Advisory on Fraudulent Petitions Involving Tracing and Recovery of Electronic Wire Transfers — NFIU — NG

Nigerian Financial Intelligence Unit
ADVISORY ON FRAUDULENT PETITIONS
INVOLVING TRACING AND RECOVERY OF
ELECTRONIC WIRE TRANSFERS FROM FOREIGN BANKS INTO ACCOUNTS IN NIGERIAN BANKS JUNE, 2024

Background
The Nigerian Financial Intelligence Unit (NFIU) is committed to providing timely advice or guidance to its stakeholders through an evidence-based approach from relevant case studies. These case studies provide ample information on emerging trends, patterns, suspicious activities and methods intended to exploit the vulnerabilities of the financial system for illegitimate and unlawful activities. This advisory became necessary due to numerous petitions received by the NFIU from financial institutions, government agencies, and other third parties seeking assistance towards the tracing and recovery of funds transferred from foreign entities to their business partners in Nigeria. The advisory aims to draw the attention of relevant stakeholders and the general public to the red flags as well as the emerging trends that have been observed most especially the use of forged documents by fraudsters to defraud unsuspecting members of the public. The Unit has recently received several complaints and requests involving entities who claim to be victims of criminal conversion of funds. This includes the violation of their right to withdraw huge funds transferred to them from their business partners overseas. The petitions to trace and recover funds were supported with contradictory statements of accounts and forged documents to deceive the public such as; copies of SWIFT messages, copies of Memorandum of Understanding (MoUs) between the investor and investee and other forged supporting documents. How International Money Transfer System Works A wire transfer also referred to as telex transfer is the process by which one entity, usually a bank, transfers money to another entity. Wire transfer services are typically used to transfer money internationally between financial institutions. Most wire transfers take place within two to three days. International Wire Transfers are processed almost exclusively using the Society for Worldwide Interbank Financial Telecommunication's (SWIFT) network. It links more than 9,000 banking institutions together through 209 countries and territories1. There is a large amount of traffic processed through the SWIFT network. Bank-to-bank wire transfers are the most common means of transferring money between bank accounts and financial institutions. For instance, if you have two bank accounts and would like to initiate an electronic funds transfer between both accounts, you will need to verify the recipient bank's routing number and the recipient's account number, as well as the amount 1 What you need to know about wire transfers. https://www.cebih.org/what-you-need-to-know-about-wiretransfers/

of money to be transferred. Then your bank will send a notification to the recipient’s bank about the impending transfer of funds through SWIFT (explained below). The transaction will usually take few hours to complete and often a few days (between 2-3 days). Once the wire transfer is completed, debit entry is passed on the source account and the corresponding entry credited into the recipient's account and funds becomes available either for use or transferred to third party. The figure below illustrates this process in graphics. International Money Transfer Process
Figure 1. International Money Transfer process
a. The sender initiates the transaction by submitting a duly completed telegraphic transfer or wire transfer form to his Bank, containing; payment amount, name & address of beneficiary, beneficiary’s bank account details, purpose of transaction etc. b. The local bank processes payment on behalf of its customer via the SWIFT Network (MT102), an efficient and reliable secure messaging system that connects banks worldwide, to the receiving bank responsible for crediting the beneficiary account.
c. The wire transfer is usually consummated through a correspondent banking
operations, especially where it also involves check clearing and different currency exchange.

d. The specified payment amount is then credited into the receiver or beneficiary’s account held in his bank. Trends and Patterns of Suspected Fraudulent Petitions The suspected fraudulent petitions usually follow these patterns;

