Money legally earned can become illicit financial flow if illegally applied, says ICPC chairman

FUNDS earned legally can become illicit financial flows (IFFs) if they are illegally applied, according to Bolaji Owosonaye, chairman of the Independent Corrupt Practices and other related offences (ICPC).

Owosonaye said this during the review of ‘Report on Illicit Financial Flows (IFFs) in Relation to Tax’ launched on Wednesday at the ICPC headquarters in Abuja.

“Money legally earned could become an illicit financial flow if it is illegally applied. For example, if you work legally, but decide to travel out of Nigeria, the rule is that you cannot take cash above a certain amount without declaring it to the Customs. So, if you choose to take above that limit, even though the money is legally earned and is your money, because you are trying to move it illegally, it becomes tainted.

“If you succeed in crossing Customs and you arrive at your destination on the other side, they would treat the money as illicit because you have moved it illegally,” said Owosonaye.

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Muhammed Nami. chairman of the Federal Inland Revenue Service (FIRS), during his presentation, pledged that the agency would continue to partner with anti-corruption agencies and all stakeholders in curbing illicit financial flows in Nigeria.

Nami said IFFs, through tax fraud to offshore accounts, had caused significant damage to the Nigerian economy.

He said the FIRS had identified that tax fraud and IFFs took the shapes of payment of expatriates’ staff emolument and remuneration as well as failure to declare for personal income tax purposes. He noted that laundering of funds sourced illegally through real estate transactions was one of them.

Another form of IFF done through tax would be the transfer of money out of Nigeria through unapproved channels such as virtual currencies as well as mispricing of goods and services transfer between interrelated Nigerian companies, he added.

Matthew Gbonjubola, head of International Tax Department at FIRS, while delivering the report, said weak democratic structures, opacity of financial system, cash economy, weak regulatory framework, unstructured tax incentives, skewed tax treaties, crypto assets and professional enablers were  factors fueling IFFs in commercial transactions.

Abiola Sanni, a professor of taxation & fiscal matters at University of Lagos, recommended partnerships with reputable tertiary institutions on capacity building with regard to public sector contracts- from the award to enforcement stage- by exposing gatekeepers to issues on IFFs while developing appropriate incentives.



    He noted that the reports could be enriched with statistical data to drive home some of the salient issues raised.

    Sanni also suggested prosecution of erring officers involved in failed contracts, where there was proven evidence of complicity, to serve as deterrent to others, adding that the full weight of the law should be brought against violators of extant laws and regulation as the federal government was doing in the case of P&ID’s case.

    Auwal Musa Rafsanjani, executive director of Civil Society Legislative Advocacy Centre (CISLAC), said there should be an emphasis on the need for international collaboration because IFFs often happened with the consent of some foreign parties.

    He added that there should be increased synergy among government institutions, stakeholders, civil society organisations and the media in order to properly tackle IFFs in Nigeria.

    Lukman Abolade is an Investigative reporter with The ICIR. Reach out to him via [email protected], on twitter @AboladeLAA and FB @Correction94

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