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Legal Alert – December 2010 – Minority Shareholders' Rights
 
In this Issue:-
1. Legal Alert for December 2010 – Minority Shareholders' Rights
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice
Legal Alert – December 2010 – Minority Shareholders' Rights
Introduction
The global economic crises have again highlighted the dereliction in the responsibilities of the shareholders of companies, who as owners and not spectators of their companies, should properly oversee the governance and management of their companies. And to in proper instances, assert their legal rights to protect their shares/investments in these companies.
The position of the minority shareholders is usually more precarious as a result of the narrow understanding of the general legal rule that allows only a company, through its majority shareholders, to assert the legal rights of such a company. This rule, commonly known as the rule in Foss v. Harbottle, is intended to avoid multiplicity of law suits and also to protect our courts of law from interfering in the internal affairs of a company. However, and sometime, the injury to the company is caused by the majority shareholders or their appointed Directors to which situation the law has created exceptions to this general rule.
Minority Shareholders Rights
Section 81 of the Companies & Allied Matters Act ascribes to every member of an incorporated company, who has fully paid for his or her shares, a right to attend all the shareholders' meetings of such a company; and to speak and vote at such shareholders meetings. The mode of proving membership of a company is by the possession of a share certificate and the tendering of a certified true copy of the register of members should such a matter go to litigation. See the decision in Oriji v. Dorji Textile Mills Limited (2009) 12 SC (Part III) 101 @ 108, 112-113.
All the members of a company also have the right to receive copies of the Memorandum and Articles of Association of the company as they do further have the right to receive and comment on the audited accounts of the company.
The minority shareholders of a company also have the right to bring derivative actions, in the name of the company, where the wrongdoers are the controlling directors of the company, who have being entrusted with the control and management of the company, and who have done any of the following:-
a) Entered into any transaction which is illegal or ultra vires the Memorandum and Articles of Association of the company;
b) Committed a fraud on either the company or on the minority shareholders despite repeated notice to refrain or remedy such complained of actions;
c) Derived or is/are deriving a profit or benefit or profited from their negligence and or breach of duty of care;
d) Have by their actions or inactions or omissions infringed upon the individual rights of the minority shareholders;
e) Are conducting the affairs of the company in an unfair, prejudicial and oppressive manner.
Judicial decisions on this matter, for your study, include the decisions in William v. William (1995-1996) ALL NLR 283 @ 294-302; Yalaju-Amaju v. A.R.E.C (1990) 6 SC 157 @ 175-176.
Conclusion
The plethora of judicial authorities with the provisions of the Companies & Allied Matters Act are available to all shareholders, including the minority shareholders, to protect their investment rights. Shareholders should therefore avail themselves of these provisions to avoid more catastrophic losses in the future.
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DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert – October 2010 – Land Instruments – Survey Plan and Survey Law
 
In this Issue:-
1. Legal Alert for October 2010 – Land Instruments – Survey Plans and Survey Law
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice
Legal Alert – October 2010 – Land Instruments - Survey Plan and Survey Law – Part 1
Introduction
The global economic crises that also affected the Nigerian Stock Market have necessitated both big and small investors to explore the very many investment opportunities that exist in the Nigerian real estate market. However, due to the expensive land transfer/registration costs, with associated bureaucratic bottlenecks, the most common land instrument that a land purchaser retains, after the payment receipt, is the Survey Plan.
Holders of the various Survey Plans are however not usually under sufficient enquiry as to the legal value of the Survey Plan that they receive in exchange of their hard earned money. This part one of this legal alert is our contribution to your appreciation of what a Survey Plan is, and what law regulates its enforcement in the various States of the Federation.
What is a Survey Plan?
A Survey Plan can be described as a land instrument which shows as clearly and as accurately as possible, with as much certainty as also possible, the ascertainable area of a piece or parcel of land with its definite and precise boundaries that it describes. Where a survey plan does not possess these attributes, it is of no value whatsoever to the holder of the document.
What Law regulates Survey Plans, Maps, etc?
Most States in the Federal Republic of Nigeria have a Survey Law whose provisions are similar to the Survey Laws of the other States. In Lagos State, the applicable law is the Survey Law, 1984.
Section 1 of the Lagos State Survey Law requires that any map or diagram or survey plan that is attached to a registered land instrument or that will be tendered in any court of law must be prepared, signed and certified by a licensed surveyor.
