Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 1 | P a g e MONEY LAUNDERING/TERRORIST FINANCING TYPOLOGIES THROUGH SMUGGLING IN NIGERIA MARCH 2026

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 2 | P a g e Contents Overview ................................................................................................................................................8 Key Findings ..........................................................................................................................................8 Methodology.........................................................................................................................................8 Strategic Implications.........................................................................................................................9 1.0 Background......................................................................................................................................10 1.1 Scope, Methodology and Limitations ..................................................................... 10 Scope .............................................................................................................................. 10 Methodology .................................................................................................................. 10 Limitations........................................................................................................................ 12 2.0 Literature Review.............................................................................................................................12 3.0 Strategic Threat Environment.......................................................................................................14 4.0 Legal and Regulatory framework...............................................................................................16 5.0 Emerging Digital Trends Facilitating Smuggling and Illicit Trade in Nigeria ...................18 6.0 Most Abused Routes and Major Commodity Groups Identified........................................20 6.1 Most Abused Borders and Smuggling Routes in Nigeria .................................................20 6.2 Major Commodity Groups Identified ....................................................................................23 SMUGGLING BY SEA ...................................................................................................................................23 SMUGGLING BY AIR ...................................................................................................................................23 SMUGGLING BY LAND.................................................................................................................................24 7.0 Identified Typologies ......................................................................................................................25 Typology 1: Cash Smuggling..........................................................................................................25 Typology 2: Smuggling of goods for terrorist financing activities ........................................28 Typology 3: Smuggling of Unwholesome Pharmaceuticals ..................................................33 Typology 4: Smuggling of Illegal Wildlife Products...................................................................34 Typology 5: Smuggling of Refined Petroleum Products- Premium Motor Spirit (PMS) and Automotive Gas Oil (AGO).............................................................................................................35 Typology 6: Smuggling of Goods ..................................................................................................36 8.0 Cross-Cutting Indicators and Red Flags ...................................................................................40 9.0 Key Findings......................................................................................................................................42 10.0 Key Implementation Challenges .............................................................................................44 11.0 Strategic Implications of Findings ............................................................................................45 12.0 Strategic Recommendations for Implementations .............................................................47

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 3 | P a g e REFERENCES .............................................................................................................................................49

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 4 | P a g e A publication of the Nigerian Financial Intelligence Unit The Nigerian Financial Intelligence Unit (NFIU) is the central national agency responsible for the receipt of disclosures from reporting organizations, the analysis of these disclosures and the production of intelligence for dissemination to competent authorities. The NFIU is an autonomous unit, domiciled within the Central Bank of Nigeria and the central coordinating body for the country’s Anti-Money Laundering, Counter-Terrorist Financing and Counter-Proliferation Financing (AML/CFT/CPF) framework. No reproduction or translation of this publication may be made without prior written permission. Applications for such permissions, for all or part of this publication, should be made to The Director/Chief Executive Officer, Nigerian Financial Intelligence Unit 12, Ibrahim Taiwo Street, Aso Villa Abuja, Nigeria 1, Monrovia Street, Block 3, Wuse II, Abuja, Nigeria (e-mail: info@nfiu.gov.ng) © 2026 NFIU. All rights reserved

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 5 | P a g e Foreword This report is produced by the Nigerian Financial Intelligence Unit (NFIU) as part of its strategic objectives to identify, analyse, and disrupt channels of illicit financial flows related to Money Laundering and Terrorist Financing. In view of Nigeria’s ongoing efforts to combat terrorism and associated cross border crimes, this typology study seeks to inform national stakeholders, financial institutions, law enforcement agencies, and policymakers on how smuggling is used as a vehicle for financing terrorism and laundering the proceeds of crime. By examining current patterns and methods, the report aims to enhance understanding and bolster our collective response to these threats. Smuggling has long posed a significant challenge to Nigeria’s security and economy. It not only undermines legitimate commerce and government revenue, but also fuels organized crime and insurgency. Terrorist organizations and criminal networks have increasingly turned to the illicit trade in goods from fuel and precious metals to everyday commodities as a means of generating funds and moving value covertly. As the nation’s central agency for financial intelligence, the NFIU is committed to shedding light on these mechanisms. This study brings together intelligence from domestic agencies and international partners to detail how smuggling interlinks with money laundering (ML) and terrorist financing (TF) in our region. It is hoped that the insights from this report will assist all relevant stakeholders – including the NFIU’s stakeholder agencies and other law enforcement and regulatory bodies – in sharpening detection and enforcement efforts. The findings and recommendations herein also align with regional and global AML/CFT priorities, and will be shared with international partners (including the Financial Action Task Force and the Inter￾Governmental Action Group Against Money Laundering in West Africa) to contribute to broader efforts against illicit financial flows.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 6 | P a g e Acknowledgements The Nigerian Financial Intelligence Unit (NFIU) wishes to acknowledge the valuable contributions and support of various organizations and individuals in the production of this typology study. We extend our sincere appreciation to our stakeholder agencies – the Economic and Financial Crimes Commission (EFCC), Department of State Services (DSS), Nigeria Customs Service (NCS), Nigeria Police Force (NPF), National Agency for Food and Drug Administration and Control( NAFDAC), Nigeria Revenue Service (NRS), Standards Organization of Nigeria (SON), and Nigeria Immigration Service (NIS)– for providing data, case examples, and expert insights that informed the analysis. In particular, the responses and intelligence shared by these agencies were instrumental in identifying the patterns and red flags described in this report. We also thank our international partners and networks for their support. Existing research, technical reports and additional resources made available through the Financial Action Task Force (FATF) and the Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA) greatly enhanced the regional perspective of this study. Their work on related typologies and risk assessments helped shape our understanding of cross border smuggling risks in the West African context. Appreciation is further extended to the Egmont Group and partner Financial Intelligence Units in neighbouring countries for information exchange and collaboration on specific cases. Finally, we acknowledge the dedication of the staff of the NFIU who conducted the research, analysis, and compilation of this report. Their commitment to Nigeria’s AML/CFT efforts and attention to detail have produced a comprehensive resource that will aid policymakers and practitioners alike in combating smuggling related ML/TF. It is our collective hope that the knowledge shared here will strengthen inter agency cooperation and drive forward effective counter measures against illicit finance.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 7 | P a g e List of Acronyms AML/CFT- Anti-Money Laundering/Countering the Financing of Terrorism CBN – Central Bank of Nigeria CTR – Currency Transaction Report DSS – Department of State Services EFCC – Economic and Financial Crimes Commission FATF – Financial Action Task Force NRS – Nigeria Revenue Service GIABA – Inter-Governmental Action Group Against Money Laundering in West Africa ISWAP – Islamic State West Africa Province KYC – Know Your Customer (Customer Due Diligence) ML/TF – Money Laundering/Terrorist Financing NCS – Nigeria Customs Service NDLEA – National Drug Law Enforcement Agency NPF – Nigeria Police Force NFIU – Nigeria Financial Intelligence Unit NGO – Non-Governmental Organization POS – Point-of-Sale (used for merchant/mobile money terminals) SON – Standard Organisation of Nigeria STR – Suspicious Transaction Report TBML – Trade-Based Money Laundering UNODC – United Nations Office on Drugs and Crime UNTOC – United Nations Convention Against Transnational Organized Crime WCO – World Customs Organisation

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 8 | P a g e Executive Summary Overview: This typology report presents the findings of the working group on smuggling to facilitate Money Laundering (ML) and Terrorist Financing (TF) in Nigeria. Drawing on analyses of Suspicious Transaction Reports (STRs), currency transaction data, law enforcement intelligence, and inter agency collaboration, the study identifies several operational typologies linking cross border smuggling to the generation and laundering of illicit funds. It highlights key smuggling corridors and commodities, prevalent laundering methods, and red flag indicators relevant to reporting entities and government agencies. Major typologies are outlined, each illustrating distinct methods, actor profiles, and laundering techniques. The report also provides strategic recommendations to enhance border controls, strengthen financial monitoring, and improve institutional coordination in order to mitigate the identified risks. Key Findings: Smuggling in Nigeria serves a dual purpose as a source of illicit profit and as a laundering mechanism. The North East and North West regions emerge as particularly vulnerable due to their proximity to conflict zones, porous borders, and limited state presence. Goods commonly smuggled include petroleum products (e.g. PMS) and precious metals such as gold, agricultural products, textiles, pharmaceuticals, vehicles, and even arms. Terrorist groups such as Boko Haram and ISWAP exploit informal trade routes to move these goods, using the proceeds to fund their activities. Criminal syndicates likewise engage in smuggling to generate cash, which is then introduced into the financial system through Trade-Based Money Laundering (TBML), cash couriers, front companies, and other methods. Red flag indicators observed in multiple cases include unusual cash deposits in border areas, discrepancies between trade documentation and actual goods, frequent use of cash or unofficial payment channels, and sudden changes in customer financial behaviour linked to travel or activity in high-risk areas. Nigerian authorities have documented instances of Non-Governmental Organisations (NGOs) being misused as fronts for smuggling operations, and the emerging use of cryptocurrencies and other digital assets to transfer illicit funds anonymously. Methodology: The study was conducted under the NFIU’s strategic analysis mandate as provided by Nigeria’s AML/CFT legal framework. A multi-source intelligence approach was adopted. Data sources included financial intelligence (analysed Suspicious Transaction Reports (STRs) and Currency Transaction Reports (CTRs) reported to the NFIU), case files and intelligence reports from stakeholder agencies EFCC, DSS, NCS, NPF, NIS, NRS, questionnaires and feedback from these agencies, and open-source information (media reports, academic studies, etc.) Analytical techniques ranged from pattern and trend analysis, network link analysis of suspects and entities, to financial analysis. For example, the NFIU analyzed financial transaction patterns to detect anomalies indicative of trade-based laundering. Inter-agency consultations were integral to this methodology where the NFIU convened discussions with stakeholder agencies and coordinated intelligence sharing to validate findings. This collaborative approach ensured that the

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 9 | P a g e identified typologies reflect a holistic view of the threat environment, integrating financial data with law enforcement and border control perspectives. Strategic Implications: The findings emphasize the need for a more integrated national response to smuggling-related ML/TF. Nigeria’s AML/CFT framework includes robust laws such as the Money Laundering (Prevention and Prohibition) Act, 2022, and the Terrorism (Prevention and Prohibition) Act, 2022 – and multiple institutions with defined roles. Previous engagements with other institutions along with ongoing interagency collaborations at policy and operational levels largely contributed to Nigeria's re-rating from Partially Compliant (PC) to largely compliant (LC), further emphasizing the need to sustain and enhance this existing cooperation for improved outcomes. Controls at the borders must be enhanced, taking into account both security and financial intelligence indicators. The report’s recommendations call for practical steps like joint intelligence task forces, capacity building for financial institutions in detecting trade anomalies, deployment of technology (e.g., real-time cargo tracking and data analytics), and stricter enforcement of regulations (for example, on NGO transparency and cross-border cash declarations). At the regional level, because smuggling is a transnational issue, Nigeria should continue working with ECOWAS partners and GIABA to implement coordinated cross border measures and information sharing. The ultimate goal is to constrict the channels through which illicit funds flow and ensure that those engaging in or benefiting from smuggling are identified, their assets confiscated, and their networks dismantled. Figure 1: Map of Nigeria and neighboring countries highlighting major smuggling corridors

