THE REFUSED: How terrorists use POS operators, fintech platforms, NGOs to move funds

Fintech platforms, point-of-sale (POS) operators and non-governmental organizations (NGOs) are being used by terrorists to move funds, federal government findings have shown.

The findings were revealed in a 2022 National Inherent Risk Assessment of Terrorism Financing in Nigeria.

Nigeria has been fighting terrorism, especially in the North East for 13 years.

The report had identified areas of terrorist financing through abuse of formal financial sectors, and it is feared that this could be an indication of the increasing sophistication of some of the terrorist group’s financing capabilities.

The report also showed that financing of terrorism has been carried out using bureaux de change (BDC), wire transfer and designated financial businesses and professions (DNFBP).

“The findings of this report indicate that TF in Nigeria is generally associated with the use of cash,” the report said.

“Despite this, field information flowing from police investigations and financial data has revealed constant interactions between the use of cash by terrorist actors and financial institutions, the Bureau de Change, fintech firms and designated non-financial businesses and professions.

”The inherent vulnerabilities of each sector were assessed based on the extent to which products and services offered are found in domestic surveys or STRs in relation to TF. Current account products linked to Bureau De Change and NPOs/NGOs corporate clients have been observed to be linked to TF activities.

”The use of bank accounts in the movement of TF funds has been prominent in both intelligence and investigations related to TF.

“Financial data has also shown that the illegal money changers make transactions on their personal accounts as well as entity accounts held and controlled by them with BDC activities.”

The government said that a greater percentage of transactions linked to terrorist financing were initially carried out in cash that was obtained from both legitimate and illegitimate activities.

However, according to the report, collected cash is usually placed in the financial system directly through bank deposits and indirectly through POS transactions and transactions with DNFBPs.

The investigation also showed that around 19 companies have been linked to terrorist financing in the past three years.

“Illegal money changers have been mentioned in several TF investigations,” the report further states.

“During a three-year period from 2019, around 19 companies linked to these illegal money changers have used their companies for funds considered to be linked to TF.

”Illegal money changers are not subject to any kind of regulation and as such they implement some preventive measures. The activities of the illegal money changers provide a channel for moving illegally obtained funds to TF.”

The government said preventing the country’s financial system from becoming an enabler of terrorist financing remains its priority.

The government added that its response to terrorist threats from Boko Haram and other terrorist groups is a whole-of-government approach, to include effective coordination between and among oversight, law enforcement and the private sector, as well as with foreign partners.

In 2021, the government had said it would jail 400 suspects arrested for financing Boko Haram insurgents and bandits.