ECONOMIC AND FINANCIAL CRIMES COMMISSION

NATIONAL TERRORIST FINANCING

RISK ASSESSMENT OF THE NON PROFIT ORGANISATIONS SECTOR IN NIGERIA

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Table of CONTENTS

A: Introduction ................................................................................................. 7 B: Executive Summary ..................................................................................... 15 C: FATF NPOs ................................................................................................. 18 D: Profile of FATF NPOs in Nigeria ................................................................. 21 E: The Nature of the TF Threat to NPOs in Nigeria ......................................... 33 F: Identifying NPOs potentially ‘at risk’ of terrorist financing (‘inherent vulnerabilities’) ................................................................................................. 40 Annex 1: FATF Recommendations Relevant to NPOs ..................................... 60 Recommendation 8 on Non-Profit Organisations ........................................... 60 Immediate Outcome 10 ................................................................................... 63 Annex 2: Case Studies/ Intelligence Reports .................................................. 65

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Foreword

It is my pleasure as the Executive Chairman of the Economic and Financial Crimes Commission to lead other agencies in conducting the maiden National Terrorist Financing Risk Assessment of the Non-Profit Organisations (NPOs) in Nigeria.

The objective of the project is to identify NPOs that are susceptible to Terrorist Financing abuse and realigning our supervisory measures to risk-based approach.

This report, which is central and critical in shaping and directing our focus in the monitoring and supervision of “At-Risk NPOs” couldn’t have come at a better time. The collaborative approach of the assessment is profoundly commendable and depicts the robustness of the AML/CFT regime of Nigeria.

I am aware this report is the outcome of engagements with relevant stakeholders by both the technical and core working groups across the Thirty-Six (36) States and Federal Capital Territory as well as private and public sector stakeholders for the collection and collation of vital information. These data have ultimately found expression in this report we are all proud to be associated with.

I am certain that this report will offer rewarding insights for necessary mitigating measures to be put in place where necessary without delays.

This work in my view, shall be a reference point for the EFCC; the community of NPOs, policymakers, development partners and members of the public at large. I urge us to continue to work together to fight the scourge of terrorism and its financing as we strive to build a society that is productive and prosperous in peace and security.

[Signature]

ABDULRASHEED BAWA CFE, CAMS Executive Chairman, EFCC

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Acknowledgement

I wish to express my profound gratitude to the Government of the Federal Republic of Nigeria and the Executive Chairman of the EFCC, Mr. AbdulRasheed Bawa, for their commitment toward the fight against money laundering, terrorism financing and proliferation financing in Nigeria.

I would also like to acknowledge and give my warmest thanks to the civil society organizations, NGO coalitions and networks, including Action Group on Free Civic Space, the Nigerian Network of NGOs, Nigeria International NGO Forum, among many others, for their valuable cooperation and participation during the NPO Risk Assessment.

I would like to thank all ministries, departments and agencies of government for their cooperation and collaboration during the field survey and data-gathering phase of the assessment. My appreciation goes particularly to the Federal Ministry of Justice, Federal Ministry of Finance, Budget and National Planning, Federal Ministry of Humanitarian Affairs, Disaster Management, and Social Development, Office of the National Security Adviser, National Intelligence Agency, Department of State Services, Nigerian Army, Central bank of Nigeria, Nigeria Financial Intelligence Unit, Corporate Affairs Commission, Financial Reporting Council of Nigeria, Office of the Secretary to the State Government (Borno State).

I would also like to thank the Attorney-General and Honourable Commissioner of Justice, Borno State, the Theatre Commander and Officers of Operation Hadin Kai, Maiduguri, Honourable Commissioner, Borno State Ministry of Reconstruction, Rehabilitation and Resettlement, Honourable Commissioner, Borno State Ministry of Women Affairs and Social Development, Executive Secretary, Borno State Agency for Coordination of Sustainable Development and Humanitarian Response and Director General, Borno State Emergency Management Agency.

I would like to thank the Honourable Commissioner for Youth and Social Development, Lagos State, the Permanent Secretary and Directors of the Ministry, the Honourable Commissioner of Human Services and Social Development, Kaduna State, Honourable Commissioner, Permanent Secretary and Directors of Ministry of Social Development, Imo State, Senior Special Assistant to the Governor of Imo State on CSOs, Honourable Commissioner, Permanent Secretary and Directors, Ministry of Budget, Economic Planning & Statistics, Imo State.

I would also like to thank the Commissioners of Police in Kaduna State, Imo State, Kwara State and Rivers State for their cooperation with the assessment team. I also wish to appreciate the cooperation availed to the assessment team by the DSS State Directors in Imo State, Kwara State, Rivers State, Kaduna State and Borno State, and the NDLEA State Command in Borno State.

I want to thank the development partners; United Nation Office on Drugs and Crimes (UNODC), United Nation Office for Coordination of Humanitarian Affairs (OCHA Nigeria) and the British Council for the participation of their staff in the assessment.

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My sincere appreciation also goes to the NPO sector consultants, Mrs. Victoria Ibezim-Ohaeri of Spaces for Change and Mr. Ben Evans of GreenAcres Consulting, for the guidance and technical support they provided all through the project.

I would like to acknowledge and extend my sincere appreciation to EFCC Zonal Commanders at Lagos, Enugu, Port Harcourt, Maiduguri, Ilorin and Kaduna Commands and members of the National NPO Risk Assessment (NRA) Secretariat in the persons of Ibinabo Mary Amachree (Project Coordinator), Funmilayo Adewole-Adepetun, Ali Abdullahi, Erinomo Temitope, Aliyu Umar, Mahmud Isa Tsakma, Mohammed Zukogi for their commitment and dedication.

I also want to thank members of the Core Working Group; Confidence Obayuwana, Maimuna H. Aliyu, Olaniyi O. Fadeyi, Moses Azege, Major C.J Akoh, Major A.S Udom, Hadiza Gamawa Zubairu, Victoria Ibezim-Ohaeri and Ibinabo Mary Amachree.

Finally, I would like to express my earnest appreciation to the Technical Working Group from different agencies of Government and the NGO community; Oyebisi B. Oluseyi, Efua Elens-Edeh, Omolara Akinyeye, Dr. Udy Apkan, Idem Udoekong, Aliyu Aminu Ahmed, Dr. Sam Amadi, Dr. Muhammad Mustapha Yahaya, Patrick Iyioke, Yekeen Akinkunmi, Godwin Kingsley, Zikorah Ibeh, Gambo Aliyu Mohammed, Auwal Sani Ibrahim, Sadiq Usman, Ibrahim Ditse, Hauwa Abubakar Farouk, Mohammed Ahmed, Stephen Ishola, Fidelis Akpagu, Obinna Ogbonna, Muhammed Sambo Balarabe. Mustapha Fannami, Ali Musa, Aisha Braimah, Kodjo Attiso, Ibe O. Ibe, Badamasi Abdulsalam, Aaron Emuesiri Tanrien, Imana Aderonke, Peace Baridoma, Dr. Nasir Maruf Adeniyi and Rev. (Dr.) Paul Olaide Jenfa.