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 10 | P a g e 1.0 Background Nigeria’s security and economic environment continue to be shaped by the activities of organized criminal groups, terrorist networks, and cross-border smuggling syndicates operating across the Sahel, Lake Chad Basin, and Gulf of Guinea corridors. These networks exploit porous borders, informal trading routes, gaps in regulatory oversight, and complex regional supply chains to facilitate a wide range of illicit activities ranging from cash and gold smuggling to the trafficking of arms, petroleum products, pharmaceuticals, wildlife, and other contraband. Intelligence-led operations conducted by the NFIU, law enforcement agencies, border authorities, and partner institutions have revealed increasingly sophisticated methods used to conceal the movement of proceeds of crime and operational funds. Across multiple joint investigations, surveillance activities, and inter-agency intelligence exchanges, clear typologies have emerged demonstrating how criminal and terrorist groups leverage both formal and informal channels to sustain their activities. The audience for this report includes domestic and international stakeholders including law enforcement agencies, border authorities, supervisory & regulatory bodies, reporting entities, international partners and other FIUs. The insights provided are intended to guide risk-based approaches in monitoring and compliance, inform policy and legislative enhancements, and strengthen collaboration both within Nigeria and with external counterparts. The typologies and case studies presented in this report aim to support early detection, improve intelligence integration, and enhance Nigeria’s collective capacity to disrupt criminal and terrorist financing networks operating within and across its borders. 1.1 Scope, Methodology and Limitations Scope The scope of the report covers a range of goods frequently smuggled in and out of Nigeria including counterfeit goods/merchandise – such as petroleum products, minerals (gold, lithium, tin etc.), pharmaceuticals, cash, agricultural commodities, consumer goods, and arms – and examines both domestic smuggling (e.g., evading import/export duties or bans) and cross border smuggling (illicit trade with neighboring countries and beyond). While the focus is on Nigeria, many of the typologies have a cross-border element, implicating regional trade and illicit flows within the Economic Community of West African States (ECOWAS) zone. Methodology This study was undertaken by the NFIU using a multi-source intelligence and analysis approach. NFIU leveraged its access to financial transaction reports as well as intelligence obtained through inter agency collaboration to build a comprehensive picture of smuggling related to ML/TF. The key sources of information and the analytical steps are outlined below: FINANCIAL INTELLIGENCE REPORTS: The NFIU analyzed Suspicious Transaction Reports (STRs) and Currency Transaction Reports (CTRs) filed by financial institutions and designated non-financial businesses/professions. Particular attention was paid to STRs that

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 11 | P a g e referenced keywords or patterns related to smuggling (e.g., repeated cash deposits in border towns, transactions involving import/export companies with anomalies). CTRs (large cash transaction reports) were also analyzed for patterns such as frequent below threshold deposits in regions known for cross border trade. CASE INTELLIGENCE FROM STAKEHOLDER AGENCIES: The NFIU worked closely with law enforcement and regulatory agencies. Questionnaires were distributed to relevant agencies – including the EFCC, NCS, DSS, NAFDAC, NRS, NPF, SON, and NIS – to gather their insights on smuggling trends, cases, and red flags. However, responses were not received from two key agencies: NAFDAC and SON. To ensure data integrity, follow up consultations and interviews were conducted to provide scope for a more comprehensive understanding of the initial information received. For example, the DSS provided detailed write ups on observed methods terrorists use to finance operations via smuggled goods, while the Customs Service shared data on common contraband routes and commodities. The EFCC and NRS provided case studies of investigations where smuggling and financial crimes intersected. These agencies’ inputs were crucial in identifying typologies and cross validating findings across different institutional perspectives. OPEN-SOURCE RESEARCH: Analysts reviewed open-source material including news reports, academic research, and international typology studies to place Nigeria’s experience in a broader context. Reports from the FATF and GIABA were consulted to understand known typologies globally and regionally. For instance, GIABA’s 2020 study on ML/TF through goods smuggling in West Africa provided context on how Nigeria’s situation compares with its neighbors. This helped in identifying any unique Nigerian typologies versus those common across West Africa. The NFIU also looked at United Nations Office on Drugs and Crime (UNODC) publications on illicit trafficking and World Customs Organization (WCO) alerts for reference. GEOSPATIAL ANALYSIS: Using available data on transaction locations and border incident reports to visualize hotspots of smuggling related financial activity. This highlighted corridors such as the northwestern borders for instance as high risk for cash courier activity. VALIDATION AND SYNTHESIS: Throughout the study, interim findings were circulated among the participating agencies for validation. The NFIU facilitated a series of inter-agency meetings and workshops where its analysts and participants from stakeholder agencies reviewed the emerging typologies and case studies. This collaborative vetting process ensured that the conclusions drawn are credible and reflect on the ground realities. This methodology allowed for a holistic identification of typologies through the combination of qualitative intelligence from agencies with quantitative analysis of financial and trade data. It is important to note that while numerous individual cases were examined, this report focuses on broader patterns (typologies) rather than specific investigations. However, representative case examples are provided to illustrate how the

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 12 | P a g e typologies manifest in practice. There is a section that detailed the typologies identified and the cross-cutting indicators that emerged from this methodology. Limitations The major limitation of this study is in collecting and accessing the relevant data. Due to varying privacy laws across different jurisdictions, there is a limit to cross-border data sharing which hinders broader analysis of trends and patterns across smuggling routes. Data collection in remote areas is difficult due to operational and environmental factors such as security and political stability. Additionally, the process of data collection and analysis differs across smuggling routes (e.g. land vs. maritime vs. air), as such, cross￾comparison remains challenging. 2.0 Literature Review Smuggling is defined by UNODC as “the clandestine importation or exportation of goods in violation of customs laws and regulations, often for the purpose of evading duties or restrictions’’1 . It is a significant predicate offence in Nigeria that not only generates illicit proceeds but also provides a conduit for obscuring the origins of criminal funds. Nigeria functions as transit and destination hub within the West Africa region and beyond for a range of smuggled goods and products including but not limited to illicit arms and counterfeit goods amid rising insecurity and the prevailing economic conditions2 . Furthermore, smuggling thrives through a multitude of factors involving foreign importers and domestic distributors with easy border crossings driven by weak regulations. Major smuggling routes through Nigeria include corridors from Libya, Mali, Niger and Cameroon, as well as maritime routes through the ports at Lagos and Onne. As such, the scale and porosity of Nigeria’s borders remain a problem in the efforts to curb smuggling and prevent the enabling of other smuggling-adjacent predicate offences often employed by organized crime groups. This report provides a comprehensive analysis of how various smuggling activities are exploited to finance terrorism and launder money, drawing connections between seemingly disparate illegal trade operations and the formal financial system. The primary objective is to detail the typologies (patterns) by which smugglers and their accomplices integrate funds from illicit trade into the economy or utilize them to fund terrorist activities. By doing so, the study aims to improve detection by reporting entities and enforcement by competent authorities Recent assessments emphasize that smuggling in West Africa has become both more organized and more tightly integrated with transnational money-laundering and terrorist￾financing networks. Regional typologies and national follow-ups from 2024–2025 highlight an increasing reliance on commodity arbitrage (for example subsidized fuel and agricultural goods), falsified trade documentation, and the exploitation of informal cross￾border trade routes that skirt formal controls. These dynamics have been documented in 1 United Nations Office on Drugs and Crime (UNODC). World Customs Organization (WCO) and UNODC Container Control Programme – Glossary of Terms Related to Illicit Trade, 2020 2 Africa Organized Crime Index 2025, Nigeria, africa.ocindex.net/country/nigeria

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 13 | P a g e FATF/GIABA regional work and in updated case compilations that underscore the linkage between smuggling proceeds and asymmetric security threats across borderlands.3 Intelligence-led customs interventions and financial investigations reported in 2023–2024 illustrate how maritime and land ports continue to be principal entry points for high-value contraband (arms, pharmaceuticals, wildlife) concealed within legitimate cargoes; contemporary illicit-trade reporting stresses the persistence of concealment techniques (mixed cargo, false bills of lading, trans-shipment) that complicate interdiction and follow-the-money efforts. The World Customs Organization’s (WCO) Illicit Trade Report and recent UNODC threat assessments for the Sahel both document these concealment and routing methods, and they stress that interdiction without coordinated financial follow-up misses the laundering layer that absorbs illicit proceeds.4 Smuggling, as an illegal method of conducting business, is often accompanied other sanctionable crimes that may restrict the overall process such as under declaration of goods, misinvoicing, misclassification, concealment etc. The FATF (2023) “Report on Money Laundering from Environmental Crimes” and the GIABA (2022) “Typologies on Trade Based Money Laundering and Terrorist Financing in West Africa” highlight how over invoicing has become an effective tool for capital flight and laundering proceeds of corruption and organized crime in the subregion.5 Conversely, under invoicing is frequently employed to evade customs duties and taxes, or to generate unrecorded profits in local currency. The World Bank and UNCTAD (2021) have documented persistent invoice mispricing in Nigerian trade, estimating billions of dollars lost annually through mis invoicing of goods like petroleum, machinery, and agricultural exports6 . Such discrepancies, in addition to the overarching issue of smuggling, are often facilitated by the weak enforcement of valuation controls, limited data sharing between Customs and Financial Intelligence Units, and collusion among trade intermediaries. Scholarly and policy work on fuel and commodity smuggling has demonstrated clear economic incentives that sustain large-scale diversion. Econometric and policy analyses argue that fuel subsidy regimes and price differentials create repeatable arbitrage opportunities exploited by organized networks, with empirical work from the World Bank and corroborating journalistic accounts showing the social and fiscal consequences of these flows. These studies also emphasize that subsidy reform, while politically fraught, is part of a broader mitigation toolkit because it reduces the pure economic rent that underpins many smuggling chains.7 3GIABA, https://www.giaba.org/typologies/index.html? 4 World Customs Organization (WCO), Illicit Trade Report 2023, wcoomd.org/- /media/wco/public/global/pdf/topics/enforcement-and-compliance/activities-and-programmes/illicit-trade￾report/itr_2023_en.pdf?db=web&utm_source=chatgpt.com 5 FATF (2023). Money Laundering from Environmental Crimes. Paris: FATF, GIABA (2022). Typologies on Trade￾Based Money Laundering and Terrorist Financing in West Africa. Dakar: GIABA 6 World Bank & UNCTAD (2021). Trade Mis-Invoicing in Developing Countries: Scale, Causes, and Policy Responses. Washington, DC: World Bank. 7 Rentschler, Jun & Hosoe, Nobuhiro, Illicit Schemes: Fossil Fuel Subsidy Reforms and the Role of Tax Evasion and Smuggling, Policy Research Working Paper (2022)

