The international watchdog for cash laundering and terrorist financing, the Financial Action Task Force (FATF), has placed Nigeria on its grey list. The FATF has 40 suggestions that present tips for a rustic’s monetary system to forestall cash laundering and the financing of terrorist organisations. The watchdog presently has two lists that time out nations with weak legal guidelines to forestall cash laundering and terrorist financing; they’re known as the black list and grey list.
Countries placed on the grey list are subjected to elevated monitoring and are actively working with the FATF to counter the shortcomings of their legal guidelines. They embody nations like Turkey, the United Arab Emirates, South Sudan, and Haiti. As 73% of nations have been eliminated for the reason that list’s inception, it isn’t a everlasting list, and nations have the possibility to be taken off it after cooperating with the FATF to handle their failings.
The implications of the list may, nonetheless, have extreme penalties. South Africa’s rand fell towards the greenback after the nation was placed on the list final Friday. The FATF has greater than 200 member nations, and being placed on the grey list warns nations that doing enterprise with a greylisted nation would possibly assist facilitate terrorism and cash laundering.
The financial system of a greylisted nation may additionally endure as worldwide organisations must audit corporations and take further steps earlier than investing within the nation. This may very well be particularly vital for Nigeria, because the nation’s international direct funding (FDI) has been fluctuating for the previous few years. In June 2022, the nation’s FDI reached a report low.
Adedeji Olowe, the CEO and founding father of Lendsqr, had a unique opinion. He informed TechCabal on a name that though being placed on the grey list was “a wake-up call”, and the nation was not doing sufficient to forestall cash laundering, the grey list was not too damning. He added that nations like Turkey (a NATO and G-20 member) and the United Arab Emirates have been additionally on the list and that it didn’t have far-reaching results on their economies. “All we have to do is collaborate with the FATF to bolster our laws, and we would be fine,” he stated.
Oladayo Adenubi, a monetary analyst, additionally echoed Olowe’s opinion. “I honestly don’t think this is really consequential. Many factors go into valuing the cost of capital in international capital markets. The FATF listing does not hold as much weight compared to other factors like currency risk, inflation, and creditworthiness. It’s more of a qualitative metric than a quantitative one,” he informed TechCabal.
Shuyi Timilehin, a lawyer, additionally shared the identical ideas. “ The grey list is just a way for the FATF to disclose that there are deficiencies with Nigeria’s laws and that it is working with Nigeria to correct them. Making progress depends on how well we can cooperate with the FATF to remove ourselves from the grey list. Where we would need to worry is where Nigeria doesn’t work with the FATF”.
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