News
Blockchain can combat illicit fund transfers, says Nigeria’s top financial investigator
Blockchain technology and artificial intelligence (AI) can be used to combat illicit activities, according to the chairman of Nigeria’s Economic and Financial Crimes Commission (EFCC), Olanipekun Olukoyede.
The stakes are high for Africa. The continent loses $88.6 billion each year to illicit fund flows.
According to The Guardian, Olukoyede expressed concern that these funds could be better used for critical infrastructure, healthcare and education.
A statement Commission spokesperson Dele Oyewale said Olukoyede made the 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 policy challenges that complicate the tracing, freezing and repatriation of illicit funds.
He called for the strengthening of legal and institutional frameworks in African countries to combat IFFs more effectively.
In 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 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 blocked 1,146 bank accounts involved in unauthorized foreign exchange, money laundering and terrorism financing transactions in Nigeria.
A significant number of these accounts were found to be connected to peer-to-peer cryptocurrency exchanges, highlighting the growing intersection between digital currencies and illegal financial operations.
Olukoyede further Underlines EFCC’s success in recovering $20 million worth of cryptocurrency from fraudsters.
In a notable move aimed at holding cryptocurrency platforms accountable, the EFCC deposit criminal charges against Binance, a leading cryptocurrency exchange, and one of its executives, accusing them of money laundering and tax evasion.
The EFCC Chairman stressed the importance of capacity building, strong legal systems and improved coordination and cooperation at national, regional and international levels.
He advocated for the use of advanced technologies such as data analytics, blockchain and AI to improve asset tracking and recovery efforts.
He noted that these emerging technologies could be crucial in combating financial crimes enabled by cryptocurrencies, suggesting a future in which advanced technological solutions would augment traditional enforcement measures.
Crypto and Money Laundering
Cryptocurrency has become 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) reportCryptocurrencies, coupled with the rise of illegal online casinos and junkets, have contributed to the proliferation of underground banking and money laundering in East and Southeast Asia.
Organized crime groups have exploited vulnerabilities in the cryptocurrency ecosystem and online gaming platforms, using cryptocurrency exchanges and wallets to integrate billions of dollars of illicit proceeds into the financial system. This often involves mixing funds and conducting transactions anonymously.
In Nigeria, cryptocurrency exchange giant Binance has been implied in allegations of money laundering and tax evasion of $35.4 million. CEO Richard Teng claimed to have been blackmails by unidentified individuals in Nigeria demanding a $150 million cryptocurrency bribe, which the Nigerian government has called baseless and an attempt to distract from ongoing investigations into Binance’s operations.
Recognizing the significant money laundering risks posed by the cryptocurrency sector, the UK’s Financial Conduct Authority (FCA) has identified crypto companies, alongside retail banks, wholesale banks and asset management heritage, as areas of high risk for exploitation between 2022 and 2023. In response, UK police have deployed tactical crypto advisors across the country to seize digital assets associated with criminal activity.
On June 4, Weidong “Bill” Guan, chief financial officer of The Epoch Times, was charged in a $67 million money laundering scheme involving cryptocurrencies.
According to charge, between 2020 and 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 reduced rate against cryptocurrencies on specific platforms.
The illicit funds were allegedly laundered through various channels, including bank accounts belonging to The Epoch Times, Guan’s personal accounts and his cryptocurrency holdings.
When financial institutions reported suspicious transactions, Guan allegedly misrepresented the origin of the funds, claiming they came from legitimate online donations.