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 14 | P a g e Regional analyses by research institutes and think-tanks places smuggling within a wider organized-crime and state-vulnerability framework. Global Initiative and other regionally focused reports (2023 onward) map the adaptive strategies of criminal networks how they diversify income streams through (fuel, gold, timber, wildlife, drugs etc.), co-opt local elites, and exploit corruption in customs and border agencies. These reports underline that any effective AML/CFT response must combine customs modernization, FIU-led financial investigation, and targeted anti-corruption measures at key transit nodes.8 Finally, regional bodies and FIU networks (GIABA, Egmont) have documented that informal value transfer systems, misuse of non-profit logistics, and bulk cash couriering remain persistent enablers of cross-border laundering. Their typology outputs and mutual evaluation follow-ups recommend practical changes: closer integration of FIU and customs, mandatory beneficial-ownership transparency for commodity traders, risk￾based supervision of gold dealers and bureau de changes, and expanded use of trade￾finance analytics in STR filings. These operational recommendations form the backbone of current capacity-building agendas across West Africa.9 3.0 Strategic Threat Environment Nigeria faces a complex and evolving threat landscape where terrorism, organized crime, and economic incentives intersect. In this environment, smuggling plays a dual role: it provides operational funding for terrorist groups and insurgents, and it serves as a laundering mechanism for criminals seeking to legitimize illicit profits. The country’s geographic and economic context contributes to the challenge. Porous borders, particularly in the North East and North West regions, enable relatively easy movement of goods and cash to and from neighboring countries. These regions are adjacent to areas of conflict and insurgency, which further exacerbates the risk, as law enforcement presence is limited in some border communities, creating safe havens for illicit trade. Several key smuggling corridors have been identified, often aligning with major highways or remote transit routes leading into Cameroon, Niger, Chad, and Benin. For example, petrol (premium motor spirit), which until May 2023 was subject to a state subsidy in Nigeria, has historically been smuggled out to neighboring countries where retail prices and arbitrage margins differ. Although the subsidy has now been removed and a new regime introduced, the legacy of fuel-route smuggling and arbitrage remains relevant for illicit flows. Conversely, goods that are scarce or more expensive in Nigeria (such as certain food staples or textiles) are smuggled into the country evade import duties or bans. Smuggling is also facilitated by the region’s extensive informal trading networks. Small scale cross-border traders routinely move goods in violation of customs rules, sometimes unknowingly overlapping with larger criminal schemes. https://documents1.worldbank.org/curated/en/631951642691400564/pdf/Illicit-Schemes-Fossil-Fuel-Subsidy￾Reforms-and-the-Role-of-Tax-Evasion-and-Smuggling.pdf? 82023 West Africa Organised Crime Resilience Framework, https://globalinitiative.net/wp￾content/uploads/2023/11/2023-11-28-ocwar-t-resillience-foundational-report.pdf? 9GIABA, https://www.giaba.org/typologies/index.html?

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 15 | P a g e According to United Nations Industrial Development Organization (UNIDO) Report on Counterfeiting and Smuggling of Manufactured Products in Nigeria (2010), the dual crime of counterfeiting and smuggling remains of growing concern with the rise of globalized trade. Given that counterfeit products are often smuggled in order to avoid inspections as well as evade import taxes, the report also highlights that such mutually reinforcing illegal activities invites and impacts the participation of organized crime groups10 . Despite several largescale seizures factory closures in Nigeria, counterfeit goods continue to be smuggled and proliferated by criminal networks through informal borders and trade routes, because Nigeria is not only a production hotspot but also a transit hub for counterfeit good primarily imported from Asia among other regions. Terrorist organizations, notably Boko Haram and the Islamic State West Africa Province (ISWAP), have capitalized on these conditions. They leverage informal trade routes and sympathetic or coerced local networks to traffic commodities such as fuel, gold, livestock, foodstuffs, and arms. These items can be obtained cheaply (or illicitly) in one area and sold for profit in another, generating cash that is then used to purchase weapons or sustain terrorist operations. For instance, illicitly mined gold from conflict￾affected parts of northern Nigeria is smuggled through Niger or Cameroon and sold in international markets, with proceeds potentially funding extremist groups. Recent reports from the Nigeria Customs Service show that fuel smuggling remains highly profitable: although fuel subsidies have been abolished, the lower pump price in Nigeria still drives illicit exports of Premium Motor Spirit to neighboring countries such as Benin Republic, where the same fuel sells for up to ₦1,600–2,000 per litre11 . Smuggling networks often have transnational reach and can be highly organized. These networks typically involve multiple actors: local suppliers and facilitators; transporters (using trucks, boats, or even footpaths); brokers who arrange deals and payments; and corrupt officials who provide protection or advance warning. The infiltration of corruption is a notable feature of the threat environment – bribes and pay-offs are used to evade checkpoints or inspections, weakening the enforcement regime. In some cases, insurgent groups themselves impose “taxation” on smuggled goods passing through areas they control, thereby directly benefiting from illicit trade without running the logistics. Economically, smuggling undercuts legitimate businesses and deprives the government of revenue (customs duties, taxes) which could otherwise fund public services. It also poses security risks: for example, the smuggling of small arms and light weapons (SALWs) into Nigeria has fueled communal violence and armed robbery, in addition to terrorism. Smuggled goods can include dual-use items (like fertilizers or chemicals) that might be repurposed for making explosives. The convergence of these threats means that smuggling is not merely a financial or economic issue, but a national security concern. 10 Aregbeyen, Omo, Ph.D, “Report of the Study on Counterfeiting and Smuggling of Manufactured Products in Nigeria, United Nations Industrial Development Organization (UNIDO), November 2010, https://www.unido.org/publications/ot/9659305/pdf 11 https://africa.businessinsider.com/local/markets/nigerian-authorities-expose-fuel-smuggling￾problem/cl5n26h#google_vignette

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 16 | P a g e Nigeria’s strategic threat environment regarding ML/TF through smuggling is characterized by porous borders, active conflict zones, entrenched informal economies, and adaptive criminal/terrorist networks. The subsequent sections will detail how these conditions manifest in specific typologies of smuggling-related ML/TF. Understanding this context is crucial: any effective countermeasure must simultaneously address financial flows and border security. Enhanced cross-border cooperation within ECOWAS (e.g., joint border patrols, intelligence sharing through GIABA and other forums) is also imperative, since smuggling is a regional problem as much as a national one and requires coordinated action beyond Nigeria’s borders. 4.0 Legal and Regulatory framework This typology study has been conducted under the strategic analysis mandate of the NFIU, in line with Nigeria’s AML/CFT legal framework. It builds upon provisions of key legislation including the Money Laundering (Prevention and Prohibition) Act, 2022 and the Terrorism (Prevention and Prohibition) Act, 2022, which criminalize these activities and empower agencies to combat them. Nigeria’s response to smuggling-related financial crimes is anchored in a broad and interconnected legal framework that links tax enforcement, customs controls, AML/CFT obligations, and national-security legislation. This framework empowers agencies such as the NFIU, EFCC, NCS, DSS, NAFDAC, NRS, SON, NPF, and NIS to conduct joint investigations, share intelligence, and pursue criminal proceeds arising from illicit cross￾border trade. At the fiscal and revenue level, the Nigeria Revenue Service (NRS) Establishment Act, 2025 gives NRS the mandate to assess, collect, and account for federal taxes while enabling collaboration with NCS, EFCC, and the NFIU in tackling tax evasion linked to smuggling. Complementary legislation such as the Value Added Tax Act 2004 (VATA) and the Finance Acts (2019–2023) strengthen transparency in import/export processes, expand VAT and excise coverage, and formalize digital information exchange between tax and customs authorities, which is an essential component for detecting under￾invoicing, false declarations, illicit value transfers and other techniques utilized in smuggling. Cross-border trade and border enforcement is governed primarily by the Nigeria Customs Service Act (2023) which criminalizes smuggling, concealment, mis-declaration, and under-invoicing. The NCS Act grants the Nigeria Customs Service powers of seizure, arrest, and prosecution, and provides the legal foundation for joint tax-customs audits, import VAT verification, and supply-chain tracing. These provisions are reinforced by sectoral laws, such as the NDLEA Act, the SON Act, and NAFDAC regulations, which criminalize and regulate the importation of pharmaceuticals, chemicals, counterfeit goods, and substandard products. The financial crime dimension is covered under the Money Laundering (Prevention and Prohibition) Act, 2022, the Terrorism Prevention and Prohibition Act, 2022, the EFCC Act, 2004, and the Proceeds of Crime (Recovery and Management) Act, 2022. These statutes

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 17 | P a g e enable agencies to pursue the proceeds of smuggling as predicate offences, investigate associated tax fraud, trace illicit financial flows (IFFs), and recover assets derived from cross-border criminal activity. The framework enables the NFIU to share actionable intelligence with NRS, NCS, EFCC, DSS, and NPF when indicators of trade-based money laundering (TBML), bulk cash smuggling, or terrorism financing are detected. For national￾security-related smuggling, DSS operates under the Criminal Code, Penal Code, TPA 2022, and CEMA amendments, giving it the authority to interdict networks that overlap with organized crime and terrorism. As smuggling is a cross-border crime, the Extradition Act 2004 and Mutual Legal Assistance Treaty enable the Attorney General of the Federation to request for the surrender of fugitives from countries with which Nigeria has a treaty, and allows relevant agencies to make request for information, such as bank records, to substantiate a smuggling case. Nigeria’s regulatory system is further supported by policy instruments such as the National Tax Policy (2017), which promotes stronger tax compliance, data harmonization, and inter-agency coordination between NRS, NCS, NFIU, and law-enforcement agencies. These directives encourage a unified approach to addressing tax evasion, illicit trade, and smuggling-driven revenue leakages. To monitor the process of information sharing and harmonization between the agencies the National Tax Policy Implementation Committee (NTPIC) was established. Internationally, Nigeria’s engagement is shaped by obligations under the World Customs Organization (WCO) Revised Kyoto Convention, the WTO Trade Facilitation Agreement (TFA), the ECOWAS Protocol on Free Movement of Goods and Persons, and the African Continental Free Trade Area (AfCFTA). These instruments promote harmonized customs procedures, joint border management, and transparent rules of origin—while simultaneously requiring mechanisms to deter illicit trade. At the global AML/CFT level, Nigeria continues to align with FATF Standards, particularly in addressing trade-based money laundering and cross-border currency movements. Nigeria is also a State Party to the UN Convention against Transnational Organized Crime (UNTOC), which provides the legal basis for mutual legal assistance (MLA), joint operations, and cross-border information sharing against organized smuggling networks. Additional cooperation is guided by the UNODC frameworks on combating transnational crime, which support intelligence exchange, asset recovery collaboration, and cross￾border prosecution. Collectively, these domestic and international instruments constitute an integrated legal foundation that enables Nigerian agencies to address smuggling not only as a customs violation but also as a tax offence, an ML/TF risk, an organized crime activity, and a national security threat.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 18 | P a g e 5.0 Emerging Digital Trends Facilitating Smuggling and Illicit Trade in Nigeria Nigeria’s rapidly expanding digital economy has created new channels for smugglers to transfer value, evade detection, and bypass the traditional controls inherent within the financial management systems. As these digital tools evolve with the potential to be further exploited within criminal networks, there remains the growing concern on their role within the AML/CFT framework. The impact of these recurring digital trends has the potential to transcend smuggling and involve other predicate offences either through the level of sophistication, the overarching scope or the capabilities and prevalence of the digital trends. This is including but not limited to evading detection by law enforcement authorities and operating outside the jurisdiction of conventionally regulated financial institutions. Intelligence from law enforcement, financial institutions, and virtual asset service providers indicates that illicit actors are increasingly relying on digital tools that enable anonymity, cross-border mobility, and detachment from the formal economy. Five major digital trends currently shaping the evolving ecosystem of smuggling and illicit trade as observed from various case studies include cryptocurrencies, virtual wallets, digital market places, blockchain technology and unregulated foreign-based fintech platforms. The first trend is the growing use of cryptocurrencies particularly Bitcoin, Ethereum, and dollar-denominated stablecoins such as USDT—to facilitate cross-border payments and tax evasion. In 2025, it was reported by the Securities and Exchange Commission that Nigeria recorded over $50 billion worth of cryptocurrency between July 2023 and June 2024, and a significant share of this volume is linked to informal commerce and smuggling networks. Criminal actors use virtual assets to pay foreign suppliers for restricted or high￾risk goods without passing through banks, foreign-exchange markets, or Form M clearance processes. As these transactions occur outside regulated channels, authorities cannot assess the value of imported goods or the associated VAT and customs duties. This enables complete evasion of tax obligations and creates a parallel financial ecosystem that is invisible to regulators. Secondly, there is also the reliance on virtual wallets and peer-to-peer trading networks to transfer value discreetly within and outside Nigeria. P2P platforms such as Binance and Paxful, along with non-custodial crypto wallets, allow smugglers to exchange digital assets for cash without interacting with Nigerian banks or triggering AML/CFT controls. These environments offer minimal transparency around beneficial ownership, and the lack of institutional intermediaries means financial flows can occur entirely outside the reporting perimeter of the NFIU and tax authorities. Another trend is the growth of social-media-driven commerce and digital marketplaces. Smuggled or untaxed goods are increasingly sold through Instagram, WhatsApp, Facebook Marketplace, Telegram channels, and local fintech wallets such as Opay, PalmPay and Kuda. Many of these platforms operate with inconsistent KYC standards and limited oversight of merchant activities. As a result, payments for illicit goods can be made digitally without generating VAT, income tax records, or any financial footprint