Any unauthorised person who wilfully obliterate, remove or injure any trigonometrical station, survey beacon, mark or pole or any boundary marks fixed, set up or placed for the purpose of any public survey or any survey ordered by an Act of Parliament shall be liable to pay a fine of N100 or to serve a term of imprisonment for 3 months or to both the fine and the term of imprisonment. In further addition to the latter provision, such a person could be ordered to pay the cost of repairing or replacing the items obliterated, removed or damaged. See Section 6 of the Survey Law.
It is the duty of the owner and the occupiers of any land, including the community leaders in the area where the land is situated, or where the land have boundaries with any trigonometrical station, survey beacon, mark or pole, to preserve these items and report forthwith to the nearest officer of the survey department if these items are obliterated, removed or damaged or require repair. Any breach of this duty, on conviction, attracts a fine of N100.00.
Also, any person who without the authority of the Surveyor General uncovers any survey beacons or marks buried below the surface of the ground or covered with earth, stone or other material, is guilty of an offence and liable on conviction to a fine of N100.00 or to a term of imprisonment for six months.
Any person who wilfully obstructs, hinders, resists or threatens any Surveyor in the execution of his duty shall be guilty of an offence and shall be liable on conviction to pay a fine of N100 or to serve a term of imprisonment for six months or to both the fine and the term of imprisonment.
Discipline of Surveyors
A disciplinary committee is established for erring Surveyors who have intentionally or negligently or recklessly or out of culpable ignorance of facts made an incorrect survey or delivered an incorrect plan or diagram of land or prepared a plan which does not conform with the requirements of any regulation made under the Survey Law or have been convicted of any offence involving fraud or dishonesty.
Some of the penalties that a erring Surveyor could incur include suspension from practice or the outright cancellation of his practising license. Where a Surveyor's license is cancelled and he fails to surrender his license to the Surveyor General, such a Surveyor shall be guilty of an offence which on conviction carries a fine of N200 (Two Hundred Naira).
A Surveyor's license that is cancelled or suspended can always be restored on the Surveyor making an application which must disclose sufficient and reasonable ground(s) to assist the disciplinary committee in considering whether or not it should restore the Surveyor's license.
Conclusion
In part two of this legal alert, we shall be considering whether a Survey Plan is under Nigerian Law a land instrument that requires registration, and the implication of non-registration where registration is required.
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DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert – September 2010 – HIV and AIDS Protection Law
 
In this Issue:-
1. Legal Alert for September, 2010 – Lagos State HIV/AIDS Protection Law
2. Subscribe & Unsubscribe to Legal Alerts.
3. Disclaimer Notice
Introduction
The stigmatisation, segregation and discrimination of people living with HIV and or people afflicted or affected by AIDS remains rampant in Nigeria. Save for some provisions on fundamental human rights in Chapter IV of the 1999 Constitution of the Federal Republic of Nigeria, there are no specific laws on the protection of people living with either HIV or people afflicted with AIDS. That is until the Lagos State Government, in 2007, passed into law "the protection of persons living with HIV and affected by AIDS Law" 2007. This Law came into force on 18th May, 2007.
In spite of the Lagos State HIV and AIDS Protection Law, the menace and cost of this illness, with the response of most members of the society to it remain unabatedly negative.
A recent law suit filed at the Lagos State High Court is currently under the jurisdictional challenge of whether the Lagos State House of Assembly has the constitutional authority to legislate on labour/employment and human rights matters? Despite this law suit, employers and employees are advised to be sensitised to the existence of this law and its application.
Lagos State HIV and AIDS Protection Law
Section 1 of the Lagos State HIV and AIDS Protection Law guarantees the protection of all persons living with HIV and or affected by AIDS by among other things providing these persons with access to health care institutions in Lagos State including access to life prolonging drugs, treatments and therapies. Persons living with HIV or affected by AIDS also have the right to voluntary counseling in all Public Health Institutions established in Lagos State in addition to HIV and anti-body tests in all Public Health Institutions established in the State.
An anti-retroviral drugs trust fund is established to ensure the purchase of anti-retroviral drugs which shall be distributed free of charge to persons living with HIV or persons affected by AIDS. Such persons include pregnant women and children living with HIV or affected by AIDS. Contributors to this Fund include the Federal, State and Local Governments, corporate bodies, philanthropic organisations and individuals, International charitable organisations, non-governmental organisations, other interested persons and other nations of the world.
