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Blockchain can combat illicit fund transfers, Nigeria’s top financial investigator says
According to the Chairman of Nigeria’s Economic and Financial Crimes Commission (EFCC), Olanipekun Olukoyede, blockchain technology and artificial intelligence (AI) can be used to combat illicit activities.
The stakes are high for Africa. The continent loses a whopping $88.6 billion a year to illicit flows of funds.
According to The Guardian, Olukoyede expressed concern that these funds could be better used for essential infrastructure, healthcare and education.
A declaration Commission spokesperson Dele Oyewale indicated that Olukoyede made this revelation in Tunis, Tunisia, during a keynote speech at the Pan-African Conference on Illicit Financial Flows and Tax Evasion.
The conference brought together key stakeholders to explore innovative strategies for asset recovery and financial reintegration in Africa.
Olukoyede also highlighted the difficulties faced in asset recovery, including technical, legal and political challenges that complicate the tracing, freezing and repatriation of illicit funds.
He called for the strengthening of legal and institutional frameworks in all African countries to more effectively counter illicit flows.
Early May, Olukoyede disclosed that terrorists are increasingly using cryptocurrency traders to finance their activities in the country. According to Olukoyede, some young cryptocurrency traders are unknowingly being exploited by terrorist financiers to move funds, complicating efforts to track and stop these financial flows.
In a concerted effort to combat these illicit activities, the EFCC has frozen 1,146 bank accounts implicated in unauthorized currency exchange, money laundering and terrorist financing operations in Nigeria.
A significant number of these accounts were found to be linked to peer-to-peer cryptocurrency trading platforms, underscoring the growing intersection between digital currencies and illegal financial operations.
Olukoyede further highlighted EFCC’s success in recovering $20 million in cryptocurrencies from scammers.
In a noteworthy move to hold cryptocurrency platforms accountable, the EFCC archived criminal charges against Binance, a major cryptocurrency exchange, and one of its executives, on charges of money laundering and tax evasion.
The EFCC President stressed the importance of strengthening capacities, having strong legal systems and improving coordination and cooperation at national, regional and international levels.
He advocated using advanced technologies such as data analytics, blockchain and artificial intelligence to improve asset monitoring and recovery efforts.
He noted that these emerging technologies could prove crucial in combating financial crimes committed via cryptocurrencies, suggesting a future where advanced technological solutions strengthen traditional control measures.
Cryptocurrencies and money laundering
Cryptocurrencies have proven to be a major facilitator of money laundering activities globally, particularly in East and Southeast Asia.
According to the United Nations Office on Drugs and Crime (UNODC) relationshipCryptocurrencies, coupled with the rise of illegal online casinos and junkets, have contributed to the proliferation of underground banking and money laundering throughout East and Southeast Asia.
Organized crime groups have exploited vulnerabilities within the cryptocurrency ecosystem and online gambling platforms, using cryptocurrency exchanges and wallets to integrate billions of dollars in illicit proceeds into the financial system. This often involves mixing funds and conducting transactions anonymously.
In Nigeria, cryptocurrency exchange giant Binance has been involved in money laundering and tax evasion charges of $35.4 million. CEO Richard Teng said he was blackmailed by unidentified individuals in Nigeria who demanded a bribe of $150 million in cryptocurrency, which the Nigerian government has dismissed as unfounded and an attempt to divert attention from the ongoing investigation into Binance’s operations.
Recognising the substantial money laundering risks posed by the cryptocurrency sector, the UK’s Financial Conduct Authority (FCA) has highlighted cryptocurrency firms, along with retail banking, wholesale banking and wealth management, as high-risk areas for exploitation between 2022 and 2023. In response, British police have deployed tactical crypto advisors nationwide to seize digital assets associated with criminal activity.
On June 4, Weidong “Bill” Guan, chief financial officer of the Epoch Times, was indicted in a $67 million money laundering scheme involving cryptocurrencies.
According to accusa, from 2020 to May 2024, Guan and his “Make Money Online” team allegedly used fraudulently obtained unemployment benefits and stolen identities to acquire prepaid debit cards. These cards were then sold at a discounted price for cryptocurrency on specific platforms.
The illicit funds are alleged to have been laundered through various channels, including bank accounts held by The Epoch Times, Guan’s personal accounts and his cryptocurrency deposits.
When financial institutions reported suspicious transactions, Guan allegedly misrepresented the source of the funds, claiming they came from legitimate online donations.