[Signature]

Daniel Isei, fsi Director, Special Control Unit against Money Laundering

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A: INTRODUCTION

Context for this Risk Assessment

1. The ongoing international campaign against terrorist financing identified typologies worldwide where terrorists and terrorist organizations exploit the NPO sector through: collection, consolidation/aggregation, transfer, dissemination and use of funds raised (which is also known as the funding cycle); providing logistical support; encouraging terrorist recruitment; otherwise supporting terrorist organizations and operations; creating sham charities; or engaging in fraudulent fundraising for these purposes.

2. The Financial Action Task Force (FATF) is the international standard setting body in the area of Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT). Two parts of the FATF standards refer directly to NPOs - these are Recommendation 8 and Immediate Outcome 10 (see Annex 1).

3. Both FATF Recommendation 8 and FATF Immediate Outcome 10 require that countries, as a first step, identify the subset of organizations that fall under the FATF's definition of NPOs, and use all relevant sources of information in order to identify the features and types of NPOs, which by virtue of their activities or characteristics, are likely to be at risk of terrorist financing abuse.

FATF defines the term NPO to cover “a legal person or arrangement or organization that primarily engages in raising or disbursing of funds for purposes such as charitable, religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of “good works.”

4. Nigeria is a member of GIABA, the FATF-style Regional Body for West Africa. GIABA last published a Mutual Evaluation Report (MER) of Nigeria's compliance with the FATF standards in 2021. The MER rated Recommendation 8 as Non-Compliant and effectiveness under Immediate Outcome 10 as Low Effectiveness. The major issues identified were;
   • Nigeria has not identified the features and types of NPOs which may be at risk of TF abuse.
   • Nigeria has not identified at-risk NPOs, and the nature of threats posed by terrorist entities, as well as how terrorist actors abuse those NPOs.
   • Nigeria has not reviewed the adequacy of measures, including laws and regulations that relate to the high-risk subset of the NPO sector.
   • Nigeria has not adopted a risk-based approach or undertaken steps to promote effective supervision of at risk NPOs.
   • There is no legal requirement to apply sanctions to persons or entities acting on behalf of NPOs.
   • Outreach to NPOs is not conducted on a risk-basis

Methodology

5. The purpose of this risk assessment is to conduct a comprehensive review to understand the features and types of NPOs at risk of TF abuse and the nature of the threat.

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6. The FATF standards “do not prescribe a particular method or format for assessing risk” of terrorist financing in NPOs.¹

7. General best practices for risk assessments of the NPO sector are included in FATF’s Terrorist Financing Risk Assessment Guidance (FATF, 2019). Additionally, FATF Guidance: National Money Laundering and Terrorist Financing Risk Assessment (FATF, 2013) provides guidance on risk assessments in general.

8. This risk assessment is based as closely as possible on FATF requirements and guidance. Paragraph 8.1 of the FATF Methodology states that countries should:

   (a) Without prejudice to the requirements of Recommendation 1, since not all NPOs are inherently high risk (and some may represent little or no risk at all), identify which subset of organizations fall within the FATF definition of NPO, and use all relevant sources of information, in order to identify the features and types of NPOs which by virtue of their activities or characteristics, are likely to be at risk of terrorist financing abuse;

   (b) identify the nature of threats posed by terrorist entities to the NPOs which are at risk as well as how terrorist actors abuse those NPOs;

   (c) review the adequacy of measures, including laws and regulations, that relate to the subset of the NPO sector that may be abused for terrorism financing support in order to be able to take proportionate and effective actions to address the risks identified; and

   (d) periodically reassess the sector by reviewing new information on the sector’s potential vulnerabilities to terrorist activities to ensure effective implementation of measures.

9. The methodology used by Nigeria for its NPO risk assessment is designed to meet this requirement as follows:

Table 1: Requirements of FATF R8.1 (a-c)

Para.	Requirement	Relevant section
8.1(a)	identify which subset of organizations fall within the FATF definition of NPO.	Part C: ‘Scope of this Report’
8.1(a)	identify the features and types of NPOs which by virtue of their activities or characteristics, are likely to be at risk of terrorist financing abuse.	Part F: ‘Identifying NPOs potentially at risk of terrorist financing’
8.1(b)	identify the nature of threats posed by terrorist entities to the NPOs which are at risk as well as how terrorist actors abuse those NPOs	Part E: ‘Identifying the nature of the Threat’

10. This risk assessment will be complemented by a separate assessment of the adequacy of mitigating measures (Phase II of the risk assessment, Review of Measures to Mitigate TF Risks in NPOs). The additional assessment will “review[s] the adequacy of measures, including laws and regulations, that relate to the subset of the NPO sector that may be abused for terrorism financing support in order to be able to take proportionate and effective actions to address the risks identified” in line with paragraph 8.1(c) of the FATF Methodology.

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¹ Terrorist Financing Risk Assessment Guidance (FATF, 2019)

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Terminology and key concepts

11. The Best Practices Paper [FATF, 2014] provides the following graphic to illustrate how terrorist financing risk is assessed in the NPO sector.

Figure 1. Threat+Vulnerability=Risk

[Graphic showing: Threat + (Organisational Vulnerability + Sectoral Vulnerability) = (Legitimate NPO is exploited + Sham NPO enters the sector)]

12. FATF defines the key concepts relating to risk in the FATF Guidance: National Money Laundering and Terrorist Financing Risk Assessment (FATF, 2013) and The Risk of Terrorist Abuse in Non-Profit Organisations (FATF, 2014). These definitions are used in this risk assessment. Additional interpretations of these terms within the context of this risk assessment, and definitions of additional key terms, are provided as follows:

Table 2: Definition of key terms

Term	FATF definition	Interpretation	Relevant section
Risk	‘A function of three factors: threat, vulnerability and consequence.’		Part E and F Phase II
Threat	‘A person or group of people, object or activity with the potential to cause harm. Threat is contingent on actors that possess the capability and the intent to do harm.’	The specific group or persons may be unknown but caused by a known vulnerability, e.g. failed state.	Part E
Nature of the threat		The typologies or methods by which the threat may finance terrorism through NPOs.	Part E
‘at risk’ NPOs	‘NPOs which by virtue of their activities or characteristics, are likely to be at risk of terrorist financing abuse’.	i.e. NPOs which are ‘vulnerable’ to terrorist financing abuse.	Part F
Vulnerability	‘things that can be exploited by the threat that may support or facilitate its activities. Vulnerability in the NPO sector can exist at either the organisation or sectoral level.’	Vulnerabilities in this risk assessment consists of inherent vulnerabilities and inadequate or absent control measures (see below).	Part F Phase II
Inherent vulnerability		A specific aspect of the NPO or the way it operates that exposes it to a TF risk. ‘the features and types of [at risk] NPOs’ ‘[the]activities or characteristics’ [of ‘at risk’ NPOs]	Part F
Inadequate or absent control measures		The absence of inadequacy of measures that might prevent or mitigate the threat from exploiting the vulnerability. Could be organisational or sectoral.	Phase II (Review of Measures to Mitigate TF Risks in NPOs)
Consequence	‘the impact or harm that ML or TF may cause’		Part F Phase II

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Implementation of the Methodology

13. The current risk assessment uses both qualitative and quantitative data and, in line with FATF guidance², seeks to ensure that qualitative data is given its due weight. This is particularly significant given the lack of quantitative data on TF risk in the NPO sector in Nigeria. The first draft of this assessment report was widely shared with government and non-governmental stakeholders detailed in Section 14 of this report. Extensive feedback, including comments, corrections, suggested edits and technical inputs received from these stakeholders and institutions were incorporated into the report, and formed the basis for the final outcomes of the assessment.