Unlawful and Discriminatory Actions
The following actions and other similar acts are regarded by this law to be unlawful and discriminatory against persons living with HIV and affected by AIDS:
(a) The refusal of a Landlord to accept as a tenant a person living with HIV and or affected by AIDS.
(b) The stigmatisation and denial of such a person free and easy access to a private or public health Institution
(c) The denial of the right of the affected person to pursue his or her academic career in an educational institution
(d) The discrimination and stigmatisation of such a person in any social, religious or political gathering.
(e) The segregation, discrimination and stigmatisation of the affected person at any place of employment.
(f) The subjection of employees to compulsory and mandatory HIV test.
It is also unlawful for a person living with HIV or affected by AIDS to have his employment terminated by reason of his AIDS or HIV status. To provide some further guarantee for this provision, all corporate organisations are mandatorily required to have an HIV/AIDS policy for the benefit of their employees living with HIV and or affected by AIDS.
Other protections provided by this Law include:-
(i) Persons who die as a result of complications arising from HIV/AIDS infections have the right of admission at any mortuary or hospital, with the further right to a decent burial.
(ii) They also have the right to sue against discrimination or stigmatisation.
Offences
Any organisation that uses the medium of HIV/AIDS to harm, defraud or act in any manner that is morally wrong or criminal shall be liable to closure and blacklisting while its principal officers shall be liable on conviction to a fine of N250,000 with or without the option of a 5 year jail term.
Any person who knowingly or willfully endangers other people by infecting them with the AIDS virus commits an offence and is liable on conviction to a fine not exceeding N200,000 or imprisonment for a term not exceeding 10 years or to both the fine and term of imprisonment.
Any health worker who intentionally reveals the health status of any person living with HIV and infected with AIDS shall be suspended from his or her duties, and may be relieved of his or her duties.
Any person who fails to comply with some of the above mentioned provisions on discrimination, stigmatisation, denial of access to facilities, etc commits an offence and shall be liable on conviction to a fine not exceeding N50,000 or imprisonment for a term not exceeding two years or to both the fine and the term of imprisonment.
Any employer of labour who fails to comply with the provisions of this Law commits an offence and shall be liable on conviction to a fine not exceeding N100,000 or imprisonment for a term not exceeding two years.
Any person or persons, or organisation that lay claim to unsubstantiated remedy or remedies, or proffers cure of HIV with intent to defraud members of the public shall be liable to a fine of N1,000,000 or to a 5 years jail term on conviction.
Conclusion
The constitutionality or otherwise of the HIV and AIDS Protection Law must not inhibit Nigeria from embracing the current global best practices of penalising all forms of discrimination, stigmatisation or discrimination of persons living with HIV/AIDS. The Federal and State Houses of Assemblies must therefore harmonise a common position and pass into Law Federal and State anti-HIV/AIDS discrimination, stigmatisation or segregation law(s).
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This Alert and others produced by us are provided without any charge to you. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
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DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert for August 2010 – New Local Government Approved Taxes Levies Law
 
In this Issue:
1. Legal News
2. Legal Alert for August, 2010 – New Lagos State Local Government Approved Taxes/Levies Law
3. Subscribe & Unsubscribe to Legal Alerts.
4. Disclaimer Notice.
Legal News
Effective 1st September 2010, the Honourable Minister for the Federal Ministry of Commerce and Industry has, in the exercise of his duties as provided for in Section 45(1)(e) of the Trademarks Act, approved an upward review of the fees charged for Trademark, Patent and Design registrations at the Trademark, Patent and Designs Registry.
New Lagos State Local Government Approved Taxes/Levies Law
The controversy over the division of the taxing powers of the three tiers of government with the resulting multiple taxation thereof remains unabated in a Nigerian economy that seeks to improve and encourage existing businesses while attracting new direct foreign investments. Cases of the indiscriminate imposition of taxes and levies particularly by the local government councils, who are left with the least revenue from the federation account, remain abound.
To address the above problem and assist businesses, the Lagos State Government recently passed into law, the Local Government Levies (Approved Collection List) Law to among other things:- (a) prescribe the levies that can be imposed and collected by Local Government Councils in Lagos State and (b) to regulate the administration of such prescribed levies in Lagos State.