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 19 | P a g e linking the transactions to the formal economy. This creates a a rapidly expanding grey market in which contraband goods circulate freely, and enforcement visibility is minimal. Additionally, there is the use of blockchain-based mechanisms to obscure supply-chain information. Some illicit networks rely on smart contracts and privacy-enhanced blockchain tools to mask the origins, routing, and ownership of goods. Privacy coins like Monero and Zcash make tracing value transfers extremely difficult, while smart-contract￾based settlements can support mis-declared or under-invoiced imports at ports of entry. This method allows smugglers to disguise the true value of transactions and to synchronize illicit payments with fraudulent customs declarations, ultimately facilitating sophisticated tax evasion schemes. The final emerging trend is the increasing dependence on unregulated or lightly regulated cross-border fintech and e-commerce applications. These foreign-based digital payment platforms operate largely outside the Nigerian regulatory environment, allowing smugglers to settle international transactions without generating any data accessible to Customs, NRS, or the NFIU. When combined with unregistered courier services and informal logistics networks, these payment channels support the seamless movement of illicit goods while shielding the corresponding financial flows from tax authorities and AML supervision.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 20 | P a g e 6.0 Most Abused Routes and Major Commodity Groups Identified 6.1 Most Abused Borders and Smuggling Routes in Nigeria Analysis of reported incidents, inter-agency intelligence, and border monitoring data show that smuggling activities are heavily concentrated along Nigeria’s land, sea, and air borders. These corridors overlap with areas of high commercial activity, porous boundary lines, and limited surveillance infrastructure. The most vulnerable states based on the frequency of seizures, arrests, and operational intelligence include Lagos, Ogun, Kebbi, Sokoto, Katsina, Adamawa, Taraba, Borno, Yobe, Rivers, Akwa Ibom, and Cross River. These states account for the highest volumes of both inbound and outbound smuggling, driven by weak enforcement capacity, extensive informal trade networks, and the influence of transnational criminal syndicates. ❖ Land borders such as Seme (Lagos), Idiroko (Ogun), Illela (Sokoto), Jibia and Kongolam (Katsina), Kebbi, Maigatari (Jigawa), and the Adamawa–Taraba–Borno– Yobe corridor remain the largest channels for the inflow of contraband—foreign rice, used vehicles, drugs, textiles, pharmaceuticals, and the outflow of subsidised petroleum products into neighboring countries (Benin, Niger, and Cameroon). These routes are also exploited for arms trafficking, the movement of insurgent logistics, and the concealment of proceeds from organised criminal groups. ❖ Sea routes through Lagos ports (Apapa, Tincan, PTML), Onne Seaport (Rivers), and the coastal creeks of Lagos, Ogun, Rivers, Akwa Ibom, and Cross River facilitate containerised smuggling, illegal oil bunkering, and the clandestine export of wildlife, timber, and minerals. The Calabar Creeks, Bakassi Peninsula, Escravos, Warri, and Bonny waterways remain central to maritime smuggling operations, including the shipment of stolen crude oil and the movement of small arms across the Gulf of Guinea. ❖ Air routes—especially Murtala Muhammed International Airport (Lagos), Aminu Kano International Airport (Kano), and Akanu Ibiam Airport (Enugu)—are exploited for currency smuggling, precious stones, chemicals, and high-value contraband concealed through passenger baggage, courier services, and manipulated cargo declarations.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 21 | P a g e Figure 2:Map of Nigerian showing major smuggling Corridors Table 1:Priority Smuggling Routes in Nigeria Route / Border Point Border Type Primary Smuggled Items Key Drivers Risk Rating Seme – Lagos Land Rice, poultry, textiles, used cars, fuel High traffic volume; corrupt networks; transit fraud Very High Idiroko – Ogun Land Fuel, rice, vehicles Bush paths; community￾level networks; low enforcement presence Very High Illela – Sokoto Land Fuel, food items, arms Diversion schemes; armed escorts; proximity to Niger Very High © Microsoft, OpenStreetMap Powered by Bing Ogun Kebbi Ada… Taraba Borno Yobe R… A… C… Kano E… Nigerian States with Major Smuggling Corridors (Labeled by State Name) 6 10 Smuggling Intensity

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 22 | P a g e Route / Border Point Border Type Primary Smuggled Items Key Drivers Risk Rating Jibia – Katsina Land Arms, fuel, motorcycles, textiles Insurgent exploitation; minimal surveillance Very High Kongolam – Katsina Land Fertilizer, grains, fuel Remote pathways; cross-village networks High Maigatari – Jigawa Land Livestock, textiles, pharmaceuticals Sahel trade flows; weak scanners High Mfum – Cross River Land Timber, cocoa, drugs, contraband Timber trafficking; weak cross￾border control High Gembu – Taraba Land/Mountain Drugs, raw gold, wildlife Difficult terrain; minimal patrols High Banki/Bama – Borno Land Arms, fuel, insurgent logistics Insecurity; ungoverned spaces Critical Calabar Creeks/Bakassi – Cross River Coastal Fuel, rice, seafood Illegal jetties; unregistered boats High Escravos/Warri/Bonny – Delta/Rivers/Bayelsa Coastal Crude oil, chemicals, arms Oil bunkering networks; high criminal sophistication Critical Yauri/Kebbi Inland Axis Inland Cattle, grains, hard currency Trade misinvoicing; false trucking declarations Medium– High

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 23 | P a g e Route / Border Point Border Type Primary Smuggled Items Key Drivers Risk Rating Lagos Ports (Apapa, Tincan, PTML) Sea/Port Containerized contraband, drugs, substandard goods Shipping fraud; corrupt port agents Very High Onne Port – Rivers Sea/Port Chemicals, arms components, foreign goods Under￾declaration; bypass practices High MMIA Lagos / Kano Airport / Enugu Airport Air Cash, precious minerals, antiquities Courier manipulation; passenger concealment High Source: Nigeria Customs Services 6.2 Major Commodity Groups Identified An analysis of smuggling patterns and trade flows across Nigeria’s land, sea, and air borders reveals that the country functions as both a destination and a transit hub, facilitating the inflow of prohibited consumer goods and the outflow of high-value or subsidized commodities. The routes exploited for these movements often align with regions that have weak border surveillance, limited customs capacity, and extensive informal trade activity. SMUGGLING BY SEA Nigeria’s maritime, particularly Lagos Port (Apapa, Tincan, PTML), Onne Seaport (Rivers State), and the coastal creeks of Lagos, Ogun, Rivers, Akwa Ibom, and Cross River States, serve as gateways for large-scale illicit shipments concealed within legitimate cargo. Inbound smuggling by sea primarily involves counterfeit and expired pharmaceuticals, frozen poultry products, narcotic substances, and used clothing (“okrika”), often imported in contravention of national health and trade laws. Outbound smuggling largely consists of unprocessed timber, wildlife products (including ivory and pangolin scales), and illegally refined petroleum products, typically destined for Asian and Middle Eastern markets. SMUGGLING BY AIR Airports—especially Murtala Muhammed International Airport (Lagos), Aminu Kano International Airport (Kano), and Akanu Ibiam International Airport (Enugu) facilitate

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 24 | P a g e smaller but high-value smuggling operations characterized by sophisticated concealment and international coordination. Inbound items include technological devices such as drones, restricted communication equipment, and undeclared foreign currency, while outbound smuggling involves cash and bearer negotiable instruments (BNIs) exceeding declaration thresholds, alongside antiquities, cultural artifacts, and endangered wildlife species illicitly exported to foreign collectors and black markets. SMUGGLING BY LAND Nigeria’s extensive land borders particularly Seme (Lagos), Idiroko (Ogun), Kebbi, Adamawa/Taraba, and Borno/Yobe corridors represent the most frequently exploited routes due to their porosity and proximity to informal trade zones in Benin, Niger, and Cameroon. Inbound flows are dominated by staple foods (rice, spaghetti), narcotics, used vehicles, and vegetable oil, often trafficked to evade import duties or bans. Outbound smuggling is led by subsidized petroleum motor spirit (PMS), moved illegally into neighboring countries where higher fuel prices create lucrative arbitrage opportunities. This activity not only drains Nigeria’s fiscal resources but also strengthens informal cross-border economies that operate outside regulatory oversight.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 25 | P a g e 7.0 Identified Typologies Based on the analysis, seven major typologies were identified that demonstrate how smuggling operations interface with ML/TF mechanisms in Nigeria. Each typology represents a distinct method by which illicit funds are generated or transferred through smuggling activities. The descriptions below outline the nature of each typology, the primary actors involved, and the key indicators that could signal such activity to authorities or reporting entities. Typology 1: Cash Smuggling Cash smuggling remains a major channel for moving illicit proceeds across Nigeria’s borders, particularly through land routes, airports, and unregistered crossings. Individuals and syndicates transport bulk currency to evade reporting requirements, conceal illegal profits, or finance criminal activities. The method exploits weak border controls, poor declaration compliance, and the availability of informal transport networks. It represents a high-risk typology for money laundering, terrorist financing, and tax evasion. Case Study 1: Cash smuggling through concealment in luggage A passenger arriving at Aminu Kano International Airport from Dubai was intercepted with USD 110,000 concealed in his possession. Upon questioning, he claimed he was transporting the cash on behalf of a Dubai-based jewelry dealer for delivery to a contact in Kano. The receiving party, who operates two gold-related businesses, admitted the funds were proceeds from gold exports to the UAE but acknowledged that no royalties were paid, the exports were undeclared, and his companies were not registered with NRS, SCUML, or licensed by the Ministry of Solid Minerals. Further checks with Nigeria Customs Service showed no records of any gold exports or statutory payments linked to the suspect’s companies within the relevant period, suggesting the gold shipments were conducted outside formal regulatory channels. The investigation highlighted how undeclared mineral proceeds are physically repatriated into Nigeria to avoid customs scrutiny, taxes, and AML controls. Key Red Flag Indicators