14. The risk assessment was completed using a Methodology provide by Greenacre Associates. It was implemented by a Local Assessment Team comprising representatives from the following organisations:

• Economic and Financial Crimes Commission (EFCC)
• Special Control Unit Against Money Laundering (SCUML)
• Nigerian Financial Intelligence Unit (NFIU)
• Office of the National Security Adviser (ONSA)

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² “While quantitative assessments (i.e., based mostly on statistics) may seem much more reliable and able to be replicated over time, the lack of available quantitative data in the ML/TF field makes it difficult to rely exclusively on such information. Moreover, information on all relevant factors may not be expressed or explained in numerical or quantitative form, and there is a danger that risk assessments relying heavily on available quantitative information may be biased towards risks that are easier to measure and discount those for which quantitative information is not readily available. For these reasons, it is advisable to complement an ML/TF risk assessment with relevant qualitative information such as, as appropriate, intelligence information, expert judgments, private sector input, case studies, thematic assessments, typologies studies and other (regional or supranational) risk assessments in addition to any available quantitative data.” Paragraph 30-31, FATF Guidance: National Money Laundering and Terrorist Financing Risk Assessment (FATF 2013)

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• Nigerian Army (NA)
• Department of State Services (DSS)
• Federal Ministry of Justice (FMOJ)
• Federal Ministry of Budget and National Planning
• Financial Reporting Council of Nigeria(FRCN)
• National Intelligence Agency
• Federal Ministry of Humanitarian Affairs, Disaster Management and Social Development
• Borno State Government
• Christian Association of Nigeria
• The Nigerian Supreme Council for Islamic Affairs (NSCIA)
• Corporate Affairs Commission,
• Central Bank of Nigeria
• Spaces for Change (National NGO representative) and
• International NGO Forum

Data and sources

15. The following primary information and data sources were used in this assessment:

• Interviews: Interviews were conducted with representatives from the following agencies between the months of January and February and March 2022 across the six geopolitical regions of Nigeria.
  • North East Region - Borno State
    • The Borno State Agency for Coordination of Sustainable Development and Humanitarian Response
    • The Senior Special Assistant to The Governor on Security.
    • The Borno State Emergency Management Agency.
    • The Attorney General and Commissioner of Justice.
    • National Drug Law Enforcement Agency
    • Department of State Service
    • Economic and Financial Crimes Commission
    • Borno State Ministry of Reconstruction Rehabilitation and Resettlement
    • Operation Hadin Kai (Multinational Joint Task Force)
    • INGOs
    • Local NPOs
  • South West Region - Lagos State
    • Ministry Of Women Affairs and Poverty Alleviation (WAPA)
    • Ministry of Youth and Social Development
    • NGOs
  • South South Region - Rivers State
    • Department of State Service
    • The Nigeria Police Force

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• Ministry of Social Welfare

• NGOs

• North West Region - Kaduna State

  • Department of State Services
  • The Nigeria Police Force
  • Ministry of Human Services and Social Development
  • NGOs

• North Central - Kwara State

  • Department of State Services
  • Ministry of Women Affairs and Social Development
  • NGOs

• South East - Imo State

  • Ministry of Welfare and Social Development
  • Ministry of Budget, Economic Planning and Statistics
  • Senior Special Assistant to The Governor on Civil Society
  • Department of State Services
  • The Nigeria Police Force

• Data request and questionnaire. Written requests for data on terrorist financing in the NPO sector, case studies, focus group discussions, and surveyed perceptions of the TF risk, threats and vulnerabilities were obtained from representatives of the following agencies:

  • Economic and Financial Crimes Commission
  • Special Control Unit Against Money Laundering
  • Corporate Affairs Commission (CAC)
  • Financial Reporting Council of Nigeria(FRCN)
  • Nigerian Financial Intelligence Unit (NFIU)
  • Federal Ministry of Budget and National Planning (FBMNP)
  • Federal Ministry of Justice (FMOJ)
  • Financial Institutions (Commercial Banks)
  • INGOs
  • Local NPOs

• Data from Suspicious Transaction Reports: The NFIU provided a summary of STRs received on FATF NPOs. The data covered from the year 2017 to 2021.

• Data on number of NPO clients and NPO transfers: Fourteen (14) banks responded to an information request covering assessments of threats and control measures, and data on number of clients and the value of NPO business.

• Survey: A survey on thirty (30) NGOs, forty (40) INGOs, sixteen (16) Financial Institutions and four (4) government agencies with supervisory function on NGOs was conducted on perceptions of TF risk and the effectiveness of mitigating measures.

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• The survey was conducted with a combination of online/offline questionnaire, emails, and focus groups discussions. The assessment team conducted interviews with state government officials and focus group session/consultations with local and international NGOs.

Table 3: NGOs attendance from field visit (Source: Field Visits)

Region	State	City	Date	NGOs Attendance	Total Per Region	Proportion (%)
North East	Borno	Maiduguri	31 Jan. - 4 Feb. 2022	55	550	10.00
South West	Lagos	Lagos	7 – 8Feb. 2022	19	5925	0.32
South South	Rivers	Port Harcourt	10– 11 Feb. 2022	32	3115	1.03
North West	Kaduna	Kaduna	14 – 15 Feb. 2022	20	1087	1.84
North Central	Kwara	Illorin	23 – 24 Feb. 2022	26	7295	0.36
South East	Imo	Owerri	23 – 24 Feb. 2022	31	1083	2.86
				183	19,058*	16.41

• Legal review. The following laws and regulations were reviewed, including relevant amendments, implementing regulations and notices. The review was supplemented by interviews with officials responsible for their implementation.
  • Money Laundering (Prohibition) Act, 2011 as amended
  • Terrorism Prevention (Amendment) Act 2013
  • Federal Ministry of Industry, Trade and Investment (FMITI) (Designation of Non-Financial Institutions and other Related Matters) Regulation, 2013
  • Companies and Allied Matters Act 2020
  • Companies Regulations 2021
  • Companies Income Tax Act CAP C21, LFN 2004 (as amended)
  • Federal Inland Revenue Service (Establishment) Act 2007
  • Financial Reporting Council Act 2011
  • Economic and Financial Crimes Commission (Establishment) Act 2004
  • Nigerian Financial Intelligence Unit Act 2018

16. The following reports on AML/CFT in Nigeria were consulted:

    • Mutual Evaluation Report 2008
    • Mutual Evaluation Report 2021
    • National Risk Assessment (NRA) 2016
    • Trends and Typologies Report on Terrorist Financing in Nigeria (2013)³

17. The following secondary information and data sources were used. Secondary information and data were not given the same weight as primary sources. Primarily it was used to inform the methodological approach, but it was also used selectively and in context to inform assessments where primary data was not available:

    • The Interpretive Note to Recommendation 8(see International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation – the FATF Recommendations (2012, updated 2016)).