It starts with an entity opening a new bank account at a known
local bank, where there is no existing account.
The entity’s bank account detail is used to prepare a Memorandum
of Understanding (MoU) between a foreign investor and an investee company (the entity) for agricultural or oil & gas purposes.
Accordingly, MT103 telegraphic transfer (otherwise known as
TELEX) message containing huge amount of money, usually expressed in Euro, Pounds Sterling or United States Dollars is fraudulently generated as proof of an alleged wire transfer already consummated by the investor’s bank.
With the Telex Copy, MoU and other relating documents, entity’s
Directors or authorized signatory(ies) officially writes the bank notifying it of the expected funds, and requesting that money be credited into their account.
The entity’s representatives sometimes create a document, which
they described as an abridged statement of account, and or a credit alert held up in a server “waiting to drop”.
The entity writes to the Central Bank of Nigeria (CBN) informing of
the pending transaction with their bank and also requesting assistant to have the alleged funds credited into its account.
Armed with the compiled documents, including acknowledged copies
of letters to their Bank and the CBN, entity’s directors and representatives approaches vulnerable individuals and business owners, persuade them to make financial commitment sufficient to facilitate the release of funds described in step ‘5’ above, with a promise to take certain percentage of the expected inflow.
To further deceive their victims, they write to the Federal Ministry
of Justice seeking the Honorable Attorney General’s intervention for the release of the alleged funds.
Parties involved (the entity’s representatives and others) engage the
services of a law firm seeking representation for the tracing and recovery of funds supposedly transferred from a foreign bank into a Nigerian Bank but allegedly held up in the bank’s server.
Finally, the Law firm writes the NFIU requesting assistance to
trace and recover funds which it had allegedly restricted either through a Post-No-Debit (PND) directive or a stop order.
The petitions are then supported with contradictory statements of
accounts and forged documents to mislead the NFIU into initiating a forensic analysis of the transaction. These documents may include copies of SWIFT messages, copies of Memorandum of Understanding (MoUs) between the investor and investee, etc.
In most cases, the huge funds claimed do not match the line of
business of the funds' recipient and far exceed their transaction profile/history.

Case Studies
It has been observed that some law firms accept briefs relating to tracing and recovery of huge sums of money allegedly wired via the SWIFT Network from entities and individuals (clients) immediately swing into action without conducting due diligence on the authenticity and validity of documents received from such clients. Some case studies are presented below;

Case Study 1
On July 14, 2020, a legal firm filed a complaint to the Assistant Inspector General of Police that Firm K herein referred to as the complainant alleged that their client, company F is a duly registered company in Nigeria. Company F was nominated by the Contract and Implementation Committee of EEE in state L of Nigeria for the construction of an ultra-modern market and a 9 kilometers road in G local government area of the same State L, the committee had an MoU with company JJJ Gas Plant in which they were mandated to nominate an indigenous company for the execution of indigenous projects which they did by nominating company F. According to the complainant, the company JJJ Gas Plant transferred a sum of €7,883,325.46 (Seven Million, Eight Hundred and Eighty-Three Thousand, Three hundred and Twenty-Five Euros, Forty-Six Cents) only from their Bank X account to one of Company F’s accounts with bank C in Nigeria on September 14, 2014, for the execution of the community project. The complainant further stated that the initial transfer was suspended due to a stop order issued on 16 September by the Financial Reporting Council. The order was lifted on October 13, 2014, by the funds' release order due to the non-payment of the accrued 1% interest on the funds. The accrued percentage was agreed to be deducted hence, the total amount transferred was €7, 881, 358.71 (Seven Million, Eight Hundred and Eighty-One Thousand, Three Hundred Fifty-Eight Euros, Seventy-One Cents) only. In such scenario, Company ‘F’ attempted to perform a transaction on their account, the bank informed them that they have not received the funds. Company ‘F’ claimed that they have contacted Bank X and confirmed that the funds were wired successfully. The complainants claimed that, although they admitted making a mistake in one of the digits of their account numbers, it has been rectified and that they have been trying to access the money for a long time. In line with the above, the complainants prayed for assistance of the NFIU to trace and recover such monies to enable them to carry out their project. Under listed documents were attached to buttress their claim:

The nomination letter by committee EEE
The Swift Telegraphic transfer copy
Financial Reporting Council Stop Order
Financial Reporting Council Release Order
A declaration by an attorney on the authenticity of the transaction
A copy of a mail sent to Bank X to validate the transfer of funds

Other Fraudulent Petitions Received
A law firm submitted a petition on behalf of its client an NGO requesting the NFIU and other relevant agencies to trace and recover the sum of €30,000,000,000.00 (Thirty Billion Euros) only, transferred from a foreign bank to a bank in Nigeria. The petition further claimed the funds have been blocked by a financial institution in Nigeria. The purpose of the funds according to the petition is for investment in the real estate sector.