The effort of the Lagos State Government, through the above mentioned law, is to address complaints, especially from the private sector, over the unlawful collection of levies with the resulting multiple taxation, and also to address various superior Courts of record decisions that held that the existing local government laws, on levies that were collected by some Local Governments in the country, were unconstitutional, null and void.
This Alert will provide you with a synopsis of one of such Superior Courts of record decisions on this vexed issue with a further synopsis on the provisions of the new Lagos State Local Government Levies (Approved Collection List) Law which took effect from 12th July 2010.
1st Synopsis – Eti-Osa Local Government v. Rufus Jegede & Anor - CA/L/453/2002.
The Respondent in this appeal, at the Lower Court, challenged the competence of the Appellant Local Government Council to make a law imposing taxes and levies that are outside the provisions of the Fourth Schedule to the 1999 Constitution and also outside the provisions of Part 111 of the Taxes and Levies (Approved List for Collection) Act, 1998. The Lower Court held that the Appellant Local Government Council had no legislative powers of its own to impose or determine taxes and levies which are outside the enabling 1998 Taxes and Levies (Approved List for Collection) Law. Where however there exist some residual legislative power to collect certain taxes and levies, such residual legislative power must be exercised in conformity with the provisions of the 1998 Federal law, i.e. the Taxes and Levies (Approved List for Collection) Act, 1998.
The Appellant was dissatisfied with the decision of the Lower State High Court and appealed, as was its right, to the Court of Appeal. The Court of Appeal, in its unanimous decision, upheld the decision of the lower State High Court and held that the inherent power of any tier of government to legislate on and impose any form of tax or levy cannot be left at large, or at the whim and caprice of any tier of government, but according to the existing laws of the Federal Republic of Nigeria. The Court of Appeal also, obiter dictum, reiterated the age long principle that "...... over taxation resulting from lessez-affaire tax doctrine could be counter productive."
2nd Synopsis - Lagos State Local Government Approved Levies for Collection Law, 2010
This Law authorises all Local Government Councils with their Local Government Development Authorities or any other administrative unit established by Law at the local government level of the State to collect any of the following levies which are enumerated in the Schedule to this Law:-
(1) Shops and kiosks rates.
(2) Approved open market levy.
(3) Tenement rates.
(4) Licensing fee for sale of liquor.
(5) Slaughter slab license fee in abattoirs under local government control.
(6) Marriage, birth and death registration fees.
(7) Street naming registration fee.
(8) Motor Park levy (Including Motor cycles and Tri-cycles).
(9) Parking fee on local government streets or roads as may be approved by the State Government.
(10) Domestic animal licence fee (Excluding poultry farmers).
(11) Licence fees for bicycles, trucks, canoes, wheelbarrows and charts (other than a mechanically propelled trucks).
(12) Radio and Television licence fee (excluding radio and television in motor vehicles, transmitters and other communication equipment)
(13) Public convenience, sewage and refuse disposal fees.
(14) Cemetery and burial ground permit fee.
(15) Permit fee for private entertainment and merriment in public places (excluding roads and streets).
(16) Wharf landing fees.
Subject to Section 13 of this law, no levy shall be charged and collected by a Local Government Area or by a Local Government Development Authority save or except for the levies enumerated above.
To ensure that the disparity or differences in the rates of the levies charged by each Local Government Authority in comparison to other Local Government Authorities is minimised, the State Joint Revenue Committee is enjoined to carry out a periodic review of the rates charged and issue directives that will seek to harmonise the rates as closely as possible to each Local Government Authority's area as possible.
To further ensure transparency, which leads to greater tax compliance, each Local Government Revenue Committee is enjoined to publish at a conspicuous place in all revenue offices of the Local Government Authority, a chart of the approved list of levies with the applicable rates, and the expected time of payment of these levies.
To address the controversy over the appointment of private tax consultants, this law requires that private tax consultants can only be engaged by a local authority where such an authority does not have the personnel with appropriate knowledge or skill to optimally administer the levy or where two or more local authorities by mutual agreement, delegate the authority to administer any levy to a common private tax consultant whether or not the position of such a private tax consultant is established by a law of the Lagos State Government. The collection of the scheduled approved levies by any other unauthorised person shall be unlawful and punishable under this Law, as highlighted hereunder.
