TL;DR,

• Nigeria AI adoption strategy is being accelerated to combat the $88.6 billion lost annually across Africa due to illicit financial flows.
• The Nigerian government is restructuring blockchain policy committees and incorporating AI into security frameworks through NITDA initiatives.
• International cooperation and pressure on tax havens are essential for successful asset recovery, with Nigeria citing examples like the $311 million repatriated from the US in 2020.

The chairman of Nigeria’s Economic and Financial Crimes Commission, Olanipekun Olukoyede, has highlighted blockchain technology and artificial intelligence (AI) as tools to address illicit financial flows (IFFs) in Africa.

According to local media, Olukoyede highlighted the $88.6 billion lost annually in African countries due to IFFs at the Pan-African Conference on Illicit Financial Flows and Taxation.

Nigerian Official Advocates Blockchain, AI Against Illicit Financial Flows

The conference is the African Union’s annual forum. Stakeholders, policy makers, and innovators come together focusing on Nigeria’s AI adoption strategy, tackling the region’s illicit financial flows and other related issues. Its main focus is to pool in ideas, techniques and best practices for dealing with the IFF’s challenges.

The EFCC chair echoed how important strong legal frameworks are in making a difference. Supportive, yet protective, laws advocating for the adoption of cutting-edge technologies like data analytics, blockchain, and AI make improvements in vital factors like asset tracking and recovery.

Pan-African Conference on Illicit Financial Flows and Taxation.[Photo: AU]

According to Olukoyede, practical anti-corruption efforts require international pressure to ensure cooperation from tax havens and low-tax jurisdictions, stressing the need for strong advocacy.

Nigeria AI Adoption Strategy; Legal Frameworks for Asset Tracking and Recovery

Nigeria has recently taken steps to embrace blockchain technology and AI. In May, Nigeria’s National Information Technology Development Agency (NITDA) restructured the National Blockchain Policy Steering Committee (NBPSC). This update was to potentially reassess the policies guiding the region’s National Blockchain Policy.

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The review forms part of efforts to stay abreast of blockchain innovations and expand its reach by involving additional stakeholders, promoting comprehensive adoption and successful execution.

Photo: BBC

In April, NITDA advocated incorporating artificial intelligence into Nigeria’s security framework to improve outcomes. The agency’s Director General, Kashifu Inuwa, said the security and IT sectors could use technologies such as AI and the Internet of Things (IoT) to improve the security sector.

The agency is determined to place Nigeria as a leader in AI adoption with initiatives like the National Centre for Artificial Intelligence and Robotics and the development of a National AI policy.

EFCC Strategies for Fighting Illicit Financial Flows

Africa has an annual loss of $88.6 billion due to illicit financial flows. Unfortunately, digital assets have become a go-to option for most money laundering exploits. During the African Union IFFs conference, Olukoyede acknowledged that current strategies cannot keep up with evolving markets.

Currently, the Economic and Financial Crimes Commission operates under various guidelines. A few of its legacy frameworks to combat IFFs include:

• EFCC Act (2004) – Establishes the Commission’s mandate to investigate and prosecute financial crimes.
• Money Laundering (Prevention and Prohibition) Act 2022 – Provides strict guidelines on cash movements and penalties for violations.
• Central Bank of Nigeria guidelines – Regulates financial transactions and reporting requirements.

The commission also enforces strict cash declaration requirements mandating that any transaction exceeding $10,000 must be declared to the Nigeria Customs Service. Failure results in severe punishments ranging from hefty fines to asset forfeiture.

While these tactics have served their purpose, digital assets, inform or stablecoins, and cryptocurrency circumvent such guardrails. Anonymity, cross-border reach, and virtual value render most, are a few elements that benefit its spread.

Nigeria is at the helm of crypto adoption, becoming a severe issue affecting its fiat currency. Banning the technology only goes so far, so from Olukoyede’s perspective, adopting it is the far better option.

International Cooperation: Successful Recovery Cases and Pressure on Tax Havens

Nigeria’s AI adoption strategy focuses on adopting the technology first to counter its use in illegal ventures. NITDA and the NBPSC are already reevaluating policies, ensuring they accommodate new technology.

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While the issue might appear focused on Nigeria, Africa as a whole is a hotbed for cyber attackers. Keeping up with technology changes is the only way to keep up with changing times. Digital assets have provided better utility than traditional banks. It’s only a matter of time before education thrives within the region and better solutions dominate the market.

Regions like Kenya, South Africa, Egypt, Morocco, and Ghana, among others, must band together to foster a new era of security while there’s still time.