A law firm forwarded a petition on behalf of its client seeking to trace and
recover the sum of €6,000,000,000.00 (Six Billion Euros) only transferred from foreign banks to the client’s Nigerian bank account. The funds were meant for the construction of 10 modular refineries in three local government areas in an oil producing state of Nigeria. The law firm wrote to the Police, EFCC and the NFIU, and appealed for discreet investigation for the tracing and recovery of funds.
An Individual claimed to be the beneficiary of a transfer of N30,
000,000.00 (Thirty Million Naira) only. The individual claimed that the funds have been withheld by a bank in Nigeria and wrote to various agencies to investigate and help to recover funds. The agencies then requested NFIU to trace the funds for recovery. Case Study 2 On August 27, 2020, the Unit received a petition by XXX Nigeria Limited to intervene for the release of $10,000,000.00 (Ten Million Dollars) which is equivalent to N300,700,000,000.00 (Three hundred Billion, Seven Hundred Million Naira) only flagged by Bank Y as a suspicious transaction and subsequently frozen in Nigeria since January 2019. XXX Nigeria Limited claimed that they were denied withdrawal by the bank even though the purpose of the funds was clearly stated to be for ‘Investment purposes. They prayed that the Unit assists them to unfreeze the account to enable them to utilize the funds for the purpose they were intended for. A copy of the transfer slip was attached to further support their claim. However, analysis by the Unit showed that bank Y never received a transfer of the claimed amount.
A mining company without a license from the Crude Oil Marketing
Department (COMD) of the NNPC for crude oil sales wrote to an agency alleging that a transfer from Deutsche Bank to a bank in Nigeria has been held by the bank without any justification. A petition was written to an investigating agency to facilitate the tracing and recovery of funds.

General Findings

Most of the funds were alleged to have been transferred from top financial
institutions in Europe.
The NFIU has never received request from counterpart FIUs seeking
information on international wire transfers in large sums conducted by foreign investors from other jurisdiction but held up in a Nigerian Banks.
Most of the entities are briefcase companies as they do not maintain
operating business offices. This is probably due to the absence of known existing business with track record.
The acknowledged copies of letters written to the entities’ local banks, the
CBN and the Hon Attorney General and Minister of Justice were usually done to not only give credibility to the transactions but also portray them as legitimate transactions geared towards supporting the Nigerian economy.
Queries conducted on our database revealed that the involved
persons/entities usually have no record of large transactions conducted in the past (i.e. transactions above N5,000,000.00 and N10,000,000.00 for individuals and entities respectively).
Most of the organizations’ supporting documents are forged documents.
Open-source search reveals various websites where some contract agreements were found including the passport photographs of alleged business partners.
Inconsistency of records and other supporting documents often presented
by the fraudsters. For instance, the same signature was sighted to be affixed by the investor and investee rather than the investor’s name or actual signature, and the official passports were also observed to be forged.
The common mode of transaction observed was by SWIFT wire transfer
and all the messages provided as additional attachments were observed to be doctored/forged
Most of the organisations that filed petitions claimed to be in sectors that
require huge capital outlay and produce high turnover i.e., Mining and

Energy. This is to justify the huge sum of funds that are claimed in their petitions and also not to potentially raise red-flags.

Records from the company registry revealed that the entities involved in
such transactions are often newly incorporated, and in some cases, they are not duly incorporated with the Corporate Affairs Commission (CAC).
Some of the account numbers contained in the petitions do not exist.
Some of the organizations claim to be engaged in businesses or activities
that are not authorized in their Memorandum and Articles of Association (MEMART).
All the banks mentioned in the requests confirmed that the funds claimed
have not been received by them.
The petitions were submitted by the law firm without carrying due
diligence on clients’ information and records.
The sums mentioned in the petitions are often very large sums and in
foreign currencies. The highest being €30, 000,000,000.00 Euros (Thirty Billion Euros) only while the lowest was N30, 000,000.00 (Thirty Million Naira) only. Red Flags  Large amount of funds transferred in a single transaction.  Contradictions in the documentation such as an Arabic inscription ِب س )“BismillahiMuhammadu“ ِم ِٱ ِ لل ِ محمد(instead of investor’ s signature.  No history of similar transactions in the accounts of individuals or entities involved.  Records of acknowledged copies of letters to deposit money banks and the CBN.  Newly incorporated companies expecting large amounts of foreign inflows/remittances.  Providing an acknowledged document from relevant agencies as legitimate transaction/approval documents to source for and receive foreign remittances/funds.  Presentation of Telex copies  Absence of complaint from either the alleged foreign investors or the foreign banks.  Request seeking financial commitment from individuals in exchange for a fixed percentage of the expected funds.

 Request for a law firm to offer legal service in exchange for a fixed percentage of the alleged inflow. Possible Mitigations against such Petitions Financial Institutions and government agencies should be aware of the possibility of fraudsters using forged and fraudulent documents to request funds supposedly transferred to their bank accounts as returns or proceeds for high-profit business endeavors. We, therefore, recommend Enhanced Due Diligence as one of the measures to mitigate potential risk of financial fraud. Other measures include:

Financial Institutions to take immediate steps to verify the authenticity of
any SWIFT instruction presented in support of such petitions.
Potential investors, individuals and business owners to use a multi-factor
authentication approach to validate the authenticity of documents and also be alert to the red flags outlined. The authentication process must be completed by an expert or someone with requisite expertise
Request and validate certified true copies of documents from issuing
authorities
Engage forensic experts to ascertain signatures of parties in such
transactions and other sensitive documents
Validate the existence of companies involved.
Conduct an open-source search on individuals and companies for more
information.
Engage in further investigations to find answers to issues that negate
basic principles of logic.
Government agencies should provide timely notification to the banks that
have been accused of blocking/withholding funds, so that enhanced due diligence can be conducted and the customer’s accounts placed on monitoring.

