By Idris Muhammed Abdullahi
ABUJA In the shadows of Nigeria’s bustling economy, billions of dollars slip away silently each year diverted through complex networks of shell companies, hidden ownership, fraudulent trade, and tax evasion. These illicit financial flows (IFFs) not only erode the country’s wealth but also undercut its development. While the public often looks to anti-corruption agencies for solutions, a powerful and underutilized force exists at the heart of the nation’s fight against these crimes: the tax authorities.
From the Federal Inland Revenue Service (FIRS) to State Internal Revenue Services (SIRSs) and Local Government Revenue Committees, Nigeria’s tax institutions sit on a trove of intelligence that could expose money launderers, asset thieves, terrorist financiers, and the networks behind anonymous wealth. But to unlock this potential, Nigeria must rethink its anti-money laundering (AML) architecture playing tax authorities at its very core.
The Hidden Power of the Taxman
Tax authorities are not just revenue collectors they are economic detectives. Every audit, filing, and compliance check reveals a footprint: a trail that can lead to the true owners of companies, unexplained wealth, and suspicious cross-border transactions. Tax officials know who earns what, who owns what, and who hides behind what. Yet for decades, these insights have been siloed, disconnected from the nation’s broader fight against financial crime.
The Federal Inland Revenue Service has already demonstrated what is possible. In a landmark 2023 audit, FIRS uncovered a series of profit-shifting schemes in which multinational companies funneled billions of naira offshore under the guise of “management fees” and intellectual property charges. These transactions, often routed through tax havens, not only denied Nigeria its fair share of taxes but also raised red flags for money laundering and terrorism financing.
When tax authorities are empowered and connected to agencies like the EFCC, NFIU, and Corporate Affairs Commission (CAC), these red flags can become weapons leading to asset seizures, prosecutions, and reforms.
The Missing Link: Beneficial Ownership Transparency
At the heart of modern financial crime is one simple trick: hiding who truly owns what. Shell companies and nominee directors help criminals move money without detection. To combat this, Nigeria began building a Beneficial Ownership (BO) Register under the Companies and Allied Matters Act (CAMA) 2020.
In reality, the CAC’s BO register, while groundbreaking, remains incomplete, static, and often unverifiable.
This is where tax authorities come in.
Every year, companies file tax returns. Every audit requires disclosure of shareholders and persons with significant control. By integrating BO verification into tax procedures, Nigeria can transform the FIRS into a frontline force for transparency. Mismatches between CAC records and tax disclosures can trigger investigations. Suspicious structuring can lead to joint enforcement actions. And over time, the tax system itself becomes a deterrent against anonymous wealth.
Tax and Asset Recovery:
Connecting the Dots
Illicit assets rarely lie dormant. They buy properties, fund elections, launch companies, and open offshore accounts. By examining the tax records of suspects most especially discrepancies between income and lifestyle , tax authorities can flag unexplained wealth and collaborate in asset recovery.
This model is already proving effective elsewhere. In Kenya, the Revenue Authority (KRA), in partnership with the anti-corruption commission, used tax investigations to recover mansions, vehicles, and foreign accounts linked to unexplained incomes. Nigeria can replicate this model especially now that the Proceeds of Crime Act allows non-conviction-based forfeitures.
The Next Frontier: Taxing the Untouchables
In today’s digital economy, crime and tax evasion no longer rely on physical assets. Intangibles like royalties, trademarks, domain names, digital coins, and intellectual property rights have become new vehicles for IFFs. These assets are difficult to trace, harder to value, and often registered in secrecy jurisdictions.
But again, tax authorities can rise to the challenge.
Through enhanced transfer pricing regulations, digital economy taxation, and crypto monitoring frameworks, tax institutions can trace these invisible flows. Already, the FIRS has begun auditing digital asset transactions and tightening rules around intangible payments. But more is needed. Training, legislation, and data-sharing protocols must evolve to stay ahead of the game.
Rethinking the Architecture
The current AML/CFT framework in Nigeria often sidelines tax institutions. This must change. Nigeria’s new fiscal and tax reform initiatives offer a golden opportunity to embed tax authorities into AML policy councils, risk assessment bodies, and beneficial ownership oversight committees.
Tax laws must be amended to mandate beneficial ownership disclosure during tax processes. The Money Laundering (Prevention and Prohibition) Act must recognize tax institutions as competent authorities. And inter-agency task forces should include FIRS, state tax boards, and local revenue office not just as observers but as strategic actors.
It is Time for Tax Justice
Illicit financial flows are not just numbers on paper. They are stolen schools, broken hospitals, jobless youths, and underfunded security agencies. They fuel corruption, distort elections, and finance terror.
If Nigeria is serious about fighting financial crime, it must unleash the power of its tax authorities.
This means giving them access, resources, and legal mandates. It means integrating them into national efforts to expose beneficial ownership, recover stolen wealth, and shut down the networks that siphon money out of the country. It means treating tax not just as a revenue tool but as a weapon for justice.
The war against IFFs, money laundering, and terrorism financing cannot be won in silos. It will take collaboration. It will take courage. And it will take a tax system designed not just to collect, but to protect.
Idris Muhammed Abdullahi is A global voice in the fight against AML CFT / illicit financial flows, and is an expert in forensic tax investigations, beneficial ownership, and asset recovery.