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³ https://www.nfiu.gov.ng/images/Downloads/downloads/tf.pdf

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• The Methodology for Assessing Technical Compliance with the FATF Recommendations and the Effectiveness of AML/CFT Systems (FATF (2013)).
• The International Best Practices: Combating the Abuse of Non-Profit Organisations (FATF (2015)).
• The Risk of Terrorist Abuse in Non-Profit Organisations (FATF, 2014).
• The Terrorist Financing Risk Assessment Guidance (FATF, 2019).
• The FATF Mutual Evaluation Reports of Canada,⁴ the United Kingdom⁵ and Hong Kong, China;⁶
• Feedback from the FATF Private Sector Consultative Forum (Vienna, March 2016);
• The National Risk Assessments and/or NPO TF Risk Assessments of UK, Canada, Australia, and the Philippines.

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⁴ Mutual Evaluation Report for Canada: September 2016 ⁵ Mutual Evaluation Report for the United Kingdom: December 2018 ⁶ Mutual Evaluation Report for Hong Kong, China: September 2019

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B: EXECUTIVE SUMMARY

18. This risk assessment was commissioned by the Government of Nigeria as part of its commitment as a key player of the Financial Action Task Force’s (FATF) Global Network⁷ to combat the financing of terrorism.

19. The risk assessment meets the core FATF requirements in relation to Recommendation 8 and Immediate Outcome 10. Specifically, paragraph 8.1 of the FATF Methodology states that countries should:

    8.1 (a) identify the features and types of NPOs which by virtue of their activities or characteristics, are likely to be at risk of terrorist financing abuse;

    (b) identify the nature of threats posed by terrorist entities to the NPOs which are at risk as well as how terrorist actors abuse those NPOs;

20. The risk assessment identified the following types of NPOs as the subset of NPOs that meet the FATF definition.

Table 4: Activities of NPOs in Nigeria (Source: SCUML)

Activity Type	Sample	Sample (%)	Population
Humanitarian NPOs	83	1.88	357
Community Development Association	73	1.65	314
Corporate Foundation	3	0.07	13
Expressive NPOs	845	19.09	3638
Private Charitable Foundation -Service	350	7.91	1507
Private Charitable Foundation -Expressive	71	1.60	306
Religious and Faith-based NPOs	1727	39.02	7435
Service-Provision NPOs	1146	25.89	4934
	4426	100.00	19055

Table 5: Legal types of FATF NPOs (Source: SCUML)

Legal Type	Sample	Sample (%)	Population
INGOs	6	0.14	26
INCORPORATED TRUSTEES	4351	98.31	18732
LIMITED BY GUARANTEE	36	0.81	155
STATE/LGA	33	0.75	142
	4426	100.00	19055

21. Data used in this risk assessment included a survey of thirty (30) NGOs, forty (40) INGOs; data submissions from the sixteen (16) Financial Institutions; questionnaire of four (4) law enforcement and intelligence agencies; interviews with two (2) supervisory bodies; and reviews of ten [10] laws, as well as other relevant literature. A combined qualitative and quantitative assessment was undertaken.

22. Supervision of NPOs is largely de-centralised, and there is no central database on NPOs which inhibits a full understanding of the profile of the sector. Surveys and focus groups commissioned by this report helped fill in some gaps in the data, and

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⁷ Nigeria is a member of GIABA, the FATF-Style Regional Body for West Africa.

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reveal a domestic NPO sector dominated by religious NPOs, with a relatively small but well-funded group of international humanitarian NPOs often operating in areas with significant security challenges.

23. The assessment considered:

    • The size and nature of the overall TF threat in Nigeria;
    • Analysis of TF abuse of NPOs in other jurisdictions; and of other forms of financial abuse of NPOs in Nigeria;
    • Qualitative assessments of the likely nature of the risk from law enforcement, supervisory and NPO officials.

24. Part E of the report identif[ies] the nature of threats posed by terrorist entities to the NPOs which are at risk as well as how terrorist actors abuse those NPOs [FATF Methodology Part 8.1(b)]. It notes a significant terrorist and terrorist financing threat in Nigeria from Boko/ISWAP, and this is considered to be the most significant potential threat to NPOs in Nigeria.

The Primary Terrorist Financing Threats to NPOs in Nigeria

1. Boko Haram
2. ISWAP.

Secondary Terrorist Financing Threats to NPOs in Nigeria 3. Yan Bindiga / Yan Taadda 4. International Islamic terrorist groups (al-Qaida, ISIS, Al Shabab). 5. Domestic secessionist groups (including IPOB). 6. Islamic Movement of Nigeria (IMN) North West Nigeria)

Nature of the TF Threat to NPOs in Nigeria (known)

1. Use of NPOs as means for facilitating foreign funding of terrorist groups in Nigeria.

2. Use of NPOs as a part of complex schemes (often involving vendors) to disguise funding of terrorist groups.

3. Crimes against NPOs by terrorist groups (kidnapping for ransom / hijacking of goods).

4. Part F of the Report Identif[ies] the features and types of NPOs which by virtue of their activities or characteristics, are likely to be at risk of terrorist financing abuse [FATF Methodology 8.1(a)]. Eleven features, types, activities and characteristics of NPOs are assessed as inherent vulnerabilities that are likely to increase the risk of TF abuse.

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Inherent Vulnerabilities that are likely to increase the risk of terrorist financing abuse

1. Foreign NPOs active in the North-East

2. NPOs with links to high-risk foreign individuals or entities

3. NPOs active in very high-risk areas, including movement of goods (North East and North West)

4. NPOs active in medium-risk areas, including movement of goods (South East)

5. Humanitarian NPOs operating in the North-East

6. Faith-based NPOs raising and disbursing funds through cash

7. ‘Service provision’ NPOs (food, health care, water, shelter, medical supplies, education, social services, religious services) operating in high risk areas mentioned above

8. NPOs that engage vendors or third parties in the high risk areas

9. NPOs associated with unapproved financial or operational activities

10. NPOs associated with complex financial arrangements

11. NPOs using higher risk methods for moving funds, with two elements: a. NPOs moving large sums b. NPOs using cash transactions

12. Overall, this report recognises that Nigeria is a complex country, with a variable threat profile and pockets of significant vulnerabilities. The most significant single factor in the level of risk faced by an NPO is geography, with NPOs operating in the North-West or North East facing a significantly greater risk than NPOs in other parts of the country. The situation in the North-East and North West attracts a heavy presence of humanitarian NPOs and NPOs with foreign links, which contributes to the higher risk profile of these NPO activities in high-risk areas.

