CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The issue of money laundering is broad and diverse, it is an unlawful practice that takes place throughout the world and it is typically connected with other criminal offenses, from fraud, moving drugs to more complicated criminal offenses (The World Bank, 2006). Furthermore, sufficient information and understanding regarding the phenomenon is lacking. The discovery of armed robbery, drug trafficking and other criminal offenses can be done with accuracy by the government but the presence of a monitoring system to predict and avoid the occurrence of money laundering is lacking (Walker & Unger, 2009). In the past, international authorities like the United Nations (UN) and others, have tried to put measures and systems in place to fight the issue of money laundering.
Money laundering according to Ogbodo and Miseseigha (2013) is the "concealment of the source, nature, existence, location and disposition of money and/or property acquired unlawfully or from criminal activities such as embezzlement, drug trafficking, prostitution, 419, corruption and large-scale criminal offense". How money laundering began has not been figured out with certainty, some views think it began with Chinese merchants years back, Silkscreen (1994); Steel (2006) postulated that it came about when criminal companies in the United States established companies in an effort to legitimize their ill-gotten funds. Ogbodo and Miseseigha (2013) insisted that the development of money laundering was for trade purposes which Nigeria is the focal point of money laundering in the continent of Africa.
This threat leads to the establishment of EFCC in 2002 by an Act of the National Assembly which was later amended in 2004. It was birthed from the decision of the Federal Government to completely eradicate corruption and sanitize the Nigerian economic environment by imposing all economic and financial crimes legislations.
Money laundering among other forms of economic and financial crime needs existing and financial operation. Money is laundered with currency exchange houses, stock brokerage houses, casinos, automobile dealers, political leaders and trading firms. These institutions are capable of masking proceeds from illegal criminal activities. The overall impacts of these criminal activities on the socio-political lives and economic wellbeing of individuals of the developing nations and Nigeria particularly might be well managed (Ribadu, 2014). This illicit trade has pervaded both the national and international business and banking industry with unmitigated vigour. Osilowo (2004) discussed money laundering as the process whereby criminals try to hide the true origin and ownership of the proceeds of their criminal activities. Cash lends anonymity to several forms of criminal activity and is the normal medium of exchange in the world of drug trafficking. One of the most typical form of money laundering that banks experience every day takes the form of accumulated cash transactions which will be deposited in the banking system or exchange for valued items such as bank drafts, bank cheques, money orders and so on new outlined policies have been introduced in many nations to enhance the discovery of money laundering and to improve the supervision of banks. Economic crime is usually made use of for numbers of criminal offenses connected with industries, commerce and other orderly criminal activities in both personal and the public sector. Money laundering is an example of economic and financial crime. Money laundering has been a critical issue that impacts the socio-economic structure of a society. The economic health of a country has the ability to be threatened by money laundering due to the inflow and outflow of cash in the society (Akpabio, 2014).
Nevertheless, Nigerian government like many other governments of developing nations up till recently has been very slow in putting in place stringent policy measures and legislative structure in combating the impacts of economic and financial crimes. Consequently, economic and financial crimes have eroded the integrity of Nigerian banks since considerable numbers of them were proactively involved in money laundering and other financial crimes on the economy and socio- political development of Nigeria as a developing country. It is instructive to stress from on set that this study is not meant to explore details legal discussion on the idea of economic and financial crimes and the relevant provisions of Nigerian law regulating same. This obviously will not obviate occasional reference being made to various types of economic and financial crimes as understood by Nigerian law and relevant statutory laws regulating those types of criminal offenses.
1.2 Statement of the Problem
The impact of money laundering on economic growth are hard to enumerate yet it is clear that such task damages the financial sector institution that are crucial to economic development reduces efficiency in economy's real sector by diverting resources and encouraging crime and corruption, which slow economic development and distort external economic sector (Idowu and Obasan, 2012). Money laundering in Nigeria had worsened in current times, covering the image of respectable and hardworking people in the nation. According to Efenyumi, (2013), money launderers go through the bank in certain nations with the confidence that the laws in that nation protect them and their illegal money to the disadvantage of those in poverty by money launderers in frustrating genuine business, corrupting the financial and socio-political system promote country and global action to regulate it. It is against this background that this study seeks to determine the economic implications of money laundering in Nigeria.
1.3 Objectives of the Study
The main objective of this study is to examine the economic implications of money laundering in Nigeria by using EFCC Enugu as a case study. He specific objectives therefore, include;
i) To understand the impact of money laundering on the Nigerian economy
ii) To examine the extent to which money laundering affects the Gross Domestic Product (GDP) of the Nigerian economy.
iii) To explore the extent to which fraud affects the Federal Government revenue of the Nigerian economy
1.4 Research Questions
The following statements in line with the objectives of this study were considered to be the research questions for this study.
i) What is the impact of money laundering on the Nigerian economy?
ii) To what extent does money laundering affect the Gross Domestic Product (GDP) of the Nigerian economy?
iii) To what extent does money laundering affect the Federal Government revenue of the Nigerian economy?
1.5 Research Hypotheses
Below are the research hypotheses for this study:
i) There is significant correlation between money laundering and the Nigerian economy
ii) There is a significant correlation between money laundering and the Gross Domestic Product (GDP) of the Nigerian economy
iii) There is a significant relationship between money laundering and the Federal Government revenue of the Nigerian economy
1.6 Significance of the Study
The results from this study are useful to various sector of the economy, particularly the financial sector. It will broader the literatures on economic implications of money laundering in Nigeria and assist policy makes in formulating new anti-money laundering policy to curb money laundering in Nigeria.
Government with this research work will be witty and aware of the extent the activities of EFCC has contributed in administration and controlling of fraud in Nigeria. It will also be of great significant in examining the area of weakness and how best to improve them for effective regulation of fraud.
To the academic, the research work will help them formulate more theories and strategies that will enhance the effectiveness of EFCC in ensuring financial accountability and transparency. It will also contribute to the enrichment of literature on EFCC and serve as a body of reserved knowledge to be referred to by researchers.
1.7 Scope of the Study
This study is about the economic implications of money laundering in Enugu State, Nigeria. Therefore, the EFCC, Enugu State will be used as a case for this study.
1.8 Limitations of the Study
This study suffered many setbacks due to a lot of reasons. One of such is the inaccessibility of information from the office of EFCC. Presently, they are security conscious and unwilling to disclose information and plans available some write ups and journals which would have been helpful for this research work. Ideally, the work should have involved more states but due to some inherent constraint such as time and money but effort would be made to at least touch a great number of states to have a balance view of this research.
1.9 Definition of Terms
The following terms were used:
Economy: The economy is the total of all activities related to the production, sale, distribution, exchange, and consumption of limited resources by a group of people living and operating within it.
EFFC: This is an acronym for Economic and Financial crimes commission. It is a commission created by an act of the National Assembly in 2002 and was amended in 2004. It is charged with the responsibility of investigating and enforcement of all laws against economic and financial crimes.
Money Laundering: the process of illegally concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source.