1. Passenger returning from a high-risk gold hub (Dubai) with large undeclared cash.
2. Physical transportation of foreign currency instead of formal remittance channels.
3. Entities involved in gold trading not registered with NRS.
4. Businesses not confirmed as DNFBPs by SCUML.
5. Entities not licensed by the Ministry of Solid Minerals to trade or export gold.
6. Non-payment of statutory royalties on exported minerals.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 26 | P a g e 7. No customs record of gold exports or statutory payments despite claims of exporting. 8. Absence of business documentation (export declarations, shipping forms) 9. Use of cash to distance transactions from financial-sector monitoring Source: EFCC Case Study 2: Cash smuggling through false declaration and concealment In March 2025, a passenger arriving from Johannesburg, South Africa via Murtala Mohammed International Airport to Lagos initially declared a total of USD 279,000 at the airport currency declaration desk. Additional routine checks and further investigations by the customs revealed an additional USD 299,000 concealed in hair relaxer packs bringing the total amount to USD 578,000. In addition, customs officials at the airport discovered counterfeit notes from within the total sum including one EUR 100 and USD 250 from the undeclared cash. There was no justification offered for the physical transportation of the huge amounts discovered with the passenger. The Nigeria Customs Service, following the completion of their due diligence on the passenger, handed over the case to the Economic and Financial Crimes Commission (EFCC) for further investigation. The subsequent investigation highlighted how undeclared physical currency and falsely declared sums can undermine Nigeria’s efforts towards financial transparency and flout AML controls. Key Red Flag Indicators

1. Passenger returning from a high-risk jurisdiction (at the time) with large undeclared cash.
2. Physical transportation of foreign currency instead of formal remittance channels.
3. False declaration of physical currency at entry port.
4. Counterfeiting of foreign currency
5. Use of cash to distance transactions from financial-sector monitoring Source: EFCC; NCS Case Study 3: Cross-Border Financial Flows and Currency Smuggling This case involves an individual mobile money agent account operating in Ilela Sokoto State, which shares a border with the Republic of Niger—a known corridor for high￾volume cash movement, informal trade, and potential smuggling activity. The account holder operates as a mobile banking agent, a service category designed to improve financial inclusion but also exposed to misuse due to its high cash-handling capacity and minimal documentation requirements. The account is registered to a mobile money agent, typically associated with moderate retail-level cash handling.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 27 | P a g e The high inflows totalling over ₦100 million, and large same-day withdrawals or transfers, do not align with typical agent operations. Given the high-cash withdrawals in a border town and the national concern over currency smuggling into neighbouring countries, the pattern may indicate physical cash smuggling disguised as legitimate agent activity. This case illustrates how financial inclusion products such as agent banking can be misused for illicit financial flows, especially in vulnerable border regions. Key Red Flag Indicators

1. High-risk jurisdiction frequently flagged for cross-border currency trafficking, informal trade and smuggling.
2. Large transactions with inconsistent counterparties that are not payroll or invoice-backed
3. Frequent cash withdrawals in high volumes
4. Inflow transactions in volumes that do not align typically align with mobile money agency operations, raising layering concerns. Source: NFIU Case Study 4: Cash Smuggling through non-declaration and concealment This case involves the attempted smuggling of foreign currency to the tune of USD 1.154 million and SAR 135,900 by a passenger arriving at Malam Aminu Kano International Airport, Kano, North-west Nigeria from Saudi Arabia. The suspect was arrested ffollowing intelligence-led profiling and mandatory screening of inbound baggage. The undeclared currency of various denominations was found to have been concealed in cartons of date palm fruit and secured with cello tape. Preliminary investigations were carried out by the NCS, including the arrest of suspects related to the attempted smuggling, and the case was later transferred to the Economic and Financial Crimes Commission for further investigation for broader ML investigations. This case illustrates how financial inclusion products such as agent banking can be misused for illicit financial flows, especially in vulnerable border regions. It also demonstrates NCS's active surveillance of smuggling activities across air borders through intelligence-based profiling and baggage inspection, as well as the active collaboration between the NCS and the EFCC Key Red Flag Indicators
5. High-risk jurisdiction frequently flagged for cross-border currency trafficking, informal trade and smuggling

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 28 | P a g e 2. Physical transportation of foreign currency instead of formal remittance channels. 3. Noncompliance with declaration of physical currency at entry port. 4. Use of cash to distance transactions from financial-sector monitoring 5. Smuggling of prohibited items and false declaration of imports. Source: NCS Typology 2: Smuggling of goods for terrorist financing activities This typology involves the movement of weapons, weapon components, and dual-use items that can support terrorist or insurgent operations. Criminal and extremist groups exploit porous borders and weak customs inspection to transport goods that can be easily concealed or mis-declared. These items are often purchased using illicit proceeds or foreign support and then smuggled into conflict-affected zones. Motorcycles are frequently smuggled across Nigeria’s borders and diverted into the hands of armed groups, where they serve as mobility assets for attacks, logistics, and surveillance. Smuggler’s mis-declare or conceal shipments and rely on informal routes to avoid detection. The proceeds of these smuggling activities often finance criminal enterprises, while the assets themselves enhance the operational capabilities of terrorist networks. Firearms and ammunition are transported into Nigeria through coastal waters, creeks, and illegal jetties, often concealed within cargo shipments. Maritime smuggling exploits limited surveillance, nighttime navigation, and the vast network of inland waterways. The weapons are sold to criminal groups, oil theft syndicates, and insurgent actors. This typology illustrates how maritime vulnerabilities enable the inflow of arms and the financing of broader organized criminal activities. Criminal actors conceal firearms and ammunition inside modified vehicle compartments, hidden panels, or cargo spaces to evade customs and security checks. These concealed shipments move through established smuggling routes and rely on the complicity of transporters or corrupt checkpoint officers. The weapons ultimately supply insurgents, bandits, or organized crime groups. This typology demonstrates how concealment methods undermine border security and facilitate violent crime. Case Study 5: Smuggling of Arms and Dual-Use Goods for Terrorist Financing Following actionable intelligence, the Nigeria Police Force arrested a businessman alongside several accomplices for their active involvement with terrorist groups led by notorious commanders operating in the North-West and North-Central regions of Nigeria. Investigations revealed that Kamarawa and his associates travelled to Niger Republic and Libya, where they purchased a military-grade Buffalo/Koker gun truck for

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 29 | P a g e ₦28.5 million, which was later smuggled into Nigeria and delivered to a terrorist leader hiding in a forested enclave. Although the arrested subject publicly presented himself as a legitimate businessman engaged in food trading and transportation services, investigative findings established that his enterprise functioned as a cover for providing material and logistical support to armed bandit groups. His activities included supplying food items, medical supplies, and other essential resources critical to sustaining terrorist operations. Forensic analysis of his digital devices uncovered substantial evidence linking him to a mass abduction incident, as well as his direct role in negotiating ransom payments. Further investigations revealed his procurement and distribution of banned and illicit items such as psychotropic substances and narcotics (Penta injections, Tramadol, Diazepam, Codeine, and Cannabis), military and police uniforms, weapons and tactical equipment, and building materials. Kamarawa also maintained connections with a medical doctor who treated injured terrorists across multiple hideouts. While, prosecution of the arrested suspects has commenced, ongoing investigations continue to trace associated actors and financial enablers within the network. Key Red Flag Indicators

1. Individuals or businesses engaged in legitimate trade (e.g., food transport) but maintaining links with terrorist or armed groups.
2. Frequent travel between Nigeria and conflict-affected regions (Niger, Libya) under the guise of trade or logistics.
3. Payments or purchases inconsistent with declared income sources, such as acquisition of high-value tactical vehicles.
4. Use of commercial enterprises to mask the movement of restricted goods such as uniforms, medical supplies, and narcotics.
5. Involvement of medical professionals or service providers in supporting or facilitating operations of non-state armed actors. Source: NPF Case Study 6: Smuggling of Motorcycles from Benin Republic for Terrorist Operations On 18th September 2025, a joint patrol team comprising police officers and vigilante members, led by the Divisional Police Officer of Kamba, Kebbi State, acting on credible intelligence, arrested four suspects who are all residents of Kamba town, Dandi Local Government Area. The suspects were found in possession of three Honda motorcycles, locally referred to as “Boko Haram” bikes, which were purchased and smuggled from Benin Republic at a total cost of ₦5,400,000. During interrogation, investigations revealed that the motorcycles were intended for delivery to the Lakurawa terrorist group through an intermediary, identified as Alhaji, a

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 30 | P a g e resident of Kangiwa town in Arewa LGA, who remains at large. While the investigation was ongoing, another individual, Mubarak Ladan (28 years) of Kamba town, attempted to bribe investigators with ₦600,000 to obstruct justice and secure the release of the suspects. The bribe money was recovered as evidence, and Mubarak Ladan was arrested. The case remains under investigation. This case underscores how cross-border smuggling operations are often exploited to provide logistical and material support to terrorist networks, while also revealing the corruption risks that may undermine law enforcement processes. Key Red Flag Indicators

1. Repeated cross-border movement of motorcycles or other utility vehicles through unofficial routes or small-scale traders.
2. Bulk purchase of motorcycles or vehicles inconsistent with the buyer’s known income or legitimate business activity.
3. Payments for high-value goods made in cash without proper documentation or customs clearance.
4. Use of intermediaries to facilitate logistics to remote or conflict-prone areas.
5. Attempts to bribe or influence law enforcement officers during ongoing investigations to derail justice.
6. Local networks of traders or transporters suspected of supplying materials commonly repurposed for terrorist logistics Source: NPF Case Study 7: Interception of Firearms Concealed in Cargo from Turkey In June 2024, following intelligence-based profiling and inspection of inbound cargo containers, the Nigeria Customs Service (NCS) intercepted a suspicious container (MAEU9165396) at the Port Harcourt II Command, Onne Port, in Rivers State. The container, originating from Turkey, was flagged for concealment and false declaration. Upon thorough examination, authorities uncovered a significant cache of contraband firearms and ammunition hidden within boxes and falsely declared to evade customs scrutiny. The seizure included 844 units of various rifles (including pump-action, magnum pump￾action, and double-barreled rifles) and 112,500 rounds of live ammunition. The offences identified were attempted smuggling of prohibited items and false declaration of imports. Preliminary investigations led to the arrest of suspects linked to the shipment. The case was subsequently transferred to the National Centre for Small Arms and Light Weapons (NCCSALW) for in-depth investigation, including terrorism financing (TF) linkages and tracing of transnational networks. The estimated market value of the consignment was substantial, reflecting the high profitability of arms smuggling through maritime routes into Nigeria.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 31 | P a g e Key Red Flag Indicators

