With the ever changing and growing of commerce and technology, the chances of committing a money laundering offence are becoming very high and probable daily. This is because many anti-money laundering laws have fixed low cash transaction limits and imposed huge reporting obligations on both companies (designated financial and non-designated financial institutions) and individuals (all practitioners and consultants) to make commercial dealings almost impossible without flouting the laws.
Money laundering is not a violent crime but an economic and financial crime, which can arise from different transactions or circumstances. Money laundering offences may be committed “innocently” although ignorance of law is not an excuse. For instance, a person who is in possession of a property that is derived from or obtained directly or indirectly through the conduct of an unlawful act or in possession of a large of amount cash beyond the maximum fixed by law may be exposed to money laundering charges.
The proof of offences of money laundering can be by either direct or circumstantial evidence. See Kalu v. F.R.N. (2014) 1 NWLR (Pt. 1389) 479. However, there are as many defences as there are varying money laundering offences. A defence is a legal excuse or justification for doing an act which, though illegal, yet the perpetrator is excused or exculpated from punishment either on ground of fact or law or both.
In view of the fact the charges of money laundering can be preferred against an individual or company, it is important for directors and shareholders to be aware of the acts which constitute the offence and possible legal defences that are available to them in the event of any accusation.
- What is Money Laundering?
Money laundering is the process of concealing the origins of money, obtained from illicit activities such as drug trafficking, corruption, internet fraud, investment scam and embezzlement by converting it into a legitimate fund or asset. Money laundering is an offence that is committed in an attempt to disguise the real origin, source, ownership and source of wealth that is derived from crimes and legitimizes the income. Possession of large amount of cash above the maximum limits fixed by law is a money laundering offence.
According to the Supreme Court in Daudu v. F.R.N. (2018) 10 NWLR (Pt. 1626) 169, money laundering is the washing of illegitimate money in a bid to make it appear clean or legitimate. It involves the process of transforming the proceeds of crime into ostensibly legitimate money or other assets. Also, in Atuche v. F.R.N. (2015) 4 NWLR (Pt. 1449) 306 at pages 332 to 333, the Court of Appeal held that “the phrase “money laundering” has been defined as the act of transferring illegally obtained money through legitimate people or accounts so that its original source cannot be traced. In the instant case, the implication on the face of counts 38-41 of the amended charge was that the alleged source of the money for the alleged purchase of the shares was illegally obtained from the depositors’ monies with Bank PHB and made to look as if the shares were properly or legally bought by the appellant. Thus, the counts in issue as appeared on the face came within the ordinary meaning of the phrase money laundering.”
Money laundering emboldens other offences, such as fraud, human and drug trafficking. The disguising, legitimizing or whitewashing of the origin and source of the funds as well as the sometimes, rapid movement of funds involving even foreign banks, makes money laundering very difficult to prove. The Supreme Court in recognizing the difficulty in proving the offence of money laundering in Daudu v. F.R.N. (supra) held that:
“proving money laundering cases is a herculean task because it requires a prior establishment of the predicate offence before the money laundering aspect can be established.”
In FRN v. Yaya (2016) 2 NWLR (Pt. 1496) 252, the Court of Appeal, in recognizing the difficult task of proving money laundering offence, defined a predicate offence of a money laundering and held at page 277 paragraphs C – E, as follows:
“A predicate offence is an offence whose proceeds may become the subject matter of any of the money laundering offences. It is an action that provides the underlying resources for another criminal act. For an offence of money laundering to be established, the prosecution has an onerous task of proving that the proceeds of a particular act is defined as a predicate offence. In the instant case, the appellant failed to prove that the act of the respondent was a predicate offence under any law.”
- What Law Regulates Money Laundering in Nigeria?
The principal legislation governing money laundering offences in Nigeria is the Money Laundering (Prevention and Prohibition) Act, 2022. While the Economic and Financial Crimes Commission, through the Economic and Financial Crimes Commission Act, is the investigating and prosecuting authority of money laundering offences in Nigeria.
In Nigeria, the Money Laundering (Prevention and Prohibition) Act, 2022 was passed into law when the President assented to it on the 12th day of May, 2022 to amend the old Money Laundering Act 2011 and improve the standards and effective implementation of the legal, regulatory and operational measures for combating money laundering.
