Update as of November 2023:
At the 40th Technical Commission/Plenary and 27th Ministerial Committee meeting of the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), Nigeria was rated fully compliant on Recommendation 8. This major shift comes after over 7 years of relentless civil society advocacy, which documented how the state misused FATF standards to overregulate the nonprofit sector and unjustly limit civic space.
Poor risk assessment leads to negative FATF evaluation in 2021
The Nigerian government has shown hostility to civil society in recent years, including a 2016 risk assessment (RA) that flagged civil society organisations (CSOs) as risks for terrorist financing (TF), without producing any evidence of terrorist abuse. The human rights and social justice organisation Spaces for Change (S4C) pushed back by publishing a report in 2019 that identified and explained the problems with the RA, pointing out how its misapplication of Financial Action Task Force (FATF) standards could lead to low rating when the country was evaluated in 2021. They were right. The FATF evaluation found that Nigeria had not conducted a proper risk assessment and had misapplied the standard for non-profit organisations (NPOs).
2022 risk assessment process is collaborative
S4C’s report and follow up advocacy, along with the negative evaluation, successfully pressured the Nigerian government to begin a collaborative process with civil society on a new risk assessment specific to the nonprofit sector. As of July 2022 the process is still ongoing; however, the current level of engagement creates the potential for a more enabling legal framework for civil society in Nigeria. Already one major change has been made: the government removed CSOs from a highly regulated category of non-bank businesses and professions, such as money service businesses. This will help ease administrative burden on CSOs.
Looking back: 2016 risk assessment was followed by government action to close civil society space
Nigeria’s government has been hostile in recent years, often seeking to suppress dissent. It was one of seven countries that voted against a 2016 Human Rights Council Resolution that calls on governments to protect civil society space.
That same year the Nigerian government conducted a RA that did not include a separate examination of risks to non-profit and included many inaccuracies and flawed conclusions. The RA noted that foreign donations made up 50% of funding for two-thirds of the CSOs it interviewed, compared to the 35% that received all their funding from domestic sources. The RA concluded that this was a medium to high risk for terrorist financing and money laundering without presenting any evidence and inaccurately stating the non-profit sector was unregulated.
After the 2016 RA, Nigeria’s Financial Intelligence Unit (FIU) began a programme to de-register CSOs it claimed did not adhere to their mandates, making unsupported allegations of money laundering. There were no examples of court cases, asset forfeitures or other actions. These officials were also unaware of the due diligence and stringent reporting required by foreign donors. The lack of data on the TF threat for CSOs meant that Nigerian authorities were unable to properly identify CSOs that fit FATF’s definition of an NGO and design appropriate risk mitigation measures.
In addition, a 2016 parliamentary proposal aimed to create a NGO Regulatory Commission with authority to shut down CSOs. Meanwhile, harassment, intimidation, surveillance, bank account closures and smear campaigns against civil society leaders became all too common. These actions are documented in a database maintained by S4C.
Although the FATF revised its standard on NPOs in 2016 to require a risk-based, proportionate approach to TF regulation and supervision, the changes came “too little too late”, according to S4C. Despite these difficulties, Nigerian civil society undertook a campaign to push back against these restrictions through advocacy, research and engagement with the government. Read more about this successful campaign in this Learning Center story.
Takeaways
Nigeria includes areas at high-risk for terrorism, due to on-the-ground activities of groups such as Boko Haram. Civil society efforts found no gaps in the legal framework but did see weak enforcement of existing regulation of CSOs. This kind of information is very effective in building awareness of civil society good governance practices among security officials and re-focusing the RA toward targeting and mitigating risk. Such efforts require resources and sustained dialogue in the future.