1. Importation of cargo from high-risk jurisdictions with a history of arms trafficking or falsified documentation.
2. False declaration or mislabeling of container contents, especially shipments declared as “household items” or “machinery.”
3. Multiple trans-shipment points or altered bills of lading to obscure the true origin of goods.
4. Sudden increase in import activity by newly registered companies or those with no verifiable trade history.
5. Frequent use of maritime routes and ports with known vulnerabilities to corruption or limited scanning technology.
6. Connections between importers and conflict-affected zones, or businesses operating in proximity to armed groups.
7. Bulk cash payments or suspicious transfers to overseas suppliers inconsistent with the declared nature of trade. Source: NCS Case Study 8: Smuggling of Arms Across Nigeria’s border This case involves an organized arms-smuggling network using concealed compartments in vehicles to move weapons across Nigeria’s borders. On 2 December 2024, security operatives arrested ABC, who was awaiting delivery of firearms from DEF, a suspected terrorist commander. The weapons—two AK-47 rifles and ammunition were hidden inside a secret compartment of a car and transported through an informal border route into the country. ABC has a history of criminal activity, including illegal gold mining, cattle rustling, and a previous conviction. Investigation also showed he had long-standing ties with GHI, a notorious gunrunner he met during a deradicalization programme in 2015. Under GHI’s instructions, ABC was to receive the weapons, hide them temporarily near Mani town, and then pass them to JKL, a commercial taxi driver responsible for onward movement to high-profile terrorist actors in the North-West. Key Red Flag Indicators
8. Use of modified vehicle compartments to conceal arms, ammunition, or contraband during cross-border movement.
9. Involvement of individuals with prior convictions for related crimes (cattle rustling, banditry, illegal mining).
10. Links formed during rehabilitation/deradicalisation programmes later exploited for criminal or terrorist activities.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 32 | P a g e 4. Use of commercial taxi drivers or informal transport operators as part of illicit logistics chains. 5. Movement of consignments through informal or weakly monitored border routes, avoiding formal checks. 6. Instructions relayed through multiple intermediaries, often using different phone numbers to obscure command-and-control structures. 7. Temporary storage of weapons in remote or bush locations before onward delivery. Source: DSS Case Study 9: Smuggling of Arms Through Vehicle Compartments This case involves the arrest of two suspects on transit from Benue to Kwara State while transporting large cache of Arms and Ammunition including one (1 ) general purpose machine gun (GPMG), three (3) ak-47 rifles with three magazine, one (1) type-06 with one (1) magazine, one thousand and ninety-six (1,096) rounds of 7.62 x 39 mm live ammunition, twenty (20) rounds of 7.62mm NATO caliber live ammunition which were concealed inside the compartments of a Toyota Hiace bus. This operation was carried out by the State Criminal Investigation and Intelligence Department Lafia (SCIID), Nasarawa State Command following receipt of actionable intelligence. Further investigations revealed that the suspects have been responsible for smuggling and supplying arms to terrorists while also engaging in other crimes including kidnapping. They also added that the proceed of their crimes are being used to finance terrorist activities. Key Red Flag Indicators

1. Use of modified vehicle compartments to conceal arms, ammunition, or contraband during cross-border movement.
2. Involvement of individuals with prior convictions for related crimes (kidnapping, banditry).
3. Movement of consignments through informal or weakly monitored border routes, avoiding formal checks.
4. Evidence of collusion between smugglers and terrorist/armed groups. Source: NPF Case Study 10: Smuggling of Arms Through Vehicle Compartments This case involves the interception of arms and ammunitions including AK-47 rifles which were concealed in secret chambers and modified compartments of the vehicle and smuggled from a neighboring country into another state in north-west Nigeria, as

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 33 | P a g e supply to a high-profile terrorist commander operating in the same region. Investigations also revealed that funds were sent to the courier via POS operators in multiple tranches of NGN 2,000,000for the purchase of consignment. It was further discovered that the funds in question were proceeds derived from kidnapping for ransom. Key Red Flag Indicators

1. Use of modified vehicle compartments to conceal arms, ammunition, or contraband during cross-border movement.
2. The use of mobile money agents to facilitate layering and obscure the destination of funds.
3. Involvement of individuals with prior convictions for related crimes (kidnapping, banditry).
4. Movement of consignments through informal or weakly monitored border routes, avoiding formal checks.
5. Evidence of collusion between smugglers and terrorist/armed groups. Source: DSS Typology 3: Smuggling of Unwholesome Pharmaceuticals Unwholesome pharmaceuticals including substandard, counterfeit, or unregistered grades enter Nigeria through ports, land borders, and informal courier networks. Smugglers exploit gaps in regulatory enforcement and high domestic demand for cheap medicines. The financial flows linked to these activities commonly pass through cash transactions, informal payment systems, or undeclared transfers. This typology highlights public health risks as well as the ML/TF vulnerabilities of the pharmaceutical trade. Case Study 11: Maritime Smuggling of Illicit Pharmaceuticals Following intelligence-led profiling and inspection of inbound cargo containers, the NCS intercepted 11 containers at the Port Harcourt II Command, Onne Port, in Rivers State, on suspicion of concealing unwholesome pharmaceutical products. A detailed examination confirmed that the containers held a large volume of illicit and unregistered drugs, cleverly hidden among legitimate goods such as tree cutters, ceiling fans, and plumbing materials. The intercepted items included approximately 1.3 million bottles of codeine syrup, 9 million unregistered diclofenac tablets, 12 million unregistered Panadol tablets, and other counterfeit or unregistered pharmaceutical products. The total consignment was valued at about ₦20.549 billion at the time of seizure. The offences identified were false declaration of import and smuggling of unwholesome products.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 34 | P a g e Preliminary investigations were conducted by the NCS, after which the seized pharmaceuticals were handed over to NAFDAC for further analysis and enforcement actions. The case also underscores the close collaboration between the NCS and NDLEA in combating cross-border trafficking of narcotics and counterfeit drugs through maritime routes. Key Red Flag Indicators

1. False declaration of imports, especially pharmaceutical shipments disguised as industrial or household goods.
2. Imports of large quantities of controlled or unregistered drugs without corresponding licenses from NAFDAC.
3. Multiple shipments from the same foreign supplier, often routed through intermediary countries to disguise origin.
4. Cargo from countries known for producing counterfeit or substandard pharmaceuticals. Source: NCS Typology 4: Smuggling of Illegal Wildlife Products Smuggling networks traffic large quantities of wildlife products, including ivory, pangolin scales, and exotic species, through Nigeria as a source, transit, or exit point. The illicit trade is driven by foreign demand and relies on concealment in containers, mis-declared exports, and corrupt logistics chains. Proceeds from this trade are laundered through cash-based businesses and complex export arrangements. This typology reflects Nigeria’s role in global environmental crime and its associated financial risks. Case Study 12: Smuggling of Large Quantities of Illegal Wildlife Products This case marks a significant breakthrough against a transnational wildlife trafficking syndicate operating across Lagos and Ogun States in southwest Nigeria. The illegal wildlife activities involved the export of pangolin scales and elephant ivory, often disguised as seafood, agricultural produce, or timber. The larger operation began following collaborative intelligence sharing between the Nigeria Financial Intelligence Unit (NFIU) and the Environmental Investigation Agency (EIA), which resulted in the Nigeria Customs Service (NCS) intercepting a container of illegal wildlife products at the Apapa Port destined for export. The seized items included: 7,137 kg of pangolin scales, 846.34 kg of ivory,4.6 kg of pangolin claws. The consignment was estimated to be worth approximately ₦1 billion at the time of seizure. Attempted violation of export prohibition guidelines and breach of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) convention. The seizure triggered comprehensive money laundering investigations by multiple agencies, including the NCS, NFIU, EFCC, National Environmental Standards and

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 35 | P a g e Regulation Enforcement Agency (NESREA), NRS, and SCUML. The investigations uncovered the use of shell companies registered as exporters of agricultural products or seafood, wire transfers and payments made through Bureau de Change operators, falsified invoices and customs documentation, and laundering of proceeds through real estate in Ogun and Lagos States. Arrests were subsequently made, and additional containers were seized in Lagos, Ogun, and Oyo States during follow-up operations. The broader money laundering investigation also revealed links to international accomplices operating from Vietnam, using Nigeria as a major transit hub for illegal wildlife trafficking. The suspects, alongside their shipping and clearing agents, were prosecuted under relevant national laws. INTERPOL also issued Red and Silver Notices against the prime suspect and some of the international accomplices. Key Red Flag Indicators

1. Exporters or importers registered as agricultural or seafood businesses engaging in unusual high-value transactions inconsistent with declared business profiles.
2. Frequent wire transfers or payments routed through Bureau de Change operators and offshore accounts in wildlife trafficking–prone countries.
3. Use of falsified export documents, invoices, and customs declarations to conceal the true nature of goods.
4. Repeated export consignments declared as timber, seafood, or agricultural products with similar shipping routes to high-risk destinations (e.g., Vietnam, China).
5. Ownership or acquisition of high-value assets such as real estate disproportionate to declared income or business activity.
6. Strong links between local exporters and known foreign nationals or entities Source: NCS Typology 5: Smuggling of Refined Petroleum Products- Premium Motor Spirit (PMS) and Automotive Gas Oil (AGO) The smuggling of fuel products across Nigeria’s borders is driven by price differentials, subsidy distortions, and high demand in neighboring countries. Syndicates transport PMS and Automotive Gas Oil (AGO) through land borders, waterways, and tank farms often with the support of corrupt actors. The profits are reinvested through informal markets, transportation businesses, and cash-intensive trade networks. This typology shows how fuel smuggling creates major revenue leakages and ML vulnerabilities. Case Study 13: Seizures of Petroleum Motor Spirit (PMS) and Automotive Gas Oil (AGO) Along Unapproved Borders of Adamawa and Taraba This case highlights several significant breakthroughs by the Nigeria Customs Service (NCS) Roving Teams under Operation Whirlwind (Zone D) in enforcing control measures along the vast and porous unapproved borders of Nigeria’s northeastern region. In separate intelligence-led operations, officers of the NCS intercepted multiple fuel

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 36 | P a g e smuggling attempts across various routes, including Malabu–Belel, Girei–Wurobokki, Gurin–Fufore, and Jimeta in Adamawa State, as well as several other crossing points in Taraba State. The seizures included the following items:69,000 litres of Automotive Gas Oil (AGO), two separate cannisters of PMS of 69,375 and 36,435 liters each. The combined seizures were valued at approximately ₦74.4 million. The investigation into the case remains ongoing. The seized petroleum products—classified as hazardous materials—have been disposed of in accordance with existing environmental and regulatory guidelines. The case demonstrates the NCS’s proactive intelligence-led patrols and enforcement actions under Operation Whirlwind, aimed at curbing large-scale smuggling of petroleum products through unapproved border routes in the northeastern corridor. Key Red Flag Indicators

1. Use of jerrycans and tankers to transport petroleum products across unapproved routes.
2. Night-time movements through remote and difficult terrains.
3. Operations involving multiple border crossings to evade detection.
4. Lack of export documentation and customs clearance.
5. Smuggling of subsidized petroleum products for resale across neighboring borders.
6. Coordination of operations across multiple states, often involving local facilitators or syndicates. Source: NCS Typology 6: Smuggling of Goods Multiple goods are being smuggled into Nigeria due to various reasons including import restrictions, high domestic prices, and strong consumer demand. Smugglers use informal crossings, waterways, and bush routes to move large quantities of the product while avoiding customs duties and taxes. The financial flows are often cash-based, under￾recorded, or linked to informal trade networks. This typology illustrates how everyday commodities can be embedded in large-scale illicit economies. Case Study 14: Interceptions and Seizures of Smuggled Contrabands – Foreign Parboiled Rice and Unregistered Pharmaceutical Products This case highlights one of the several significant achievements of the Nigeria Customs Service (NCS) Roving Teams in enforcing control measures along the vast unapproved borders in the northwestern region. In the third quarter of 2025, following a coordinated sting operation by the Federal Operations Unit (FOU) Zone B of the NCS, a petroleum tanker and several vehicles were intercepted while attempting to move concealed

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 37 | P a g e offensive items of import through illegal routes. The occupants of the vehicles abandoned them upon sighting the patrol teams. A thorough examination of the vehicles revealed the following items: 250 bags of foreign parboiled rice, 58,780 sachets of unregistered pharmaceutical products The combined seizures were valued at approximately ₦20 million. The case remains under investigation, while the seized contraband is undergoing statutory processes for condemnation and forfeiture to the Federal Government of Nigeria in accordance with established regulations. This case underscores the persistent smuggling threat across Nigeria’s northwestern corridors and the sustained vigilance of the NCS Roving Patrol Teams in disrupting illicit trade networks operating through unapproved routes Key Red Flag Indicators