This Law further seeks to make unlawful the erection of road blocks and road closures by any Local Government official purportedly for the purpose of collecting the approved list of levies.
OFFENCES
Any person who collects or attempts to collect any levy that is not listed in the Schedule to this Law or does so without due authority and identification, or mounts a road block, or causes a road or street to be closed for the purpose of collecting any levy commits an offence and shall be liable on conviction to pay a fine of N500,000.00 (Five Hundred Thousand Naira) only or to imprisonment for a term of three (3) years or to both the fine and the term of imprisonment.
It is equally an offence for any person or agency to demand from any other person an amount in excess of the applicable levy or to fail to remit the revenue collected when due, or who withholds such revenue for his own use, or renders a false return or defrauds any person or embezzles any money or steals or misuses Local Government Authority documents, or compromises on the assessment or collection of any levy, or commits any of these offences which shall on conviction attract a penalty of five hundred percent (500%) of the sum in question and a term of imprisonment for three (3) years.
Where the offending person is armed with an offensive weapon or causes injury to any officer or authorised agent of the Local Government Authority in the performance of their duties, this offence on conviction attracts a term of imprisonment of three (3) years. Where injury results from this felony, the term of imprisonment on conviction is five (5) years. Aiding and abetting the contravention of the provisions of this Law attracts a fine equivalent to 400% (Four Hundred Percent) of the sum in question and imprisonment for a term of two (2) years. The impersonation of the character of an authorised revenue agent shall in addition to any other punishment enumerated herein attract a fine of Two Hundred and Fifty Thousand Naira (N250,000) or a term of imprisonment of three years or to both the fine and the term of imprisonment.
CONCLUSION
There is a rather curious provision at the end of the Lagos State Local Government Levies (Approved Collection List) Law, 2010 and this is Section13. Section 13 of this Law provides as follows: "Nothing in this Law shall be construed as prohibiting a Local Government Authority from enforcing penalties stipulated for breach of its bye-laws or charging fees as may be approved by the State Joint Revenue Committee for the use of the Local Government properties, public utilities established and maintained by the Local Government or Services rendered by the Local Government or its officials to particular individual and organisation.
The commendable effort of this law to bring clarity and certainty to what taxes and levies Local Government Authorities are permitted to collect in Lagos State may be compromised by the above Section 13 of this same Law. Section 13 does not follow the decision in the decision of Eti-Osa Local Government Area v. Rufus Jegede (supra) where the Court of Appeal held that the taxing power of any tier of government cannot be left at large or at the whim and caprice of any tier of Government but according to the provisions of the 1999 Constitution and the 1998 Taxes and Levies (Approved List For Collection) Act. The amendment or outright expunging of Section 13 of this law is highly therefore recommended.
The second comment must be that save for Section 13 of this Law, it is not immediately discernable what new practical mechanism are in place or will be put in place to re-orientate the correct implementation of this Law in Lagos State to serve as an equitable model for other States in the federation, to emulate.
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This Alert and others produced by us are provided without any charge to you. You can always subscribe to it, on behalf of other interested persons from whom you have their permission, by sending to us a one line e-mail with the words "Subscribe – Legal Alerts" followed by the desired email address.
You are equally free to terminate your subscription by sending to us a one line email with the words "Unsubscribe - Legal Alerts" and your electronic address would be removed from our list. In the future, you can return to our mailing list by visiting our web site www.oseroghoassociates.com to subscribe for the Legal Alerts.
DISCLAIMER NOTICE. This Legal Alert is a free educational material, for your general information and enlightenment purposes ONLY. This Alert, by itself, does not create a Client/Attorney relationship between yourself and our Law Firm. Recipients are therefore advised to seek professional legal counselling to their specific situations when they do arise. Questions, comments, criticisms, suggestions, new ideas, contributions, etc are always welcomed with many thanks.
This Legal Alert is protected by Intellectual Property Law and Regulations. It may however be shared with other parties provided that our Authorship is always acknowledged and this Disclaimer Notice is attached.
