By
Wahab Shittu SAN
Terrorist financing is not merely a financial crime it is the lifeblood of extremism. Severing that lifeline demands more than freezing accounts; it demands intelligence, coordination, law, and relentless vigilance.
Nigeria stands at a critical juncture in its fight against terrorism. From the Boko Haram insurgency in the Northeast to the activities of bandits, separatist financiers, and transnational criminal networks, the common thread binding these threats is money. Without sustained financial supply lines, no terrorist organisation can recruit, arm, operate, or survive. The battle, therefore, must be fought in the boardrooms, banking halls, bureau de change windows, and digital wallets not merely on the battlefield.
This article, drawing on internationally accepted frameworks and the latest policy recommendations, presents a comprehensive roadmap of strategies the Federal Government of Nigeria must adopt and strengthen to decisively combat terrorism financing. These strategies go beyond traditional asset freezing to encompass proactive intelligence, legislative reform, private sector mobilisation, and robust international cooperation.
Understanding the terrorism financing threat landscape
Terrorism financing in Nigeria operates through both formal and informal channels. Designated terrorist groups exploit legal businesses, non-profit organisations (NPOs), unregulated money transfer systems such as the Hawala network, Bureau De Change (BDC) operators, and increasingly, virtual assets and cryptocurrency platforms. These channels share a common vulnerability: inadequate oversight and porous regulatory frameworks that create gaps through which illicit funds travel with relative ease.
The Financial Action Task Force (FATF) the global standard-setting body on anti-money laundering and counter-terrorism financing (AML/CFT) has consistently flagged Nigeria’s exposure to terrorism financing risks, citing deficiencies in beneficial ownership transparency, supervision of non-financial businesses, and the capacity of law enforcement agencies to detect and prosecute complex financial crimes. For Nigeria to exit grey listing and, more critically, to protect its citizens, decisive, coordinated action is non-negotiable.
Enhanced identification and asset freezing
The first and most immediate line of defence against terrorism financing is the swift identification and freezing of assets belonging to designated individuals and organisations. However, current practice in Nigeria often limits freezing measures to assets directly linked to a specific act of terrorism a dangerously narrow approach that allows financiers to shelter funds in adjacent accounts, family holdings, or front companies.
Targeted financial sanctions (TFS)
The Federal Government must strengthen its Targeted Financial Sanctions regime to ensure that all funds, financial instruments, and economic resources whether or not directly tied to a specific terrorist act are captured when a designation is made. This aligns with United Nations Security Council Resolutions 1267, 1373, and 1988, to which Nigeria is a signatory.
The scope of asset freezing must be broadened explicitly to cover assets owned or controlled by designated persons not merely those held in their name. Terrorist financiers are sophisticated actors who routinely obscure ownership through nominees, shell companies, and layered corporate structures. Regulators must be empowered and mandated to look through these structures.
Swift intelligence-to-action pipelines
Intelligence agencies the Department of State Services (DSS), the National Intelligence Agency (NIA), and Military Intelligence must establish fast-track protocols with the Central Bank of Nigeria (CBN), the Nigerian Financial Intelligence Unit (NFIU), and the Economic and Financial Crimes Commission (EFCC) to ensure that actionable financial intelligence translates into asset freezing within hours, not weeks. The window between identification and action is precisely when terrorist financiers move funds to safety.
Regulatory and supervisory reforms
Regulation without effective supervision is merely paperwork. Nigeria must overhaul its supervisory architecture to ensure that high-risk sectors receive the oversight their risk profile demands.
Hawala and Bureau De Change operations
Alternative remittance systems, particularly Hawala networks and Bureau De Change operators, remain among the most exploited channels for terrorism financing in Nigeria.
Cash-intensive, lightly regulated, and operating largely outside the formal banking system, these channels provide convenient cover for moving funds across state and national borders. The CBN must significantly intensify its supervisory activities in this sector, including mandatory registration, transaction reporting thresholds, and real-time monitoring tools.
Beneficial ownership transparency
Nigeria’s Corporate Affairs Commission (CAC) has made some progress on beneficial ownership registers, but enforcement remains weak. Terrorist organisations routinely establish front companies to receive and disburse funds. The Federal Government must enact regulations requiring timely, accurate, and publicly accessible beneficial ownership declarations and must ensure that false declarations carry meaningful criminal penalties.
Virtual asset regulation
The rise of cryptocurrency and decentralised finance platforms presents a new and rapidly evolving frontier for terrorism financing. Nigeria has one of the highest rates of cryptocurrency adoption on the African continent, making this a particularly acute risk.
The Federal Government, through the Securities and Exchange Commission (SEC) and the CBN, must fully implement FATF’s Standards on Virtual Asset Service Providers (VASPs), including mandatory know-your-customer (KYC) requirements, transaction reporting, and international cooperation obligations for crypto exchanges operating in Nigeria.
Public-private partnerships and information sharing
No government agency can effectively combat terrorism financing in isolation. The private sector particularly commercial banks, microfinance institutions, insurance companies, and telecommunications firms sits at the front line of suspicious transaction detection. Mobilising this sector is therefore not optional; it is essential.
Two-way information flow
Currently, information sharing is largely one-directional: financial institutions report to government agencies, which rarely share intelligence in return. This must change. The NFIU and relevant security agencies should establish a formalised mechanism to share sanitised intelligence on terrorism financing typologies, high-risk indicators, and emerging methods with the private sector. Banks that understand the threat are far better positioned to detect it.
Streamlined suspicious transaction reporting
Nigeria’s current suspicious transaction reporting (STR) framework conflates terrorism financing reports with routine anti-money laundering reports, creating a volume problem that buries the most critical intelligence. Dedicated, fast-track reporting channels specifically for terrorism financing suspicions must be created, ensuring that such reports receive immediate, priority treatment by the NFIU and are escalated directly to security agencies without bureaucratic delay.
Private sector capacity duilding
The Federal Government, in partnership with the Chartered Institute of Bankers of Nigeria and relevant professional bodies, must invest in sustained training programmes to equip compliance officers, bank staff, and non-financial designated businesses with the skills to recognise unusual transaction patterns particularly those with no obvious economic rationale that may indicate terrorism financing activity.
Dr Shittu is a Senior Advocate of Nigeria (SAN).
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