13. Nevertheless, for most NPOs in most parts of the country, there is little evidence of a terrorist financing risk. Overall, this assessment recognises that there is a gradient of risk from Medium-High in parts of the North through to Low-Medium for NPOs in parts of the South.

14. With the above caveats in mind, the threats and vulnerabilities observed in the North West and North East are significant enough to support a conclusion that the overall inherent terrorist financing risk to NPOs in Nigeria is Medium High.

Inherent TF Risk of NPOs in Nigeria Medium High

29. A second report will assess the adequacy of mitigating measures in relation to the eleven identified vulnerabilities, in line with 8.1(c) of the FATF Methodology.

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C: FATF NPOs

30. Paragraph 8.1(a) of the FATF Methodology states that countries should “identify which subset of organizations fall within the FATF definition of NPO”.

31. FATF defines the term NPO to cover “a legal person or arrangement or organization that primarily engages in raising or disbursing of funds for purposes such as charitable, religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of “good works.””

32. This definition excludes:

    • Informal groups of people which do not meet the definition of legal arrangement;
    • Legal persons or arrangements or organizations which are not established for ‘good works’, such as political parties, trade unions, or cooperatives which are primarily engaged in economic activities for the financial benefit of members;
    • Legal persons or arrangements or organizations not engaged in the raising or disbursing of funds as a main purpose. This might include those sports clubs, social associations or religious groups that do not or only incidentally engage in the raising or disbursing of funds.

33. FATF provides the following graph⁸ to illustrate which NPOs should be covered by the risk assessment.

Figure 2: FATF NPOs(Source: TF Risk Assessment Guidance, FATF).

[Graphic showing a circle labeled "NPO Sector" with a smaller circle inside labeled "FATF Defined NPOs" and a segment labeled "most at risk NPOs" and another segment labeled "Other NPOs"]

Identifying ‘FATF NPOs’ in Nigeria

34. The Local Assessment Team attended a workshop chaired online by an external consultant. The workshop examined the FATF guidance on ‘FATF NPOs’ and the scope of R8 Risk Assessments and sought to identify which NPOs would meet the FATF definition and should be included within the scope of this risk assessment.

35. Ten categories of organisation have been identified as FATF NPOs based on their activity. These are:

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⁸ Figure 4.1, Terrorist Financing Risk Assessment Guidance, (FATF, 2019(

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• Expressive NPOs: NPOs engaging in programmes focused on interest representation, think tanks, advocacy groups, literary clubs, research, democracy, governance strengthening, public interest litigation, sports and recreation, arts and culture etc. They operate mainly as non-governmental organizations (NGOs), advocacy groups, special interest groups and pressure groups. May also include social research and policy advocacy organizations.
• Service-provision NPOs: local and international humanitarian groups or organizations involved in the procurement, disbursement and delivery of social goods and services to a wide range of target groups in need.
• Humanitarian organizations: Local and international organizations working to ensure that there is swift, emergency relief assistance available to populations impacted by natural disasters, insurgency, conflicts or wars.
• Faith based/ religious organizations: NPOs that are fully- or partly-owned and managed by churches, mosques and other religious groups and their subsidiaries, and primarily depend on their religious institutions/congregants/members for funding.
• Private charities: NPOs typically established and funded by a specific benefactor for advancing his/her philanthropic objectives. The founders are often eminent personalities, business leaders and may include politically-exposed persons who may wish to use those platforms to attract public goodwill. The benefactor mainly provides the funding for executing the philanthropic ventures.
• PEP entities: NPOs established by individuals connected to persons in power (e.g. the wives of presidents, state governors or local government chairpersons). These entities are mainly used to do good while generating goodwill for political ends. This mainly comprises NGOs and private foundations set up by politically exposed persons (PEPs). For the purpose of this assessment, PEP entities fall under the privately-owned charities described above.
• Corporate foundations/CSR initiatives: NPOs owned and operated by indigenous and international corporations to give back to the societyand be socially accountable to itself, its stakeholders, and the public.
• Donor bodies: Private international institutions that provide funding for a wide range of charitable activities, especially in developing economies. These donors support such a wide range of good works like democracy strengthening, civil society empowerment, research, education, healthcare, promotion of sustainable livelihoods, safe water supply and sanitation services, state building initiatives etc. This definition excludes foreign governmental and inter-governmental donors.
• Host Community Trusts: Community associations required by law to be incorporated as incorporated trustees in compliance with the requirements of the Petroleum Industry Act. The Host Community Development Trusts as specified in Chapter 3 of the PIB 2021 will be registered as incorporated trustees, thereby subjecting them to the same regulatory obligations as NGOs.
• Community Development Associations: Community-based groups working to ensure that residents at the grassroots feel greater impact of governance. They also engage in maintaining peaceful co-existence in their various domains and in safe-guarding government infrastructure at the grassroots level. In states like Lagos, such groups are backed by law (Community Development Associations Law 2019 which requires every Local Government Area in Lagos State to establish a Community Development Committee (CDC) formed voluntarily by the residents living in that area. Community Development Committees are included as FATF NPOs insofar as they are established and controlled independently of the state.

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A minority of CDCs are de facto a tier of government and are therefore excluded (e.g. in Lagos).

36. Certain civil society organisations were determined not to be FATF NPOs. They include:
    • Trade unions, professional associations and business membership organisations were all excluded as they are not established for the promotion of ‘good causes’.
    • Cooperative societies (established under the Cooperative Act). This includes many micro-finance organisations and credit unions. They were excluded as they can make and distribute profits, and are not therefore primarily established for the promotion of ‘good causes’. Officials stated that there is no significant activity or funds associated with these organisations.
    • Foreign government donors: The donor arms of foreign governments, established by statute and controlled by the executive. It includes major aid agencies such as USAID.
    • Intergovernmental agencies: They are mainly governed by international laws and established primarily by sovereign states (referred to as member states) through formal treaties for carrying out good works directly or disbursing funds to support good works around the world and serving common interests. Examples include UN agencies, World Bank, WHO, UNICEF, UNDP etc.

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D: PROFILE OF FATF NPOs IN NIGERIA

37. As noted above, the assessment team identified ten types of FATF NPO in Nigeria as follows:

38. The following table contains a breakdown of the various legal types of NPOs registered by the Corporate Affairs Commission (CAC) between 2017 and 2021.

