The Nigerian government has taken steps to strengthen its corporate transparency and beneficial ownership regime, including cleaning the corporate register and compelling companies to regularise their records. However, experts argue that this is not enough to tackle corporate fraud and illicit financial flows. The Corporate Affairs Commission's Beneficial Ownership Register identifies Persons with Significant Control and is designed to capture ownership and control beyond the name appearing on a share certificate.
The Nigerian Financial Intelligence Unit receives and analyses suspicious and threshold transaction information, draws on relevant databases, and disseminates intelligence to competent authorities for investigation and prosecution. The machinery for enforcing corporate transparency exists, but the issue is whether it is being used effectively. The first question is whether the system is reaching the corporate vehicles that matter, such as companies handling substantial public contracts and entities with unexplained ownership structures.
A risk-based intelligence approach is required, rather than indiscriminate enforcement. The PSC database should be systematically examined alongside relevant procurement, tax, regulatory, identity, and financial intelligence. A serious intelligence system should be capable of flagging patterns such as a company with a modest apparent economic profile receiving unusually large government contracts. These indicators are leads that require further investigation to determine whether they conceal wrongdoing.
The second question is where are the prosecutions? A regulatory flag cannot be the end of the process. Where investigation establishes deliberate concealment of beneficial ownership, fraudulent corporate information, or other conduct constituting an offence, the information should move through the appropriate investigative and prosecuting channels. The trail should answer basic questions, including who made the declaration, who supplied the information, and who exercised control.
The answers to these questions should come from evidence, which will often lie outside the corporate register itself. Bank mandates, payment instructions, procurement documents, contracts, powers of attorney, accounting records, electronic communications, and the history of changes in ownership and directorship may reveal the person exercising effective control. This is why targeted forensic investigation must follow credible intelligence.
The third question is more consequential: are the accounts, assets, and operations actually being disrupted where the law permits it? Delisting is not a bank freeze, and financial restraint must follow the applicable law, evidential thresholds, and judicial process. The Proceeds of Crime Recovery and Management Act provides a court-based mechanism for restraint of realisable property where its statutory conditions are satisfied.
The exercise should move from automated detection to human investigation, and the system should move quickly to preserve relevant evidence and prevent the dissipation of suspected proceeds. The corporate structure identifies the entity, the financial intelligence identifies the movement, and the investigation identifies the controller. The law determines what can then be restrained, prosecuted, or both.
Key points
- The Nigerian government needs to move beyond administrative activity and demonstrate genuine enforcement intensity to tackle corporate fraud and illicit financial flows.
- The Corporate Affairs Commission's Beneficial Ownership Register and the Nigerian Financial Intelligence Unit are key components of Nigeria's corporate transparency regime.
- A risk-based intelligence approach is required to identify and investigate corporate vehicles that matter, such as companies handling substantial public contracts and entities with unexplained ownership structures.