The objectives of the new Money Laundering Act by virtue of its section (1) (1) (a-e) are to:
- Provide for an effective and comprehensive legal and institutional framework for the prevention, prohibition, detection, prosecution and punishment of money laundering and related offences in Nigeria;
- Strengthen the existing system for combating money laundering and related offences;
- Make adequate provision to prohibit money laundering;
- Expand the scope of money laundering and provide appropriate penalties; and
- Establish Special Control Unit Against Money Laundering under the Economic
and Financial Crimes Commission for effective implementation of money laundering provisions of the Act, in relation to designated non-financial businesses and professions.
- What are the Common Legal Defences to Money Laundering Charges in Nigeria?
Generally, all the defences that are available to criminal charges can be used to defend against a charge of money laundering. However, the following are some of the commonly used defences:
- Absence of Intention to Commit Money Laundering
Most offences require intent to commit them under Nigerian law. Mens rea which is the intent to commit an offence, is a very important aspect of our criminal jurisprudence. The Court of Appeal in the case of Suinner v. F.R.N. (2021) LPELR – 53404 (CA) explained the concept of mens rea thus: “it is a fundamental principle of criminal law that a crime consists of both a mental and physical element. Mens rea, a person’s awareness that his or her conduct is criminal, is the mental element, and actus reus, the act itself is the physical element.”
Section (15) (2) of the Money Laundering (Prevention and Prohibition) Act, 2022 provides that “…any person or body corporate, in or outside Nigeria, who directly or indirectly – (a) conceals or disguises the origin of; (b) converts or transfers; (c) …… (d) acquires, uses, retains or take possession or control of any fund or property, knowingly or reasonably ought to have known that such fund or property is or forms part of the proceeds of an unlawful act commits an offence of money laundering under this Act.”
Thus, the phrase “knowingly or reasonably ought to have known” introduces the issue of mens rea, a guilty intent. To that end, there must be a concurrence of the act of money laundering and the intention to commit the said act to ground a conviction on a charge of money laundering. Mens rea is a criminal intention or knowledge that an act is wrong, and today most of the offences are defined by statutes that generally contains a word or phrase “knowingly or reasonably ought to have known” to indicate the importance of mens rea as an ingredient of the offence.
Where a company is alleged to have committed a money laundering offence, a director or company secretary or shareholder of the company who did not “knowingly or reasonably ought to have known” the existence of the act that constitutes money laundering may have a legal defence to any money laundering charge against him or her. The prosecution will therefore be required to prove mens rea of the director or company secretary or shareholder in respect of the offence of money laundering. The prosecution must prove that the accused person was reasonably expected to know that the funds in question were the proceeds of crime.
Other people who are unaware of commission of the offence of money laundering such as bankers, accountants, etc. cannot be convicted of money laundering if they can prove that they have no prior knowledge that the money obtained was illegal. So, if a defendant can show that he or she is not aware of the funds in question came from illicit or illegal source, then, such a person may lack the requisite mens rea required for the commission of the crime.
- Lack of Evidence or Insufficiency of Evidence
All the ingredients of the offence of money laundering must be proved by the prosecution to ground any conviction. A situation may arise wherein the prosecution is unable to prove the ingredients of the offence of money laundering for lack of evidence. Any criminal charge may be dismissed for want of or insufficient evidence to successfully prosecute the accused person.
In Kalu v. F.R.N. (2016) 9 NWLR (Pt. 1516) 1 at page 23, the Supreme Court held as follows:
“The ingredients of the offence of money laundering under section 14(1)(a) of the Money Laundering (Prohibition) Act are:
- (a)or property;
- (b)illegal acts;
- (c)or property must be with the aim of.
(a) concealing or disguising the illicit origin(i)of the resources or property, or
(b) aid any person involved in any of the acts of drug related offences or
(c) any other crime or illegal act so as to evade(ii)the illegal consequences of his action.”
The prosecution must prove all these ingredients of the charge beyond reasonable doubt for there to be any conviction. Where the prosecution failed to prove the ingredients of a money laundering charge, such charges are liable to be dismissed by the trial court, and if such deficiency in the prosecution case is shown on appeal, the charge would be quashed by the appellate court.
