Nigeria can utilize blockchain technology to tackle illegal money transfers
Blockchain technology and artificial intelligence (AI) can serve as effective tools in the fight against illicit activities, as per Olanipekun Olukoyede, the chair of Nigeria’s Economic and Financial Crimes Commission (EFCC). Africa faces significant losses of $88.6 billion annually due to illegal fund flows, a concern reiterated by Olukoyede regarding the potential misallocation of these funds, which could instead be utilized for critical 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 challenges related to asset recovery, including technical, legal, and political obstacles that hinder the identification, freezing, and repatriation of illicit funds. He stressed the need for improved legal and institutional frameworks in African nations to combat illicit financial flows more effectively.
Olukoyede also highlighted the misuse of cryptocurrency traders by terrorists to finance their operations, complicating efforts to track and disrupt these illicit financial activities. In response, the EFCC intervened by freezing 1,146 bank accounts involved in unauthorized foreign exchange transactions, money laundering, and terrorism financing in Nigeria, with many of these accounts linked to peer-to-peer cryptocurrency platforms, showcasing the growing overlap between digital currencies and illegal financial practices.
Furthermore, the EFCC successfully recovered $20 million worth of cryptocurrency from fraudsters and took legal action against Binance, a prominent cryptocurrency exchange, and one of its executives, on charges of money laundering and tax evasion. Olukoyede stressed the importance of capacity building, robust legal systems, and enhanced coordination across national and international levels. He advocated for leveraging advanced technologies like data analytics, blockchain, and AI to bolster asset tracking and recovery efforts, acknowledging their potential in combating financial crimes facilitated by cryptocurrencies and envisioning a future where innovative tech solutions complement traditional enforcement strategies.
In a related context, cryptocurrency has emerged as a major enabler of global money laundering activities, particularly in East and Southeast Asia. The United Nations Office on Drugs and Crime (UNODC) report highlighted the role of cryptocurrencies in fueling underground banking and money laundering schemes in the region, facilitated by illegal online casinos and junkets. Organized crime groups exploit vulnerabilities in the cryptocurrency ecosystem and online gambling platforms to inject illicit funds into the financial system via cryptocurrency exchanges and wallets, often utilizing anonymity and fund mixing techniques.
In Nigeria, allegations of $35.4 million in money laundering and tax evasion have implicated the cryptocurrency exchange giant Binance. The CEO, Richard Teng, claimed to have faced blackmail attempts demanding a $150 million cryptocurrency bribe, a claim dismissed by the Nigerian government as unfounded and a diversion from ongoing investigations into Binance’s activities. Recognizing the money laundering risks associated with cryptocurrencies, the UK’s Financial Conduct Authority (FCA) identified crypto firms as high-risk areas for exploitation alongside traditional banking sectors, prompting the deployment of crypto tactical advisors by UK police to seize digital assets linked to criminal activities nationwide.
On a separate note, Weidong “Bill” Guan, the Chief Financial Officer of the Epoch Times, was recently charged in a $67 million money laundering scheme involving cryptocurrency. Guan and his team allegedly used fraudulently obtained unemployment benefits and stolen identities to acquire prepaid debit cards, which were then exchanged for cryptocurrency on specific platforms. The illicit funds were laundered through various channels, including bank accounts connected to The Epoch Times, Guan’s personal accounts, and his cryptocurrency holdings, with Guan reportedly misrepresenting the funds’ origins when questioned by financial institutions about suspicious transactions.
