the Presidential Advisory Committee Against Corruption
(PACAC, which began yesterday in Abuja.

Tagged “Understanding The Interface Between Cryptocurrency And
Money Laundering, the conference seeks to provide clarity on the
nature of virtual currency, benefit and danger, as well as the
urgent needs for legislative and regulatory frameworks.

In his Goodwill message at the opening session of the seminar
the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele,
called for continuous conversation on the development, even as he
urged financial institutions to brace up to the reality of
cryptocurrency.

Emefiele, who was represented by Mr. K. Amugo, also put the
global market capitalisation of cryptocurrency, as at October,
2918, at a whopping US$203 billion.

The CBN Governor, however, disclosed that the virtual currency
was neither permitted nor prohibited.

He said: “As the global use of crypto-currency with the
associated inherent risks continues (sic) to gather momentum, the
need for legislative and regulatory frameworks to address the
challenges became imperative.

“Information from coimarketcap.com indicates that
crypto-curtencies global market capitalisation currently stands at
approximately US$203 billion.as at end (of) October 2018.”

According ro Emefiele: “This is an indication that
cryptocurrency may become a major part of the financial system and
it is currently offering new and exciting opportunities as well as
challenges to the industry and Regulations”.

Notwithstanding, Emefiele insisted that: “Presently, there is no
legal frameworks for the regulation of crypto-currencies in
Nigeria. Based on existing regulations, the use of crypto currency
in Nigeria is neither permitted nor prohibited”.

Also speaking the PACAC’s chairman, Prof. It’s Sagay (SAN),
described cryptocurrency as a “stateless phenomenon”, expressing
fear of possible manipulation of the system for criminal
activities.

Sagay argued that as it stood, cryptocurrency only benefits
operators; not society.

“The development, wide adoption, and operations of virtual
currencies across the world, are both beneficial and disruptive.
Notwithstanding the dangers of cryptocurrencies, benefits could
accrue from them to persons, particularly in providing low cost
remittance, foreigh exchange services, access to …financial
production, and as a driver of innovations online.

“In fact, this phenomenon seems to be a stateless type of
phenomenon. From my own perspective, the only beneficiaries of the
system, are those who operate them, and those who trade in them;
not society.

“Also, there is a dark side, which includes the use of virtual
currencies for criminal activities.”

He submitted that: “Due to the upswing in the use of virtual
currencies by criminal groups, legislative and regulatory
frameworks need to be adopted, updated in response to these new
challenges, particularly with respect to the fight against money
laundering and terrorist financing.

“Also, because of the encrypted nature of cryptocurrencies,
operators evade taxation.

“It is necessary, therefore, that there should be at least some
regulations provided in this sector, in order to prevent it from
being a new avenue for criminal activities and evasion of social
responsibilities”.

On his part the Director General/Chief Executive Officer of
National Information Technology Development Agency, Dr. Isa
Ibrahim, said the consequences of the lack of existing regulatory
and legislative framework for the evolution, are “grave”.

Ibrahim disclosed that: “The CBN committee discovered that as at
early 2017, politically exposed persons where (sic) buying as much
as N1.2 billion worth of cryptocurrency for the purpose of
offshoring their wealth from the searching eyes of the Nigerian
officials.”

Also lending his voice to the cryptocurrency reality the
Attorney General of the Federation (AGF) and Minister of Justice,
Mr. Abubakar Malami (SAN), noted that the nation was at a
“crossroads”, given that the emerging markets remained
unregulated.

Represented by Mr. George ?Malami said: “I have been directed to
welcome all of you to this meeting, and to first of all thank the
Presidential Advisory Committee Against Corruption, for deeming it
fit to delve into this area, considering the kind of disruptive
(tendency in the) adoption of virtual currencies, and the level at
which our citizenry are beginning to participate in the activities
– whether as legitimate users or on the flip side of it, to the
negative aspect.

“Therefore, it is very important also, bearing in mind that we
are at a crossroads, where presently, the Central Bank (of
Nigeria), the Security and Exchange Commission, had issued
statements saying, virtual currencies are not legal tenders in our
country…

“It is, therefore, the Attorney General’s hope, that the outcome
of this deliberations, will help us in fine-tuning our national
policy response regarding the use…the adverse effect of the
adoption of virtual currencies”.

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