Blockchain technology and artificial intelligence (AI) are being harnessed by Nigeria’s Economic and Financial Crimes Commission (EFCC) chair, Olanipekun Olukoyede, to combat illicit activities.
Africa faces significant losses of $88.6 billion annually due to illegal fund flows, prompting concerns about the impact on essential infrastructure, healthcare, and education.
During a keynote address at the Pan-African Conference on Illicit Financial Flows and Tax evasion in Tunis, Tunisia, Olukoyede emphasized the need for innovative strategies for asset recovery and financial reintegration in Africa.
He highlighted the challenges in asset recovery, including technical, legal, and political hurdles that hinder the tracing, freezing, and repatriating of illicit funds.
Olukoyede called for the strengthening of legal and institutional frameworks across African nations to combat illicit financial flows more effectively.
Furthermore, he revealed that terrorists are increasingly using cryptocurrency traders to fund their activities in Nigeria, complicating efforts to track and halt these financial flows.
In response, the EFCC has taken action by blocking 1,146 bank accounts involved in unauthorized dealings, with a significant number linked to peer-to-peer cryptocurrency trading platforms.
The EFCC has successfully recovered $20 million worth of cryptocurrency from fraudsters and filed criminal charges against Binance and one of its executives for money laundering and tax evasion.
Olukoyede stressed the importance of capacity building, robust legal systems, and enhanced coordination at national, regional, and international levels to combat financial crimes effectively.
He advocated for the use of advanced technologies such as data analytics, blockchain, and AI to improve asset tracking and recovery efforts, highlighting their potential in combating financial crimes facilitated by cryptocurrencies.
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Crypto and money laundering
Cryptocurrency has become a key facilitator of global money laundering activities, particularly in East and Southeast Asia.
According to the United Nations Office on Drugs and Crime (UNODC), cryptocurrencies, coupled with illegal online casinos and junkets, have contributed to the rise of underground banking and money laundering in the region.
Organized crime groups exploit vulnerabilities in the cryptocurrency ecosystem and online gambling platforms to integrate illicit proceeds into the financial system using cryptocurrency exchanges and wallets, often conducting transactions anonymously.
In Nigeria, Binance has faced allegations of $35.4 million in money laundering and tax evasion, with CEO Richard Teng claiming blackmail attempts demanding a $150 million cryptocurrency bribe.
The United Kingdom’s Financial Conduct Authority (FCA) has identified crypto firms as high-risk areas for exploitation and deployed crypto tactical advisors to seize digital assets associated with criminal activities.
Weidong “Bill” Guan, CFO of the Epoch Times, has been charged in a $67 million money laundering scheme involving cryptocurrency, using fraudulently obtained unemployment benefits and stolen identities to acquire prepaid debit cards.
The illicit funds were allegedly laundered through bank accounts belonging to The Epoch Times, Guan’s personal accounts, and his cryptocurrency holdings.
Read more: ‘Crypto Queen’ accomplice sentenced to six years for Bitcoin money laundering scheme