Table 6: NGOs registered by CAC 2017-2021 (source: Corporate Affairs Commission)

NGO Type	2017	2018	2019	2020	2021
Humanitarian NPOs	7	2	24	21	3
Community Development Association	27	61	65	39	7
Expressive NPOs	85	161	153	134	24
Service Provision NPOs	119	158	181	147	31
Corporate Charitable Foundation		2		5	1
Host community trusts established under the Petroleum Industries Act	2
Private Charitable Foundation-Expressive	5	11		34	1
Private Charitable Foundation-Service	72	84	242	284	33
Religious and faith-based NPOs	276	338	181	411	38
NON FATF NPO	164	205	286	243	33
TOTAL	757	1021	1354	1318	171

39. The above table present the various legal types for NPOs operating in Nigeria and registered with the CAC. Year on year, religious and faith-based groups, comprising mainly of Pentecostal churches, top the list because churches are classified as non-profit entities in Nigeria. 2018 and 2020 recorded the highest number of registrations for this category. Increases in 2019 and 2020 in particular may be attributable to the introduction of online registration by the CAC necessitated by the COVID-19 pandemic.⁹ It is followed by service provision and private charitable foundations respectively. 2018 and 2020 recorded the highest number of registrations for this category.

40. A significant percentage of NPOs operating in Nigeria are non-FATF NPOs. The term ‘non-FATF NPOs’ refer to the numerous associational bodies for traders, unions, professions, age grades, town unions, local communities, employees of private and public companies, cooperatives etc. specifically set up to advance the interests and welfare of their members. They make and distribute profits, but are not primarily established for the promotion of ‘good causes’.

41. Humanitarian NPOs are at the bottom of the registration table. Mainly international non-governmental organizations headquartered abroad engage in humanitarian activities. There is no legal requirement per se for these international groups to register with the CAC. Hence, the low registrations could be attributed to the requirement to register with, and enter into Cooperation or bilateral agreements with the Federal Ministry of Budget and National Planning (FMFBNP).

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⁹ https://www.premiumtimesng.com/business/405387-covid-19-cac-adopts-new-document-filing-process-other-reforms.html

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42. For purposes of information, the Corporate Affairs Commission, CAC, (the federal registering body) registers non-profits in two ways: as an Incorporated Trustee or Company Limited by Guarantee. A key distinguishing feature is that while Company Limited by Guarantee option is incorporating the Association itself, Incorporated Trustees option only incorporates the trustees of the Association. Incorporated Trustees are not allowed by law to venture into profit making business.

43. Analysis shows that the vast majority of NPOs are registered as Incorporated Trustees. Only 69 NPOs were registered as companies limited by guarantee between 2007 and 2011.

Table 7:Analysis of Companies Limited by Guarantee 2017-2018 (CAC Database)

NGO Type	2017	2018	2019	2020	2021
Humanitarian NPOs
Community Development Association
Expressive NPOs		2	11	8	1
Service Provision NPOs			3	7	1
Corporate Charitable Foundation
Host community trusts established under the Petroleum Industries Act
Private Charitable Foundation-Expressive	2
Private Charitable Foundation-Service	1		1	1
Religious and faith-based NPOs				1
Non-FATF NPO	1	6	7	13	3
TOTAL	4	8	22	30	5

Table 8:Analysis of state of registration for Companies Limited by Guarantee 2017-2018 (CAC Database)

State	2017	2018	2019	2020	2021
FCT	1	5	8	10	1
Lagos	1		8	10	1
Ogun	2	1	1	2
Delta		1	1	2	1
Sokoto			2
Enugu			1
Abia			1		1
Akwa Ibom				1
Rivers				2
Plateau				1
Cross River				1
Ebonyi				1	1
TOTAL	4	8	22	30	5

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Relevant Regulators

44. Nigeria has federally- and state-registered NPOs. The nature of their registration informs the nature and scale of regulatory requirements expected of them from relevant regulators at the federal and state levels.

45. At the federal level, NPOs are required to register their trustees with the Corporate Affairs Commission, (CAC), to attain a legal status. NPOs registered with the CAC are required to file two types of reports: (a) bi-annual statements and (b) annual returns to the CAC containing the accounting records and statement of accounts for the financial year and a register of members of the association.

46. At the state level, numerous associations, non-governmental organizations and foundations register with the Ministry of Women Affairs, Ministry of Youth Development, Ministry of Budget and Planning and the Ministry of Social Welfare as the case may be. There is also a requirement for non-profit organizations to register with multiple ministries that align with their thematic focal areas. That is to say, educational NPOs will register with the state educational ministry while health NPOs with the state health ministry etc. The state registration, likened to an ‘operational’ registration, gives an NPO license to operate in that state and deliver projects linked to a ministry.

47. Consistent with the requirement for multiple registration, NGO’s registering at the state level pay multiple fees for registration and annual renewals. They also submit reports of their activities either monthly, quarterly or annually to the various ‘line ministries’ they registered with. Further to the above, NPOs operating in multiple states will have to comply with these registration requirements across all the states where they are working. Whilst there are significant similarities in the treatment of these NPOs between states, it is not completely consistent.

48. It is important to mention that registration at the federal level (with CAC) is often a precondition for registration at the state level. It is a popular practice across all states visited during the regional consultations. In other words, the CAC certificate of incorporation is one of the compulsory documents that must be submitted in order to acquire a registration status at the state level.

49. International non-governmental organizations (INGO) incorporated in other countries are required to register with the Federal Ministry of Budget and National Planning (FBMNP) to operate in Nigeria for an approved period of time subject to renewal of the Ministry. INGOs registered with the FBMNP sign bilateral or Cooperation Agreements with the FMFBNP which require them to align their programme activities with national development projections. INGOs are mandated to report on their financials and programmes to the Ministry on a bi-annual basis. From 2017 to 2021, a total of 80 INGOs were registered with the FMFBNP.

50. In addition to this registration with the FBMNP, certain states require additional registration with a coordinating ministry for humanitarian assistance projects. For instance, the Borno State Agency for Coordination of Sustainable Development and Humanitarian Response harmonizes and coordinates government and humanitarian/development partners’ activities and programming to align with the recovery, stabilization and development plans of the state. INGOs and national NGOs registered with the agency submit periodic reports to it. The Agency maintains a register of humanitarian and development partners and conducts a regular review of the register to determine the consistency of periodic reports submitted by partners.

51. Whether state-or federally registered, or an INGO, all NPOs are mandated by law to register with the Special Control Unit against Money Laundering (SCUML) for the

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purpose of AML/CFT regulation. They are to report ‘suspicious transactions’ (STRs) to the Nigeria Financial Intelligence Unit (NFIU) and ‘cash-based transactions’ (CBTs/quarterly reports) to SCUML.

Figure 3: NPOs registered with SCUML by Region(Source: SCUML).

[Bar chart showing: NORTH EAST TOTAL: 550 NORTH WEST TOTAL: 1087 NORTH CENTRAL TOTAL: 7295 SOUTH WEST TOTAL: 5925 SOUTH EAST TOTAL: 1083 SOUTH SOUTH TOTAL: 3115 TOTAL: 19055]

52. Based on the SCUML statistics, the north-central has the highest number of NPOs registered with SCUML, followed by the South-West while the South-east and the North-east has the least registrations respectively. Overall, 19,055 organizations are registered with SCUML in Nigeria.

