Blockchain technology and Artificial Intelligence (AI) can be used to combat illegal activities, according to Olanipekun Olukoyede, Chairman of Nigeria’s Economic and Financial Crimes Commission (EFCC).
The stakes for Africa are high. The continent loses a significant $88.6 billion annually to illicit financial flows.
According to The Guardian, Olukoyede expressed concern that these funds could be better used for essential infrastructure, healthcare and education.
A statement from Commission spokesperson Dele Oyewale revealed that Olukoyede made the revelation in Tunis, Tunisia, during a keynote address at the Pan-African Conference on Illicit Financial Flows and Tax Evasion.
The conference brought together key stakeholders to explore innovative strategies for wealth recovery and financial reintegration in Africa.
Olukoyede also highlighted the difficulties encountered in asset recovery, including technical, legal and political challenges that complicate the detection, freezing and repatriation of illicit funds.
He called for improvements in legal and institutional frameworks in African countries to combat IFFs more effectively.
Earlier in 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 transfer funds, complicating efforts to track and stop these financial flows.
In a concerted effort to combat these illegal activities, the EFCC has frozen 1,146 bank accounts involved in illicit foreign exchange transactions, money laundering and terrorist financing in Nigeria.
A significant number of these accounts were found to be connected to peer-to-peer cryptocurrency trading platforms, underscoring the growing intersection between digital currencies and illicit financial transactions.
Olukoyede further highlighted the success of the EFCC in recovering $20 million worth of cryptocurrency from fraudsters.
In a notable move to hold cryptocurrency platforms accountable, the EFCC has filed criminal charges against Binance, a leading cryptocurrency exchange, and one of its executives, accusing them of money laundering and tax evasion.
The EFCC Chairman emphasized the importance of capacity building, robust justice systems and improved coordination and cooperation at national, regional and international levels.
He has advocated 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 the fight against financial crimes enabled by cryptocurrencies, suggesting a future where advanced technology solutions augment traditional enforcement measures.
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Crypto and money laundering
Cryptocurrency has emerged as a major enabler of global money laundering activities, especially in East and Southeast Asia.
According to the United Nations Office on Drugs and Crime (UNODC) report, cryptocurrencies, 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 within the cryptocurrency ecosystem and online gambling platforms, using cryptocurrency exchanges and wallets to integrate billions of dollars of illicit proceeds into the financial system. This often involves mixing funds and carrying out transactions anonymously.
In Nigeria, cryptocurrency exchange giant Binance is embroiled in allegations of $35.4 million in money laundering and tax evasion. CEO Richard Teng claimed to have been blackmailed by unknown individuals in Nigeria who demanded $150 million in cryptocurrency bribes, which the Nigerian government dismissed as baseless and an attempt to divert attention from ongoing investigations into Binance’s activities.
Recognizing the significant money laundering risks posed by the cryptocurrency sector, the United Kingdom’s Financial Conduct Authority (FCA) has highlighted crypto businesses, alongside retail banking, wholesale banking and asset management, as high-risk areas for exploitation between 2022 and 2023. British police have deployed tactical crypto advisors nationwide to seize digital assets linked to criminal activity.
On June 4, Epoch Times Chief Financial Officer Weidong “Bill” Guan was charged in a $67 million money laundering scheme involving cryptocurrency.
According to the indictment, which spanned from 2020 to May 2024, Guan and his “Make Money Online” team allegedly used fraudulently obtained unemployment benefits and stolen identities to obtain prepaid debit cards. These cards were then sold at a discounted cryptocurrency rate on specific platforms.
The illicit funds were allegedly laundered through various channels, including The Epoch Times bank accounts, Guan’s personal accounts and his cryptocurrency holdings.
When financial institutions flagged suspicious transactions, Guan allegedly misrepresented the source of the funds, claiming they came from legitimate online donations.
Read more: ‘Crypto Queen’ accomplice sentenced to six years for laundering Bitcoin money