SEC, NFIU seal pact to curb fraudulent transactions in capital market

The Securities and Exchange Commission (SEC) and the Nigerian Financial Intelligence Unit (NFIU) on Wednesday signed a memorandum of understanding (MoU) as part of their collaborative efforts targeted at combating crime and fraudulent deals in the nation’s capital market.

Mary Uduk, the commission’s acting director general, during her remarks in Abuja during the signing of the MoU, said the collaboration was necessary in order synergise efforts to curb abuses, including insider dealings, re-awakening of Ponzi schemes, cybercrime and other fraudulent activities in the market in the last few years.

While pointing out that the Commission is paying close attention to digital transactions and is in the process of amending its rules to capture such transactions, the Acting DG disclosed that the Commission already had appropriate regulations that prohibited shell companies from operating in the capital market and implored the NFIU to assist with solutions to track suspicious transactions as they occur.

She said: “If we have solutions that will help us track transactions, it will reduce incidence of insider dealing greatly. We would be very willing to collaborate with you on that in our determination to ensure that our markets are efficient and transparent and all investors are protected.”

Uduk listed some areas where the MoU would help in strengthening the two agencies’ collaboration as includeing training, secondment of middle cadre officers between both organisations, cross-border monitoring, repatriation of stolen funds from the capital market and prosecution of offenders amongst others.

On the rising spate of Ponzi schemes in the country, she harped on the need for improved collaboration between the commission and the NFIU and further sensitization to ensure unsuspecting Nigerians do not continue to lose their hard earned money.

Speaking at the event, Modibbo Tukur, NFIU’s director, commended the SEC for strengthening the relationship between the organizations, promising his agency’s continued support to the SEC efforts aimed at improving the safety of the nation’s investment environment.

To achieve this, Tukur disclosed that the NFIU was making efforts to ensure that in the financial system no company operates without having a physical address.

He explained: “If anyone establishes a company, it has to be a company indeed and we have to be firm on this. This has become more important now given the roll out of the ECOWAS single currency, because with that, we know that capital and investments will move across borders and it is a single currency. So we have to step up regulation to avoid fraudulent transactions.

“We will commence by September and some companies would have to be deregistered if they do not meet the criteria. We will publish the parameters and also give them enough time to regularise after which those that do not comply before the deadline will be shut down.

“If you have an empty company hanging in the system, it is a potential danger and we should not allow it to thrive” Tukur added.

He pointed out further that by the time the NFIU commenced the due diligence on the shell companies, the information would be shared with the SEC for further action.

“Analysis would now be digital so the organisation would be able to share information on transactions as fast as possible adding that the capital market being a very sensitive one, care has to be taken on information dissemination to avoid disruptions” he added.