The Nexus of Illicit Financial Flows, Anti-Corruption, Asset Recovery, Beneficial Ownership, Tax Evasion, and Terrorism Financing in Nigeria

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By Idris Muhammed Abdullahi

Nigeria grapples with a complex web of financial crimes that pose significant threats to both its economic stability and national security. This paper explores the interconnections between illicit financial flows (IFFs), anti-corruption efforts, asset recovery, beneficial ownership transparency, tax evasion, and terrorism financing. By analyzing existing challenges and reviewing current initiatives, it offers comprehensive recommendations aimed at strengthening Nigeria’s financial integrity and governance architecture.

Illicit Financial Flows and Their Impact

Illicit financial flows refer to the illegal movement of money across borders, often tied to corruption, tax evasion, money laundering, and organized crime. Nigeria reportedly loses an estimated $80 billion annually through IFFs—funds that could otherwise support infrastructure, education, and healthcare. Recognizing the gravity of this issue, the Federal Inland Revenue Service (FIRS) under the current administration has taken proactive steps to address IFFs. These include coordinating with relevant agencies and stakeholders to estimate risks, identify hotspots, and implement targeted interventions.

Anti-Corruption Measures

Nigeria’s anti-corruption framework includes key institutions such as the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC). Both have played pivotal roles in tackling corruption, procurement fraud, tax evasion, and transfer pricing abuses. With the support of FIRS and international partners, efforts are being made to enhance investigative capabilities. Nonetheless, challenges remain—especially those related to limited resources, legal bottlenecks, and political interference. Strengthening the independence and capacity of these agencies is essential for sustained impact.

Asset Recovery Initiatives

Asset recovery remains a cornerstone of Nigeria’s anti-corruption drive. Significant progress has been made, notably the repatriation of $322.5 million from the Abacha loot in 2017. Building on this, Nigeria has developed a more robust legal and institutional framework for asset tracing, forfeiture, and repatriation. These developments are expected to bolster the country’s exit from the Financial Action Task Force (FATF) grey list before October 2025.

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Beneficial Ownership Transparency

Complex corporate structures often conceal the true ownership of assets, enabling tax evasion and money laundering. In response, the Corporate Affairs Commission (CAC) has established a Beneficial Ownership Register aimed at unmasking the real owners behind companies and properties. This initiative is a major step forward in combating financial secrecy and improving transparency across sectors.

Tax Evasion and Its Consequences

Tax evasion significantly undermines public revenue and widens the fiscal deficit, hindering the delivery of basic services. To address this, Nigeria has partnered with global initiatives such as the Tax Inspectors Without Borders for Criminal Investigations (TIWB-CI), which focuses on building capacity for detecting, investigating, and prosecuting tax-related crimes.

Terrorism Financing

Terrorist organizations rely on financial networks to support recruitment, logistics, and attacks. Nigeria’s anti-corruption agencies—especially the ICPC—have prioritized the disruption of terrorism financing as part of broader efforts to counter IFFs and secure national stability. This includes regulatory oversight of non-profit organizations, fintech platforms, and informal financial systems.

The Interconnectedness of Financial Crimes

Each of these financial crimes is intricately linked. Corruption often serves as a catalyst for IFFs, which facilitate tax evasion and may be channeled toward financing terrorism. Addressing one facet without considering others will yield limited results. A holistic, ecosystem-based approach is therefore essential.

Recommendations

• Strengthen Legal Frameworks: Enact and enforce comprehensive laws targeting financial crimes, including updated provisions for asset recovery and beneficial ownership.
• Enhance Institutional Capacity: Allocate adequate resources and guarantee the independence of enforcement agencies.
• Foster Interagency Collaboration: Improve data sharing, joint operations, and synergy among law enforcement, regulatory, and financial institutions.
• Leverage Technology: Deploy advanced technologies for transaction monitoring, anomaly detection, and real-time reporting.
• Engage Civil Society: Empower citizens and civil society organizations to demand accountability and transparency through legal and advocacy channels.

Conclusion

Combating financial crimes in Nigeria demands an integrated and multi-pronged approach. By addressing the root causes and systemic enablers of IFFs, corruption, and terrorism financing, Nigeria can create a more transparent and secure financial environment. Strengthening institutions, embracing transparency, and enforcing the rule of law will not only safeguard the nation’s resources but also promote sustainable economic development.

Idris Muhammed Abdullahi, from Sokoto State, is a country specialist and expert on Finance, Anti-Corruption, Beneficial Ownership, AML/CFT/CPF, Illicit Financial Flows, Asset Recovery, and Tax Evasion.