53. For taxation purposes, all NPOs are required to register with the Federal Inland Revenue Service or state revenue authorities. All NPOs are required by law to remit employee income taxes (pay as you earn (PAYE)) to the Federal Inland Revenue Service or the state counterparts. In addition to PAYE returns, they are expected to file tax returns for Corporate Tax (CIT). NPOs also file annual returns to FIRS and deduct withholding tax (WHT), on, payments, made to its contractors/suppliers/consultants and, remit the same to the appropriate tax authority.

54. NPOs also submit their audited financial statements to the Financial Reporting Council of Nigeria (FRCN). FRCN ensures that audit reports produced by NPOs are in line with the International Financial Reporting Standards.

55. Out of the 19,055 NPOs registered with SCUML, religious and faith-based groups, service provision and expressive groups topped the chart respectively while humanitarian groups, community organizations, privately-run charities and corporate foundations were chronologically at the bottom of the table. Religious/faith-based NPOs comprise mostly churches, mosques, fraternities etc. Churches, especially the Pentecostal denomination, dominate the church category. According to one report¹⁰, about 50 percent of the country is Muslim and the other half Christian. An estimated 80 million people are Christian and about half of them are members of a Pentecostal church. Most churches in Nigeria are registered as incorporated trustees, and thereby categorized as non-profit entities. Because of this registration status, churches are not required to pay taxes. While churches are not required to pay taxes, this does not apply to for-profit ventures they are involved in.

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¹⁰ https://www.dw.com/en/nigerian-pentecostal-megachurches-a-booming-business/a-45535263

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Figure 4: Activities of NPOs registered with SCUML (Source: SCUML).

[Bar chart showing NPO Categorisation by Activity Type: Humanitarian NPOs: 357 Corporate Foundation: 314 Expressive NPOs: 13 Non FATF: 3638 Private Charitable...: 551 Private Charitable...: 1507 Religious and Faith...: 306 Service-Provision NPO: 7435 Total: 4934 (Note: The chart labels and values appear slightly misaligned in the source image)]

56. Anecdotally, great diversity within faith-based NPOs is noted. Certain members of faith communities focused only on religious worship and ritual with no obligation or responsibility for financial interventions in the society in the form of cash transfers or social investment. Other faith groups are focused on community development and humanitarian assistance interventions. For example, the Catholic Church is not directly involved in any act that carries significant risks of money laundering, but some Catholic-run entities established as independent entities under the law, like Caritas International, may be more exposed to such risks due to their participation in certain activities involving significant financial transfers and deliveries to local populations, including in conflict-settings. This category also includes initiatives that combine humanitarian services and propagations of religious ideals, as well as humanitarian initiatives owned by religious organizations to deliver certain kinds of good works - service, expressive etc. (i.e JPDC- Catholic Church).

57. The NPO survey questioned NPOs in their activities. This revealed a wide range of good works not limited to housing, education, healthcare, social services, poverty alleviation, interest representation, advocacy, arts and culture, religious, human rights and humanitarian activities and the like. Religious activities still top the list of activities due to the categorization of churches as non-profits.

Figure 5: NPOs' activities (Source: NPO survey).

[Bar chart showing NPOs' Activities: Housing, Social Services, Education, Health Care, Charity/poverty relief, Human rights, Environment, Religious, Sports, Recreation, Arts and Culture, Interest Representation, Advocacy, Women, Senior Citizens, PTA, Mutual Aid, Provident Fund, Other]

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58. There is a lack of reliable data on the financial size of NPOs. The NPO survey asked NPOs to report income by band, but poor categorization did not distinguish size clearly. Additional research may be necessary to determine a reasonable income band for NPOs in Nigeria.

Figure 6: NPOs by income band (Source: NPO survey).

[Bar chart showing Income Band for Last Year: Below N500,000: 7% N500,001-N600,000: 1% N600,001-N700,000: 0% N700,001-N800,000: 0% N800,001-N900,000: 0% N900,001-N1,000,000: 1% Above N1,000,000: 91%]

59. Other data gives some sense of the size of the NPO sector. The MacArthur Foundation reports that it has awarded $124.7 million to 113 organizations since 2015¹¹. Another report states that the United States, through the USAID, is the single largest donor for the humanitarian response in Nigeria, having provided nearly $505 million in Fiscal Years 2020 and 2021.¹² Although such grants are awarded to fewer organizations that meet the highest standard of regulatory compliance thresholds, this figure demonstrates that the low spread of incomes indicated above may not match income bands of different categories of NPOs (both local and international) operating in the country.

60. NPOs make up a negligible proportion of business for the surveyed financial institutions. Of the twelve banks that provided responses, only three recorded NPOs making up more than 0.5% of their client base; and only one recorded NPOs making up more than 0.5% of the total value of the bank’s transactions. Two banks reported having no NPO clients at all.

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¹¹ See MacArthur Foundation: https://www.macfound.org/programs/nigeria/ ¹² USAID: https://www.usaid.gov/news-information/press-releases/mar-12-2021-united-states-announces-nearly-104-million-additional-humanitarian

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Figure 7: Percentage of NPO clients / Percentage of NPO transfers reported by banks (Source: Financial Institutions’ Information Request).

[Bar chart showing % of NPO Clients / % of NPO Transfers across 12 banks]

61. The NPO survey obtained responses on the sources and nature of funds. Whilst slightly more than half of domestic NPOs received cash, for INGOs the practice was less common amongst International NGOs, with 11 of 39 respondents (28%) reporting cash donations. Overall, 24 of 63 respondents (38%) reported cash donations. Of ten banks that responded to requests on common modes of transaction within their NPO clients, six (6) mentioned cash.

Figure 8: Cash donations to NPOs and knowledge of donor (Source: NPO survey).

[Two bar charts:

1. "Cash donations are more than 5% of income" (All, INGO, Local)

2. "Do NPOs that receive cash donations know the donor" (All, INGO, Local)]

3. On whether those receiving cash donations know the sources of donations (Figure 8), 78% indicated that they are ‘always’ aware of the donor while the remaining 22% reported that they are to some degree aware of the donor but not always. No NPO reported that they are ‘never’ aware of their cash donors.

4. At 38%, receipt of cash donations remains low. Further, there are high levels of NPOs stating that they are always suggests that funds cash donations may be made by

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established supporters or are pre-negotiated and contracted for, prior to funds transfer.

64. The sources of cash donations received by NPOs depends on their activities and legal types. The data shows that 30% of the NGOs receive cash donations. Out of that 30%, 17% of the local NGOs and 13% INGOs received these donations from private individuals. Donations are not always made in cash, but may also include electronic transfers. Although the cash threshold is not indicated, 30% of NPOs receiving cash donations from private individuals is low, but suggests a trend that is worth considering for TF risks.