- Duress
Duress is an exertion of force on someone by another person who is usually at vantage position to do act against his will. This happens when a person truly believes that there will be real danger or harm if they do not comply or participate in an act which otherwise is a money laundering offence.
Duress can come or may occur in different shades and forms. But in all, the fear or apprehension of immediate threat to life or the least, bodily harm or injury must be present. The Court of Appeal in the case of Onyeresi v. Okorocha & Ors. (2019) LPELR – 49475 (CA), took out time to adumbrate on what constitutes duress, when it held thus:
“more importantly the law is that to prove duress as a criminal allegation, it must be shown:
- that there was a threat of death or serious bodily harm or injury;
- that the threat was immediate or imminent;
- that the threat created a reasonable fear in the defendant; and
- that there was no reasonable means for the person to escape from the threat, except to comply.”
The immediate threat of death or serious bodily harm or injury may be expressed by words or implied through actions for instance, pointing a gun or knife in a threating way. The requirement that someone acting under duress have well-grounded fear that the threat will materialize must pass the test of objectivity. The fear must be reasonable, the person must establish that a reasonable person, in the same situation, would have had same fear. The fact that the person is especially bold or timid because of past interactions with the person making the threat is not enough ground to displace the possibility of fear. For example, threat of kidnappers to kill a hostage victim may be determined by the court as real and reasonable enough to move with the ransom, an amount of cash that has potential of constituting money laundering offence.
The accused person who relies on duress must also show that he had no reasonable avenue for escape. Where there is a legitimate way of avoiding the danger, the plea or defence of duress will not suffice. Most times, perpetrators of money laundering exert force on bankers or accountants or account owners who are victims or relatives of victims to launder illicit or illegally obtained money by threatening to harm them or their loved ones. In such a case, the defendant may successfully put forward a defence of duress.
- No Case Submission
A “No-Case Submission” is a procedural defence to every specific intent offence which money laundering is one especially where the prosecution has not established enough evidence to secure conviction of the accused person. A No-Case Submission is usually raised when the defendant, having gone through the case of the prosecution (at the close of the case for the prosecution), believes that the prosecution has failed to prove its case or has not established a prima facie case against him and so submits that there is no case against him to answer.
InChianugo v. State (2002) 2 NWLR (Pt. 750) 225 at Pages 237-238, paras. G-B, the Court of Appeal sets out the meaning of a No-Case Submission as follows:
“At the close of the case for the prosecution, a submission of no-case to answer may be made on behalf of an accused. A no-case submission postulates one or two things, viz:
(a) Firstly, such a submission tantamounts to saying that there has been throughout the length and breadth of the case presented in court by the prosecution no legally admissible evidence led against the accused person on behalf of whom the submission was made to connect him in any way with the commission of the offence with which he has been charged which would compel his being called upon to defend himself; or
(b) Secondly, it may mean that whatever evidence there was which might have linked the accused person with the commission of the offence has been so discredited through cross-examination that no reasonable tribunal can be called upon to act on it as establishing the guilt of the accused person or that evidence is so manifestly unreliable such that no reasonable tribunal can safely convict on it.
These are two conditions, one of which and even both can sustain a no-case submission.” (Pp. 237-238, paras. G-B)
This principle of No-Case Submission was restated in the case of Lawan v. F.R.N. (2020) LPELR – 51085 (CA), where the court echoed the decision in the previous cases of Prof. Bukar Barabe v. F.R.N. (2019) 1 NWLR (Pt. 1652) 100 at 125 C and F.R.N. v. Iseghohi (2019) 12 NWLR (Pt. 1685) 154 at 178 H – 179 A, held that:
“it must be stressed that an accused person has no duty to prove his innocence. His failure to testify, for example, cannot result in a conviction. The prosecution must adduce cogent and compelling evidence to discharge the burden of proving its case beyond reasonable doubt, as any doubt created in the mind of the court must be resolved in favour of the accused person.
The effect of a No-Case Submission is that if it succeeds, the defendant is discharged from the offence for which the prosecution has led insufficient evidence. However, if a No-Case Submission fails, then the witness loses his right to call a witness in defence against the charges. A defendant must stand or fall by his No-Case Submission.