Legal Alert for July 2010 – Money Laundering Law in Nigeria
 
In this Issue:
1. Legal News
2. Legal Alert for July, 2010 – Money Laundering Legislations in Nigeria
3. Subscribe & Unsubscribe to Legal Alerts.
4. Disclaimer Notice.
Legal News
The Lagos State Government has signed into Law a bill for the regulation, standardisation and grading of Hotels and other Tourism businesses in Lagos State. This new law amends the Hotel Licensing Law 2003, and requires that no person, whether corporate or an individual, shall operate a Hotel establishment or practice any form of tourism business in Lagos State without it first obtaining a license from the Lagos State Hotel and Tourism Licensing Authority. Any contravention of this law attracts a fine ranging from N100,000 to N500,000 or a term of imprisonment of two years.
LEGAL ALERT— Money Laundering Legislations in Nigeria
There is no definitive statutory definition of what constitutes a Money Laundering offence. The Anti-Money Laundering/Combating Financing of Terrorism Regulations 2009 however defines Money Laundering as the process whereby criminals attempt to conceal the origin and or ownership of property and other assets that are or were derived from a criminal activity or activities. These regulations go further to acknowledge that money laundering and terrorism financing are now a global phenomena and malaise which pose major threats to international peace and security, national development and progress, if left un-combated.
The combined provisions of the Money Laundering Act, 2004 and the Anti-Money Laundering/Combating Financing of Terrorism Regulations 2009 provide a guide on what financial activity could constitute money laundering. While there is currently before the Nigerian National Assembly the Money Laundering Act (Repeal and Re-enactment) Bill 2010 which Bill seeks to, among other things, increase the cash amount(s) or withdrawal(s) that a financial institution or a non-financial institution must statutorily report to the financial regulators, a consideration of the existing Money Laundering Law is vital to both financial institutions and non-financial institutions and their customers.
Money Laundering (Prohibition) Act, 2004
The Money Laundering (Prohibition) Act, 2004 ("the Money Laundering Act") makes various provisions prohibiting the laundering of the proceeds of a crime or of any criminal or illegal activity, and provides for appropriate penalties for money laundering infringements.
According to the provisions of the Money Laundering Act, no person or corporation or organisation is allowed to make or accept cash payments of a sum in excess of N500,000.00 or its equivalent in the case of an individual, and N2,000,000.00 or its equivalent in the case of a corporation, unless such cash payment or acceptance is undertaken through a financial institution. Also, a transfer of funds or securities to or from a foreign country in excess of US$10,000 or its naira equivalent must be reported to the Central Bank of Nigeria ("CBN") or the Securities and Exchange Commission ("SEC") in the case of a public corporation.
The mandatory reporting of all monetary transfers to or from outside the country must indicate the nature of the transfer, the amount of the transfer, the names and addresses of the sender and the receiver of the funds or securities that were transferred, and the ultimate beneficiary of the transfer if different from the latter persons. The Nigerian Custom Service ("NCS") is also mandatorily required to forward all monetary declarations it collates to the Central Bank of Nigeria.
The Central Bank of Nigeria with the Securities and Exchange Commission are in turn required to forward weekly reports of the above mentioned declarations, submitted to them, to the Economic and Financial Crimes Commission ("EFCC"). Despite this provision, the EFCC is itself empowered to directly demand and receive these reports or declarations directly from the Financial Institutions concerned.
Another money laundering prevention mechanism is the requirement that all financial institutions must verify their customers' identity and physical address before establishing any business relationship with such a customer or customers. The business relationship contemplated by this Act, between the financial institution and the customer, includes the opening of any form of account, safe deposit box and other kinds of fiduciary relationship accounts. The types of a customer identification contemplated by this Act include a valid official document like a Driver's License, an International passport issued in the last three months preceding its submission, utility bills, etc all of which must bear the customer's full names and or photograph. A corporation on the other hand is required to provide proof of its legal existence by presenting its certificate of incorporation and other valid registration documents attesting to its existence as a body corporate recognised by law.
In the event that a financial institution suspects or has reasonable grounds to suspect that the amount involved in a transaction is derived from the proceeds of a crime or from an illegal activity, such financial institution must require from its customer physical evidence attesting to the customer's identification notwithstanding that the amount involved in the transaction is less than US$5,000 or its equivalent. Where the customer is not acting on its own behalf but for a principal, all the information on the identity of the principal must be obtained as if the principal were the customer.