Effect of Fraudulent Petitions on the NFIU This happens when an entity’s representatives (fraudsters) disguised as employees, produces fake working materials, allegedly used by the NFIU such as; stamp, letter head papers etc to meet the need of desperate individuals whose intentions are to basically give credibility to the fictitious telegraphic document in their possession. The fraudster may further seek financial consideration as fees to enable them facilitate release of the alleged funds into their bank accounts. In order to ensure that this fraudulent practice is nip in the bud, whilst preventing negative effect that such activities might have on the NFIU’s operations, it is now expedient to issue this advisory to guide the general public. It is now incumbent on the NFIU to henceforth, generate intelligence reports on any individual, group of persons or entities identified to have direct or indirect link with these deceptive fraudulent telegraphic transfers for investigation and prosecution. Effect of Fraudulent Petitions to Banks False allegations engineered by misrepresentation of material facts could result to loss of confidence by the banking public who may have reasons to believe that the banks actually held funds in its server. The negative attitude of a large number of purported victims of such alleged withheld funds if not well managed could lead to loss of patronage and reputational damage not only to the banking industry but also the financial system. Recommendations to the Banks

Upon receipt of a letter from a customer anticipating huge inflow,
evidenced by the usual Telex copy, the financial institution should immediately conduct Enhanced Due Diligence, sufficient to establish authenticity or otherwise of document presented.
Where issues of forgery are suspected, the financial Institution must
take steps to quickly respond in writing to the letter from the customer, clearly stating the non-existence of such pending transaction of fund. This action must be taken immediately upon receipt of the complaint by the bank to avoid their use of the acknowledgment of the letters for fraudulent purposes.
Financial Institutions are advised to immediately file Suspicious
Activity Report (SAR) on any entity or individual who presents such frivolous claims to the NFIU. Consequences of Fraudulent Petitions to the Public The risk and threats posed by fraudsters present high level of vulnerability as the general public easily fall victim. This is made possible by the issuance of acknowledged copies of letters from agencies as approvals received to source funds from potential foreign investors/companies. These documents are then presented to unsuspecting high net worth individuals, banks and foreign companies to get funds released on the pretext that they are working on accessing the funds. Recommendations to the Public a. The general public should be aware of the threat posed by fraudulent individuals and their fictitious telegraphic inflows whilst noting the listed red flags as well as the mode of operations contained in this document. b. The public must also take necessary steps geared towards scrutinizing potential business opportunities before committing financial resources.
c. The public should recognize the imminent risk of making investment on
the strength of unverifiable Telex transfers presented by individuals to avoid being victims of fraudulent claims. d. Henceforth, NFIU upon receipt of such letters will analyses and profile both the recipient and the sender. The resultant Intelligence Report from that will be disseminated to relevant LEAs and counterparts both domestic and internationally. Recommendations to NBA and Law firms. a. There is need for the Nigeria Bar Association (NBA) to sensitize its members on the importance of verifying and authenticating documents received from clients before taking action. b. In order to curtail the activities of persons who engaged in fraudulent wire transfers, Law firms need to always conduct Due Diligence on their clients, including document received while acting as legal attorneys or representatives.

Conclusion
Our findings suggest that deceptive fraudulent petitions involving the tracing and recovery of funds allegedly transferred from foreign banks to Nigerian banks are becoming a recurrent threat to not only the targeted victim(s) but also Financial Institutions, Law Enforcement Agencies (LEAs) and other government agencies. Financial institutions and the general public are advised to be vigilant and adopt recommendations that will help to further safeguard important documents from being easily accessible to prevent their use as a backup for such petitions. The public should exercise some level of skepticism when dealing with telegraphic transfer documents from major European banks as nearly all frivolous claims emanate from same jurisdictions and bank abroad. Relevant LEAs should also take steps to effectively address the problem of fraudulent telex copies by ensuring the prompt prosecution and sanctioning of offenders to serve as a deterrence. AUTHORIZED OFFICER Dated this day, 19th June, 2024

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