1. Use of tankers and other inconspicuous vehicles to conceal smuggled goods.
2. Abandonment of vehicles upon interception to evade arrest.
3. Movement of goods through unapproved border routes, often at night or in convoy formations.
4. Lack of proper documentation or import declaration papers.
5. Repeated interception of similar commodities from the same geographic axis.
6. Concealment of goods with legitimate products to mislead enforcement authorities. Source: NCS Case Study 15: Cross border smuggling of stolen jewelry In September 2024, the Nigeria Police Force, through INTERPOL Abuja, facilitated the arrest and ongoing prosecution of a Benin Republic citizen who stole jewelry valued at $110,000 from a diplomat in Abuja and fled across the border into Benin Republic. The arrest was made possible through informal international cooperation and the timely exchange of suspect identifiers between law enforcement agencies in both countries. This case illustrates how criminals exploit porous land borders and limited cross-border enforcement mechanisms to smuggle stolen high￾value goods such as jewelry, precious metals, and luxury items for quick liquidation abroad. It further underscores the crucial role of international cooperation and intelligence sharing in recovering assets and prosecuting offenders involved in transnational smuggling and money laundering. Key Red Flag Indicators
7. Sudden movement of high-value goods (e.g., jewelry, luxury watches) across borders without proper declaration or export documentation.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 38 | P a g e 2. Individuals with no formal trade records making frequent cross-border trips between Nigeria and neighboring countries. 3. Sale or pawn of luxury items in border towns or neighboring countries shortly after theft incidents. 4. Transactions involving the purchase or transfer of high-value movable assets inconsistent with known income levels. 5. Requests for informal or expedited money transfers following cross-border theft or smuggling events. Source: NPF Case Study 16: Smuggling of electronics and secondhand clothing Over time, there have been multiple cases recorded following a similar pattern which involves the smuggling of goods such as electronics or second-hand clothes through unofficial border routes. Such operations were flagged due to inconsistencies between customs records and NRS tax returns. Additional discrepancies were identified in the trade records where payments were made through blockchain and digital wallets as well as in the intentional (mis)labelling of the goods to reflect NGO/diplomatic affiliations for tax purposes. This case illustrates how smuggling rings and organized crime groups can exploit porous land borders and bypass enforcement mechanisms to smuggle different classes of goods for easy liquidation, tax avoidance and evading regulatory requirements. It further underscores the importance of interagency collaboration and intelligence sharing in in curbing transnational smuggling and money laundering. Key Red Flag Indicators

1. Constant movement of different range of goods across borders without proper declaration or export documentation.
2. Individuals with no formal trade records making frequent cross-border trips between Nigeria and neighboring countries.
3. Mis-invoicing/under invoicing
4. Leveraging NGO/diplomatic cover for tax exemptions/relief
5. Payments made through blockchain digital wallets and other fintech platforms. Source: NRS Case Study 17: Smuggling of used (Tokunbo) vehicles Multiple cases involving the smuggling of used vehicles have been recorded involving the smuggling of used vehicles, colloquially referred to as ‘Tokunbo,’ along the Seme Border, Nigeria’s south-western borders with Benin Republic. Operations around this jurisdiction in various intelligence-led patrols have tracked and intercepted several vehicles in the process of

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 39 | P a g e being smuggled into the country through this particular smuggling corridors to evade customs inspection and mandatory tariff payments. Vehicles across various types, models and grade often seized along this route include, but are not limited to, Jetour Jeep, Lexus RX350, Lexus RX350, Lexus EX350, (Used) Toyota Alphard, Mercedes Benz GLE450, Lexus EX350, Toyota Camry XLE, Mercedes Benz ML350, Hyundai Elantra. This case illustrates how smuggling rings and organized crime groups can bypass regulatory mechanisms and law enforcement by exploiting porous land borders to facilitate the smuggling of different classes of goods evading of taxes/tariffs and other regulatory requirements. Key Red Flag Indicators

1. Transporting of high-value vehicles through unsecured porous borders without proper declaration or export documentation.
2. Evasion of custom duties and levies
3. Seme Border as high-risk zone for smuggling activities Source: NCS

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 40 | P a g e 8.0 Cross-Cutting Indicators and Red Flags Across the typologies outlined in Section 4, certain red flag indicators emerge consistently. These are patterns or anomalies that, in isolation or combined, may signal smuggling-related ML/TF activity. Financial institutions, designated non-financial businesses and professions (DNFBPs), and competent authorities should be vigilant for these indicators in their monitoring and analysis:

1. Unusual cash activity in border regions: Large or frequent cash deposits and withdrawals occurring in border communities or conflict-affected areas, especially where banking activity is typically low, may indicate smuggling proceeds being integrated into the financial system. Structured transactions to avoid thresholds: Repeated cash transactions deliberately kept just below regulatory reporting thresholds (for example, ₦4.9 million deposits) or conducted across multiple branches or individuals to evade detection.
2. Discrepancies between trade documents and goods: Mismatches between invoices and physical shipments, over- or under-invoicing, or documentation showing low-value goods despite high freight costs, all suggesting concealment or layering of illicit funds.
3. Unusual routing or shipment patterns: Goods shipped through irregular or indirect routes inconsistent with commercial logic, or rerouted multiple times through high￾risk corridors, indicating efforts to disguise the origin or destination of smuggled goods.
4. Businesses lacking physical presence or infrastructure: Entities involved in high-risk goods (such as fuel, gold, or electronics) but operating without visible warehouses, staff, or verifiable logistics capacity.
5. High-risk commodity trading without traceable supply chains: Dealers in goods such as fuel, vehicles, rice, pharmaceuticals, or gold without clear documentation, tax records, or supplier information, particularly where turnover rises sharply in a short period.
6. Frequent use of cash in high-value cross-border trade: Traders or businesses engaged in import/export operations consistently settling large transactions in cash instead of through the banking system.
7. Unusual international wire transfers: Sudden or repetitive fund transfers to or from jurisdictions unrelated to the customer’s business, especially when involving entities in known smuggling or conflict zones such as the Lake Chad Basin, Mali, or Libya.
8. Multiple or dormant accounts used irregularly: Individuals or companies operating several accounts across different banks with rapid fund movements between them, or sudden reactivation of dormant accounts after border-region travel.
9. Frequent deposits or withdrawals just below thresholds: Evidence of structuring or smurfing, especially where cash flows correspond with border activities or coincide with known smuggling operations.
10. Transactions inconsistent with client profile: Customers conducting transactions disproportionate to their known occupation, business scale, or declared income, for instance, low-income individuals engaging in large imports or exports.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 41 | P a g e 11. Repeated involvement of same intermediaries: Continuous use of the same clearing agents, freight forwarders, or logistics companies previously linked to smuggling or non-compliant practices. 12. Movement of high-risk or dual-use goods: The trading or transport of items such as fuel, motorcycles, fertilizers, drones, or technological devices that could be diverted for use by terrorists or armed groups. 13. Collusion between smugglers and armed actors: Evidence or intelligence suggesting coordination between trade operators and militias, insurgent groups, or corrupt enforcement officials in control of transit routes. 14. Trade-linked payments lacking economic rationale: Fund transfers involving entities with no legitimate connection or commercial purpose, including payments to shell companies or newly formed import/export firms with unclear ownership. 15. NGO or charity operations in high-risk areas: Non-profit organizations conducting frequent transfers or shipments to terrorism-prone regions without transparent donor sources or verifiable project documentation. 16. Large spending without legitimate income: Individuals or small business owners making significant asset purchases (e.g., vehicles or real estate) inconsistent with their financial profile, often in cash. 17. Use of unofficial financial channels: Heavy reliance on unregistered money transfer services, POS agents, or informal bureau de change for large or repeated transactions associated with border trade. 18. Digital and fintech-based anomalies: Increased use of cryptocurrency, fintech apps, or digital wallets by individuals or entities engaged in smuggling or cross￾border trade, including rapid conversions between naira and crypto assets to obscure fund trails. 19. Community-based intelligence indicators: Reports from local populations or community policing units of unusual trade activity, secretive logistics movements, or suspicious storage near border towns, often serving as early signals of organized smuggling networks.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 42 | P a g e 9.0 Key Findings Smuggling as a Dual Threat: The analysis confirmed that smuggling in Nigeria is both a major generator of illicit proceeds and a vehicle for covertly moving value. Proceeds from smuggling (whether from goods like fuel, gold, or contraband) often become sources of funding for other crimes, including terrorism. Simultaneously, smuggling operations provide a cover for money laundering by blending illegal goods trade with legitimate commerce. Prevalence of Traditional and Emerging Methods: Traditional methods of illicit finance, such as bulk cash smuggling and simple structuring of deposits, remain prevalent – especially given Nigeria’s large informal and cash-based economy. At the same time, criminals and terrorists are leveraging modern innovations. For example, there is evidence of the use of cryptocurrencies and online platforms to transfer funds, as well as exploitation of fintech (POS terminals, mobile money) to obscure money trails. The coexistence of old and new methods means authorities must be vigilant on multiple fronts, from physical border checks to cyber monitoring. Role of NFIU and Financial Intelligence: The NFIU’s work is pivotal in detecting smuggling￾related ML/TF. By focusing on financial intelligence, the NFIU has been able to identify suspicious patterns that might otherwise go unnoticed – such as anomalous transaction activity in border regions, repeated discrepancies in trade documentation, or flows of funds connected to known hotspots. These patterns, once flagged, have enabled multi￾agency interventions (for instance, prompting Customs or DSS to investigate a suspicious trader, or aiding EFCC in tracing laundered assets). The study highlighted numerous red flags and typologies (detailed in Sections 4 and 5) which provide actionable cues for banks and enforcement agencies. If utilized properly, these will aid in front-line detection in the private sector and help investigators focus on high-yield targets. The Role of NCS and other LEAs: The Nigeria Customs Service as the statutory lead agency in the enforcement of cross-border measures against smuggling aligns with other relevant agencies under a coordinated border management framework for sharing intelligence, conducting joint cargo inspections, and coordinating joint border operations. Similarly, designated AML/CFT Units and departments within NCS and other LEAs are strengthening capacity, training, and expertise to expand investigations into ML/TF linked to smuggling offences. In light of the foregoing as well as previous records in interception, seizures and interdiction of cross-border crimes, the NCS is currently implementing a robust modernization project to deliver an end-to-end digital transformation of Nigeria’s cross￾border enforcement operations. Challenges Hindering the Response: Several challenges persist that slow down or undermine Nigeria’s response to these threats. Porous borders and a predominantly cash￾driven economy give smugglers inherent advantages in moving goods and money undetected. Additionally, border authorities such as the NCS are limited in their ability to flag and investigate potential ML/TF activities. There are gaps in data and technology – for example, not all agencies have access to the same timely information, or the