65. 28% reported that the donations are from their partner NGOs. 26% noted that they receive these donations from Government establishments. 15% noted that their donations came from corporations.

Figure 9: Sources of cash donations to NPOs (Source: NPO survey).

[Bar chart showing Sources of cash donations by legal type (Incorporated Trustees, Company Limited By Guarantee, State Registration, Cooperation Agreement (FMFBNP), Others) and source (Government, Corporation, NGO, Private Individual, Unknown)]

66. The amount of cash donations received by NPOs was not indicated to ascertain whether they are within the allowable thresholds under Nigeria’s ML laws. The ML Act 2022 prohibits money laundering and criminalizes cash payments exceeding N5,000,000 or its equivalent, in the case of an individual; or (b) N10,000,000 or its equivalent in the case of a body corporate. Transactions above this threshold must now be routed electronically or through a financial institution. [S4C:2022]. While 38% of NPOs receiving cash donations is relatively high, cash donations below the allowable thresholds, coupled with precise knowledge of the donor, may not present high ML and TF risks.

67. Figure 10 highlights the levels and sources of grants received by NPOs in Nigeria. Responses as presented below reveal that 58% of the NPOs receive grants from foreign states while 18% of the NPOs (all of them INGOs) reported that they receive grants from foreign philanthropies. Only 10% of the NPOs reported that they receive grants from local philanthropies. The remaining 16% informed that they receive grants from the Central and Local State institutions. This data is consistent with the finding of low domestic philanthropy in Figure 8, and consistent with the finding that

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the source of donations are always known and often pre-negotiated and agreed prior to the transfer of funds.

68. Figure 10: Sources of funds through formal channels (Source: NPO survey).

[Bar chart showing Levels and sources of grant income by legal type and source (Central State, Local State, Domestic Philanthropy, Foreign State, Foreign Philanthropy)]

69. Methods of funding recorded by ten banks with NPO clients were, in order: electronic, wire or bank transfers (8 responses); cash (6 responses); cheques (2 responses); cross-border inflows (1 response); and foreign exchange (1 response).

70. Receiving foreign funding in Nigeria is often characterized by stringent grant-making procedures such as enhanced due-diligence and reporting requirements imposed by public and private donors while local banks enforce enhanced due diligence requirements arising from anti-money laundering and security-related concerns. The combination of controls from grant-makers and banks may significantly reduce TF risks associated with foreign philanthropy.

71. A total number of thirty-seven (37) INGOs moved cash totalling nine billion, four hundred and sixty-four million, forty-one thousand, seven hundred and eighty naira and sixteen kobo (9,464,041,780.16) from 2019 till 2021. Of ten banks that responded to requests on origins of funds for NPO clients, five (5) mentioned foreign origins (including Europe (4 banks), North America (3 banks), and Israel (1 bank)).

Table 9: Total Cash Movement by NPOs (Source: SCUML)

Year	Nigerian Naira	US$¹³
2019	2,916,376,279	$6,643,731
2020	6,019,767,785	$14,496,819
2021	527,897,715	$1,271,284
Total	9,464,041,780	$22,791,585

72. Below is an analysis of the largest receivers of funds by individual INGOs between 2019 and 2021. The names of the individual NPOs are known but have been anonymised. The data shows that foreign funds are received almost exclusively from developed countries (USA and Western Europe), and are dominated by the fields of refuges, aid, development, health, and women/children's rights.

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¹³ e and throughout the reportU a conversion rate of 1 USD A 438.910 NGN is usedU being the mid-market rate taken from xe.com on 3rd November 2022.

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Table 10: NPOs with total foreign funding in excess of NGN 1million 2019-2021 (Source: Independent Sources)

COUNTRY OF ORIGIN¹⁴	NPO ACTIVITY¹⁵	INCOMING FUNDS (NIN MILLIONS)
		2019	2020	2021*	Total	US$
DENMARK	Refugees	622.0	1639.6	185.9	2447.5	5,575,405
SWITZERLAND	Aid	40.0	1002.4	11.8	1054.1	2,401,240
USA	Children	335.0	292.8	35.0	662.8	1,509,858
NETHERLANDS	Aid	267.9	227.8	166.6	662.3	1,508,719
FRANCE	Aid	133.5	272.5	18.0	424.0	965,872
SWITZERLAND	Health	176.9	192.3	8.0	377.2	859,262
UNITED KINGDOM	Women's rights	140.2	234.2		374.4	852,883
FRANCE	Aid	16.0	338.0	4.0	358.0	815,524
SPAIN	Health	117.3	205.0	0.0	322.3	734,199
NORWAY	Refugees	91.0	216.8	8.4	316.2	720,304
FRANCE	Health	137.0	141.7		278.7	634,879
UNITED KINGDOM	Aid	102.6	166.7		269.3	613,465
UNITED KINGDOM	Aid	38.1	186.9		224.9	512,322
USA	Health	169.7	54.5		224.2	510,728
FRANCE	Aid	69.3	133.5	15.0	217.8	496,148
FRANCE	Development	54.0	147.4	18.3	219.7	500,477
ITALY	Aid	34.9	153.5	9.3	197.7	450,361
ITALY	Development		152.6	31.0	183.6	418,241
USA	Health	68.6	25.6		94.2	214,588
SWITZERLAND	Children	22.4	54.4	6.5	83.3	189,757
USA	Aid	18.0	58.7	1.4	78.1	177,912
NIGERIA	Development	14.1	33.6		47.7	108,661
UNITED KINGDOM	Aid	31.0	7.7	6.1	44.8	102,054
NIGERIA	Development	9.1	28.2		37.3	84,969
NORWAY	Aid	16.6	14.0		30.6	69,707
FRANCE	Health	24.6			24.6	56,039
FRANCE	Health	14.1	6.1		20.2	46,016
NIGERIA	Religious		11.8		11.8	26,880
SWITZERLAND	Refugees	9.5			9.5	21,641
USA	Children		9.0		9.0	20,502
ITALY	Health		6.6		6.6	15,035
SWITZERLAND	Aid/Health	5.0	1.3		6.4	14,579
NIGERIA	Education		2.0	1.7	3.7	8,429
USA	Development		1.7		1.7	3,873

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¹⁴ Location of headquarter. Funds may also co me from other countries. ¹⁵ Based on an assessment of the NPOs website.

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NIGERIA | Women and children | 0.4 | 1.0 | 1.5 | 3U417

73. Just 7% of the NPOs consulted receive funds through alternative sources. Of this minority, 38% received funds from private individuals, 25% each from government establishments and other NPOs, while the remaining 13% disclosed that they receive funds from corporations. While the margin of NPOs with alternative sources of funding is significantly low, receiving funding from private individuals, especially if they are politically exposed persons, may expose NPOs to risks particularly associated with money laundering. Of ten banks that responded to requests on common modes of transaction within their NPO clients, none mentioned alternative sources.

Figure 11: Receipt of funds from alternative sources or channels (Source: NPO survey)