The ISIS-leaning Boko Haram which operates in the Lake Chad region uses the official Nigerian financial system to finances its supporters and its operations.
On December 6, the Governmental Action Group Against Money Laundering in West Africa revealed that Boko Haram and ISIS in West Africa had transferred 18 billion naira (roughly $36 million) from the Lake Chad region through the Nigerian financial system.
Established by the Assembly of Heads of State and Government of the Economic Community of West African States in 2000, the group added that Boko Haram and ISIS continued to mobilize, move and use funds through the Nigerian state’s formal financial and trading system.
It noted that the Nigerian government lacks sufficient insight into international links between Boko Haram and ISIS, as well as the misuse of the official financial and commercial sectors.
Although the Department of Foreign Services has significant capacity to identify and investigate terrorist financing activities and conducts parallel financial investigations, the group said, there is little evidence of the effectiveness of such efforts.
The group mentioned this information in its 2021 Mutual Assessment Report where it also notes that Nigeria lacks a clear policy to confiscate the proceeds of crime or property of equivalent value, including terrorist financing.
The report states that Boko Haram and ISIS pose significant risks through terrorist financing.
The two groups operate in large part outside the formal financial and commercial system in the conflict zone, it says.
It adds that the Nigerian government had failed to seize terrorist assets as stipulated in global standards for combating money laundering and terrorist financing.
Shell companies, bank accounts
In a study on the financing of terrorism in West Africa, the Financial Action Task Force says the channels used by terrorist organizations to raise funds in West Africa are divided into traditional ones, such as banks and exchange companies, and non-traditional channels, such as trade, the arms trade, digital currencies and the exploitation of charities.
The study sheds light on the financing methods of Boko Haram in northern Nigeria.
It says Boko Haram raises funds through several methods, most notably trade, where it buys and sells goods and extracts profits to finance its operations.
Boko Haram also relies on voluntary and compulsory contributions from its members, the Financial Action Task Force says.