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Nigeria: FATF’s recommendations regarding digital currencies work in terrorists’ favor

Oleg Koldayev

The Nigerian branch office of the Union Bank of Nigeria threatened to close the accounts of private individuals and companies involved in operations with digital currencies. Will the situation we witnessed in EU, India, and the countries of South America happen again?

Let’s study out why since 2017, in many countries, it has become the norm to close cryptocurrency companies' accounts without giving a reason. For example, in June of 2018, banks in Slovakia suddenly stopped working with virtual asset operators (crypto-exchanges, exchange officers, etc.). A little while later, so did the banks of the Czech Republic. In Chile, credit institutions ceased cooperation with the country's leading digital trading platform, the Orionx Exchange. In response to these measures, the company appealed to the anti-monopoly court with a claim against 6 banks of the country and managed to win the process.

The situation in Brazil is evolving in a similar way: the local Blockchain and Cryptocurrency Association (ABCB) appealed to the country's anti-monopoly body against credit institutions that had questioned the honesty of digital companies. In particular, Banco do Brasil, without warning and explanation, closed the account of the Atlas Quantum trading platform. The financial organization canceled its decision, the trial is still going on.

And finally, the main case on the topic of relations between crypto-companies and traditional credit institutions is in India, where these relations are, in fact, blocked. The sluggish litigation on the legality of the circulation of virtual assets in the country keeps both lawyers and businessmen on the alert. The final decision of the court was postponed many times and has been formally postponed until at least one document regulating the circulation of digital coins appears. However, some players in the Indian crypto market believe that the slowness of the Supreme Court has clear political reasons.

Now Nigeria has joined problematic countries ... The Union Bank of Nigeria emphasized the following in its public statement: “To guarantee the security of our customers’ funds, the Union Bank will monitor the accounts used for cryptocurrency transactions and can set limits, including closing such accounts”. At the same time, the management specifically stressed that it would not do anything that would contradict the documents of the Central Bank (CBN) of the country, which, frankly speaking, never made statements that the turnover of virtual assets was an illegal activity. The financial regulator, in olden times, limited itself to a warning that cryptocurrencies could not be legal means of payment and pose a certain danger in terms of money laundering and illegal financing of terrorism.

“Many people empty their accounts and close them,”Munachi OGUEKE, the founder and the head of a company specializing in over-the-counter trading of digital coins is puzzled. – “Of course, any financial institutions that have clients associated with cryptocurrencies have the authority and can terminate relations with such clients if they believe that because of this they cannot fully comply with AML / CFT rules (FATF requirements for countering money laundering – ed. note). In the absence of any special rulings from CBN, it can be safely concluded that, within the framework of an already existing circular, banks have the option of closing client accounts related to cryptocurrencies if they violate AML rules and carry out suspicious transactions.” But the UBN statement says nothing about criminal activity. “How can blocking of accounts connected with bitcoin secure the funds of clients?” - OGUEKE asked.

And to answer his question is easier than it seems. If the head of the crypto company had remembered that the Union Bank was actually registered in Luxembourg, it would have told him a lot. The global financial system is grouped around several centers of influence, to a large extent on the unified principles that determine the policy of interaction of financial corporations with government structures and society. FATF is one of these institutions, with which the governments of 35 countries are closely connected. Nigeria is not among them, but there is Luxembourg ...

FATF was established in 1989 at the dawn of globalization, by the G7 countries. Initially, FATF duties did not include control functions (formally, they are not included even now), and all decisions were of expert and advisory nature: assessment of legislation, methodological work, and advisory assistance. But over time, the voluntary observance of the suggestions of this public organization turned into voluntary-compulsory. If you live according to the rules developed by the structure, everything will be fine, if you do not, then wait for sanctions from the United States, the European Union, and other major states. And the stricter the FATF requirements for transparency of the financial systems of different countries have become the less transparent and more politically motivated the goals of the organization seemed to be.

If you read the FATF documents now, you will see that cryptocurrencies are one of the main enemies of global financial stability. From the point of view of the G7, of course.

At the same time, few Western politicians and public figures want to notice that the digital market on the African continent is developing according to its unique scenario. Because of the weak penetration of traditional financial institutions into the domestic economic space of African countries, cryptocurrencies have become one of the main operating units and storages of value for native people. In other words, cryptocurrencies now are their chance to get out of poverty. One of the very few chances. For instance, Nigeria became the leader in the over-the-counter turnover of digital assets. But if local branches of banks refuse to interact with the tokenomics, it will be marginalized and lose value.

The closure of accounts, which has become a drama for individual investors in a quiet Europe, can happen again in Africa as a cruel farce. If the fiat savings of crypto-companies leave respectable credit institutions, then where will they be? History tells us that, most likely, the terrorists will get them. And it is precisely in Nigeria where there are prerequisites for such financial migration: local Islamist organizations have their own financial infrastructure, and crypto-businessmen may simply have no other choice but to use the services of shadow banks.

Taking into account the profitability of the digital market, even despite the bitcoin crash, the radicals will benefit from such cooperation. It turns out that an organization designed to combat the financing of terrorism, adjusting to the policies of the power players, stimulates itself the influx of funds to illegal formations. Today, it is one of the many paradoxes of geo-economy, which, however, can be resolved with the appropriate political will.

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