Another important point is that where after a no-case submission or at the end of the case for the prosecution in a criminal trial, the evidence supports a lesser offence only, the court should not discharge the accused of the serious offence charged and thereafter call on him to answer to a lesser offence but should hold that a prima facie case for the more serious offence had been made out and then call on him to enter his defence. The law does not require the court at that stage to state the nature of the offence that the accused is to defend himself upon or to frame a charge for any lesser offence revealed in the prosecution’s evidence.
The foregoing was the decision of the Supreme Court in Adeyemi v. State (1991) 6 NWLR (Pt. 195) 1 at page 29 paragraph D. The Supreme Court further held as follows:
“Where the trial Judge on a submission of no case to answer finds that although the prosecution had prima facie not proved the offence charged but the lesser offence, then he (the Judge) is obliged to rule that there is a case for the accused person to answer and to proceed with the trial by asking the accused person to enter his defence.” (P.29, para. D) (words in brackets supplied for clarity).
In order to establish the guilt of an accused person, the prosecution must prove all the essential ingredients or elements of the offence or offences with which he is charged. The court must be satisfied that the totality of the evidence led supports the particulars of the offences charged. Otherwise, the defence of no-case submission would come handy for the defendant and the court will have no choice than to uphold it.
A No-Case Submission is a very delicate and risky defence to rely on unless the defendant is absolutely sure that the prosecution has failed woefully to lead any meaningful evidence that can ground conviction. It has to succeed as a whole. If it succeeds in respect of a major offence whilst there is sufficient evidence of commission of a lesser offence, the defendant will be asked to defend himself against the lesser charges.
In Nigeria, for an accused to be convicted for a lesser offence, the following conditions must be fulfilled:
(a)The elements in the offence charged and those in the lesser offence for which the accused is convicted must be the same.
(b)The evidence adduced and the facts found must be insufficient for conviction in respect of the offence charged, but at the same time support the lesser offence in respect of which the accused was convicted. [R. v. Adokwu 20 NLR 105 referred to].
(c)The lesser offence in respect of which the accused was convicted is usually not charged. This is clearly envisaged by the expression “although he was not charged with it” contained in section 179(1) of the C.P.A., which is waiving the requirement of a formal charge.
(d)The accused must be tried on the more serious offence.
See the above Supreme Court’s decision in Adeyemi v. State (1991) 6 NWLR (Pt. 195) 1.
- Absence of Predicate Offence
It is a settled law that money laundering must invariably be accompanied by a predicate offence which is an illegal act that yielded the funds sought to be laundered as clean money. It is difficult, if not impossible, to prove money laundering without a predicate offence as was held in the decided cases of F.R.N. v. Yahaya (2016) 2 NWLR (Pt. 1496) 252, Daudu v. F.R.N. (supra), EFCC v. Thomas (2018) LPELR – 45547 (CA) and F.R.N. v. Adamu (2018) LPELR – 46024 (CA).
The Court of Appeal emphasizing the indispensability of a predicate offence to money laundering offences in Wali v. F.R.N. (2020) LPELR – 51967 (CA), held thus:
“without evidence that the funds in question is a product of an illegal or illicit activity, the offence of money laundering would normally not be said to have been established because it would lack a predicate offence which is usually an accompaniment to money laundering.”
The reasoning of the court in arriving at the decision above is hinged on the timeless principle of case law which says that “you cannot put something on nothing and expect it to stand or stay.” So, it is pertinent for the defence lawyer to figure out if the money laundering charge was linked to any predicate offence committed by the accused person or any other person for that matter for which the accused person became an accessory before or after the fact. Should the money laundering charge not linked or connected to any predicate offence, the accused can raise the defence of lack or absence of predicate offence, and that should be enough to ground his discharge and acquittal.
Conclusion
It is worthy of mention here that the Central Bank of Nigeria in the exercise of its powers under section 66 of the Bank and Other Financial Institution Act, 2020 issued the Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation of Weapons of Mass Destruction Guidelines (“Guidelines”) with which all promoters of financial institutions must comply while applying for operational licenses to avoid pitfalls of money laundering, financing terrorism or proliferation of weapons of mass destruction.
However, whether the evidence of compliance with the Guidelines may in itself would serve as a successful defence to money laundering charges is entirely a question of facts and law, a decision that is squarely at the bosom of the courts.
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