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 43 | P a g e advanced tools needed to analyze complex schemes (although improvements are underway). Inter-agency coordination, while improved from the past, can still be hampered by jurisdictional overlaps or competition, meaning intelligence isn’t always shared fast enough. Furthermore, the sheer ingenuity and adaptability of smuggling networks mean that as authorities clamp down on one method, the criminals evolve new routes or techniques (such as shifting from banks to crypto, or from formal exports to parcel-post smuggling). Progress and Opportunities: Nigeria’s AML/CFT framework and the institutional capabilities of relevant agencies are steadily evolving. Findings indicate a sustained pragmatic approach to counter emerging trans-border smuggling. Nigeria has been developing a growing toolkit to counter these crimes. Specialized units (like Customs’ Special Enforcement Team or DSS’s assets recovery unit PCRMD) are enhancing investigative focus. Training programs (often with international support) are elevating the skill levels of officers in identifying ML/TF signals. The legal framework has been strengthened significantly since 2022 with new laws aligning with international standards and enabling better asset recovery. These tools provide a strong foundation on which to build. The findings suggest that if Nigeria can better integrate its efforts – aligning legal powers, intelligence, and tactical operations – it stands a good chance of substantially disrupting smuggling finances.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 44 | P a g e 10.0 Key Implementation Challenges Despite the solid framework, several practical challenges affect implementation:

1. Inter-Agency Coordination Gaps Although collaboration has improved, agencies still experience delays in information sharing, overlapping mandates, and occasional parallel operations. These gaps create opportunities for smugglers to exploit institutional fragmentation.
2. Limited Integration of Databases and Real-Time Systems Efforts are underway to link NFIU, Customs, Immigration, and other databases, but full interoperability has not yet been achieved. The absence of real-time access slows the detection of illicit shipments, high-risk individuals, and suspicious cross-border movements.
3. Porous and Hard-to-Monitor Borders Nigeria’s vast land borders require significant resources to police. Smuggling routes in remote areas remain difficult to surveil consistently, enabling organized groups to operate with agility.
4. Resource and Infrastructure Constraints Some frontline agencies still face shortages in scanning equipment, surveillance technology, and specialized personnel, which affects rapid detection and interdiction.
5. Slow Judicial Processes Delays in prosecution reduce the deterrent effect of arrests and seizures, particularly in cases involving sophisticated smuggling or ML/TF networks.
6. Vulnerability to Corrupt Practices Isolated instances of collusion or facilitation by officials can undermine enforcement efforts, especially at high-traffic border points and checkpoints.
7. Increasing Sophistication of Smuggling Networks Criminal groups rapidly adapt their techniques, including the use of front companies, complex supply chains, and informal value-transfer systems, thereby requiring agencies to continuously upgrade investigative skills and technology.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 45 | P a g e 11.0 Strategic Implications of Findings Given the above findings, several strategic imperatives emerge for Nigeria’s AML/CFT regime: Intelligence Integration: There is a vital need to bridge the remaining gaps between trade data and financial data to uncover schemes that currently slip through the cracks. For instance, systematically matching customs declarations with banking transactions could reveal discrepancies indicative of TBML or duty evasion. This calls for investment in advanced analytics and information systems that capable of correlating multi-agency datasets. An integrated approach will improve early detection of complex laundering typologies that single agencies, looking at a narrow data set, might miss. Strengthening Partnerships: Domestic and international partnerships must be strengthened and expanded. Domestically, the successes noted in this report – such as joint operations that resulted in seizures or arrests – demonstrate that unified efforts are far more effective than isolated ones. Scaling up these collaborations (e.g., real-time joint alert systems for suspicious shipments, co-located investigation teams) will be key to staying ahead of agile smuggling networks. Internationally, many smuggling operations are inherently regional (if not global) and thus require cross-border cooperation. Enhancing collaboration within ECOWAS and GIABA, for example by establishing real￾time information exchange channels or coordinating cross-border surveillance, is crucial. Intelligence from a neighboring country’s FIU about a smuggler’s financial activities there, for example, could complete the puzzle for Nigerian investigators, and vice versa. Address Root Vulnerabilities: Tackling the financial crime effectively means addressing upstream vulnerabilities. One implication is the importance of reducing the incentives and avenues for bulk cash smuggling. This could involve promoting financial inclusion (so that fewer transactions occur in cash), enforcing currency controls or declaration systems, and increasing the costs/risks of carrying cash (e.g., canine units for cash detection at borders and stronger penalties). Another vulnerability is trade mispricing; to combat TBML, authorities may need to tighten oversight of trade transactions, for example by implementing price benchmarking for imports/exports or by using e-invoicing systems that make it harder to falsify values. Corruption is a root facilitator in many smuggling cases; therefore, anti-corruption measures (transparent customs processes, rotation of border staff, prosecution of bribery) must go hand-in-hand with technical AML/CFT measures. The strategic takeaway is that purely reactive measures (catching bad actors) won’t suffice if the structural issues (cash economy, weak border infrastructure, corruption) remain unaddressed. Continuous Adaptation: Smuggling and associated laundering methods are dynamic, responding quickly to law enforcement pressure. Thus, Nigeria’s response must also continuously adapt. This implies regularly updating the risk indicators and red flags provided to financial institutions as new patterns emerge (e.g., when criminals begin exploiting new payment methods or trade channels). It also means conducting periodic typology studies – similar to this one – in other areas or as follow-ups, to capture evolving

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 46 | P a g e trends (such as cyber-enabled smuggling or the use of e-commerce for contraband trade). Regulations should be sufficiently flexible to address emerging risks; for instance, if informal trucking or logistics apps become common for smuggling, regulators should consider bringing those sectors under AML supervision or reporting requirements. A feedback loop should exist in which insights from recent cases inform training and policy updates, ensuring Nigeria’s AML/CFT regime remains one step ahead. In conclusion, Nigeria can significantly disrupt the convergence of smuggling, money laundering, and terrorist financing. The fight requires not just punitive actions but preventive and systemic reforms. The information and typologies documented in this report should serve as a guide for all stakeholders to recognize and counter the illicit financial flows stemming from smuggling by implementing the recommended strategies and maintaining vigilance. The agency-specific perspectives and real-world case studies provide additional depth, including in reinforcing the understanding of these phenomena and the necessary countermeasures.

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 47 | P a g e 12.0 Strategic Recommendations for Implementations In light of study's findings, the typology working group proposes strategic recommendations to close gaps and strengthen Nigeria’s defenses against money laundering and terrorist financing through smuggling. These recommendations are structured to address the legal, institutional, technological, and international dimensions of the challenge: Enhance Inter-Agency Coordination: Explore the establishment of formal intelligence fusion centers or task forces focused on smuggling-related financial crimes, thereby encouraging collaboration among stakeholder agencies, law enforcement agencies and border authorities. Promote regular inter-agency meetings and joint training exercises to foster trust and improve information sharing. Additionally, consider developing a secure platform for the timely intelligence exchange of intelligence on suspicious shipments or persons of interest to enhance coordinated responses. Strengthen Border Controls and Trade Oversight: Invest in modern border surveillance and inspection technologies – such as cargo scanners, drones for border patrolling, and GPS tracking for fuel tankers in vulnerable regions – to deter and detect smuggling of goods. The Nigeria Customs Service should implement real-time tracking systems for high￾risk goods such as petroleum products and minerals (e.g., pipeline or convoy monitoring). Additionally, scaling up the presence of law enforcement in remote border areas, possibly by creating joint border task units (Customs, Immigration, Military, Police, and local vigilantes), will address the physical aspect of smuggling. These units should coordinate with financial investigators so that any large smuggling seizure triggers parallel financial investigations by NFIU/EFCC (following the “follow the money” principle). Capacity Building for Financial Institutions: Train and equip banks and other reporting entities more effectively identify trade-based money laundering and other red flags associated with smuggling. This includes developing sector-specific guidelines (e.g., indicators for accounts of petrol stations, mining companies, import-export traders, NGOs) and scenario-based transaction monitoring models that flag unusual patterns such as those described in this report. Policy and Regulatory Measures: Enhance enforcement and enhance regulations of identified high-risk sectors. For example, ensure strict application of NGO transparency rules aligned with FATF Recommendation 8 by requiring NGOs operating in conflict zones to provide detailed records of aid distribution and submit to audits. NGOs found non￾compliant or suspicious should face sanctions or removal from the register. Likewise, rigorously enforce legal requirements for declaring cross-border cash transfers exceeding $10,000 (or equivalent), with penalties for false declarations to discourage bulk cash smuggling. Nigeria should also consider introducing clearer legal measures or tougher penalties to explicitly criminalize the use of smuggling proceeds for terrorism or related crimes, closing existing loopholes. Additionally, empower relevant law enforcement agencies to impose sanctions including substantial fines, blacklisting of entities for trade

Money Laundering and Terrorist Financing Typologies Through Smuggling in Nigeria 48 | P a g e mis-invoicing linked to smuggling, while also treating it (where necessary) as tax evasion associated with money laundering. Leverage Technology and Data Analytics: The NFIU and partner agencies should deploy advanced analytics tools, including artificial intelligence and data mining, to detect anomalies and patterns that manual reviews might miss. For example, using algorithms to match trade data (Customs import/export logs) with company tax filings and banking flows could automatically flag discrepancies for review (as was identified as a need by NRS). Implement blockchain analytics tools to trace cryptocurrency transactions potentially linked to smuggling payments, given the increasing use of crypto by criminals. An integrated data system that pools relevant data (customs records, STRs, company registries, travel records) would enable pattern recognition across databases. Investment in these technologies, along with training personnel to use them, will significantly enhance early detection of complex schemes. Promote Regional and International Cooperation: Since smuggling is a transnational activity, Nigeria must bolster collaboration with neighboring countries and international bodies. This involves actively participating in GIABA initiatives and joint operations – for example, expanding the ongoing partnership with Niger and Benin to jointly combat cross-border smuggling. Nigeria should pursue Memoranda of Understanding (MoUs) for real-time information exchange with the FIUs and Customs agencies of bordering nations, and use platforms such as the West African Border Security Initiative and the WCO’s regional intelligence liaison offices. Additionally, advocating for and contributing to regional databases of smugglers or persons of interest (perhaps through ECOWAS) can help track and interdict cross-border networks. Engagement with the FATF, WCO and Egmont Group should continue to bring in best practices; for instance, adopting successful techniques other countries have used against trade-based laundering and bulk cash smuggling. International cooperation should also extend to capacity building, including seeking technical assistance or joint training programs (through bodies such as the IMF, the World Bank, and UNODC) to enhance local expertise. Improve Resource Allocation and Integrity: Finally, dedicate adequate resources and integrity measures to sustain the fight. This means allocating budget for more border agents, investigators, and prosecutors focusing on ML/TF from smuggling, and improving their conditions to reduce susceptibility to corruption. Anti-corruption measures, such as rotation of staff in vulnerable posts and undercover integrity tests at borders, should be intensified. Without honest and motivated personnel, even the best policies will falter. Therefore, complement enforcement with initiatives that encourage whistleblowing and swift disciplinary action against officials complicit in smuggling. These steps will help safeguard revenue, enhance national security by disrupting terror finance, and uphold the country’s international obligations under the FATF standards. The recommendations are interlinked – success will come from a concerted, comprehensive approach that addresses both the “supply” of illicit goods and the “demand” for laundering mechanisms.

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19. Egmont Group (2021). Best Egmont Case Award (BECA) Casebook: Disrupting ML/TF through Trade Invoicing Networks. Ottawa: Egmont Group Secretariat.
20. World Bank & UNCTAD (2021). Trade Mis-Invoicing in Developing Countries: Scale, Causes, and Policy Responses. Washington, DC: World Bank.
21. UNODC (2023). Illicit Financial Flows and Trade Manipulation in the Sahel and West Africa. Vienna: United Nations Office on Drugs and Crime.
22. FATF (2024). Mutual Evaluation Follow-up Report on Nigeria. Paris: FATF.