Casino owners, dealers in jewelry, cars, luxury goods, professional consultants including Lawyers, Doctors, Accountants, etc, Hotels, Supermarkets and other designated non-Financial Institutions are required to also obtain and verify the identity of their clients and or customers by keeping a record or register of the particulars of the names of these clients or customers, their addresses and the nature of each transaction. The Federal Ministry of Commerce, to whom these records are forwarded for non-Financial Institutions, is required to in turn forward the reporting records and or declarations to the EFCC. The Register of this information, that is collated or assembled, must be preserved by the non-Financial Institutions for a period of at least five years after the last transaction recorded in the Register.
Where a designated financial institution fails to verify the identity of its customers or does not submit the returns of financial transactions undertaken by its customers with it, within seven days from the date the transaction was undertaken, such a financial institution commits an offence, and if convicted is liable to a fine of N25,000 for each day that the offence continues un-remedied; this is in addition to, and as may be appropriate, such an institution suffering a suspension or revocation or withdrawal of its operating license by the appropriate licensing or regulatory Authority.
Special money laundering surveillance and investigation could occur where a transaction or transactions involves a frequency which is unjustifiable or unreasonable, or is surrounded by conditions of unusual or unjustifiable complexity, or appears to have no economic justification or lawful objective. The financial institution or designated financial institution involved in such a transaction must seek from its customer information or clarification as to the origin and designation of the funds, the objective of the transaction and the ultimate beneficiary. The reporting institution must also draw-up a report which it must forward to the EFCC. Where necessary, the institution should take action to prevent the laundering of the proceeds of a crime or of any illegal financial activity, whether the transaction is completed or not. Such preventive actions include the very short-term freezing of the account of the customer pending when the EFCC is informed and EFCC takes action. Failure to comply with these provisions attracts a fine, on conviction, of N1,000,000 for each day during which the offence continues.
The protective rules on banker/customer confidentiality are not applicable to money laundering investigations and prosecutions especially where an ex-parte order of the Federal High Court is obtained to place a bank account or such other fiduciary account under surveillance, tap every telephone or electronic system of the suspected customer or institution.
Any person who converts or transfers or conceals or disguises or collaborates or aids and abets the concealing or disguising of the genuine nature, origin, location, movement or ownership of a right, asset or property which is derived directly or indirectly from illicit traffic in narcotic drugs or psychotropic substances or from any other criminal or illegal activity is guilty of an offence which on conviction carries a prison sentence of not less than 2 years or more than 3 years. The fact that the various acts constituting the offence were committed in different countries or places shall not be a bar to the prosecution and conviction of such a person neither will the substantive illicit traffic in narcotic drugs or psychotropic substances be exempted from further separate prosecution and conviction.
Also, any person who retains the proceeds of a crime or of any illegal activity on behalf of another person commits an offence and will be liable on conviction to imprisonment for a term of not less than 5 years or to a fine equivalent to five times the value of the proceeds of the criminal conduct or to both such fine and term of imprisonment. Where a corporation is convicted of an offence under the Money Laundering (Prohibition) Act, the Federal High Court may order that the corporation be wound up and its properties forfeited to the Federal Government of Nigeria.
The Federal High Court has the exclusive jurisdiction to try offences under the Money Laundering (Prohibition) Act, 2004. In the trial of offences under this Act, the Federal High Court is authorise to admit collaborating evidence establishing that an accused person is in possession of property for which he or she cannot satisfactorily provide an account and which property is disproportionate to his or her known sources of income.
To facilitate the obtaining of evidence, the Director of investigation or an authorised officer of the Economic and Financial Crime Commission (''EFCC''), duly authorised in that behalf, may demand, obtain and inspect financial records of any financial institution to confirm its compliance with the provisions of this Act. Any willful obstruction of EFCC or its authorised officers in the discharge of their duties under this Act is an offence which on conviction carries a term of imprisonment of not less than two years and not more than three years in the case of an individual. The punishment for a corporation is a fine of One Million Naira (N1,000,000).
Conclusion
The provisions of the Money Laundering (Prohibition) Act remains one of the most effective measures to combating terrorism, narcotic related crimes, embezzlement of public funds, which latter offence is more commonly known in Nigeria as corruption. Unfortunately, the lack of sufficient political will has not provided the minimum enforcement results required. Of equal concern are the human capacity capabilities of the enforcing agencies in Nigeria in the area of modern day sophisticated money laundering technological advances. While continuing amendments to our legislations, including this one, are commended, greater enforcement of the existing legislations is urgently required in order for the minimum levels of development and advancement that Nigeria urgently requires, can be achieved.
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