How and Why Terrorism Financing Thrive

A month long investigation by Nigeria CommunicationsWeek has revealed the vulnerability of credit cards to misuse for terrorist financing purposes and other illegal activities.

The investigation found that card scheme is now a favoured tool of terrorists in Nigeria, enabling them to fund their reign of terror and mayhem through money laundering operations on the pretext of carrying out the same everyday transactions that law-abiding citizens enjoy.

Because of this, the effort to deepen the nation’s financial system stability will remain an idle fancy unless the monetary authorities install effective monitoring windows to checkmate the operation of e-payment schemes in the country.

Nigeria CommunicationsWeek gathered that billions of Naira are converted into different currencies of the world every day through the routing of transactions through foreign card schemes and e-payment systems.

Card schemes – Verve; Visa; and MasterCard, are the owners of the payment scheme, into which a bank or any other eligible financial institution can become a member.

All the schemes cleared by international clearing houses.

Nigeria CommunicationsWeek gathered a card issued by a local bank allows the cardholder to withdraw allowable daily ATM transactions according to card type and limits in all locations of the world daily, without any restrictions once the account is in credit and also limitless spending on point of sale transactions worldwide without any restriction once the account is funded in Naira.

This in effects creates a vacuum in the e-Payment space which terrorist organizations exploit to procure military wares and feed their terror cells.

In many countries, the card schemes are tied to the domiciliary account (which are usually in currencies like the dollars, pounds, Euro or yen) of their holders.

Nigeria CommunicationsWeek gathered that in Nigeria, debit cards denominated in Naira (a hardly convertible currency), are used for cross-border transactions in other currencies of the world outside the country.

They are accepted worldwide as a means of payment for goods and services at more than 32.7million MasterCard/Visa locations and over 1.9million ATMs in more than 210 countries to conduct trans-border transactions from Naira denominated accounts worldwide without going through the protocols of foreign exchange acquisition under the controls of the Central Bank of Nigeria (CBN). 

This is clear violation of Nigeria’s foreign exchange policy.

Some “smart” Nigerians have also exploited the gap to buy up best and most expensive properties in choice places in Dubai, Europe and North America.

Nigeria CommunicationsWeek gathered that while the CBN, the National Assembly and the Presidency look elsewhere, some unscrupulous Nigerians and their foreign counterparts are cashing in on the nation’s porous payment system and destroying the foreign reserve.

Experts said that Nigeria can only check the menace with a national Naira Euro, MasterCard and Visa (EMV) compatible chip with national payment scheme to be called “Naira Pay” EMV-so called because it will create an interoperable uniform standard chip for all Nigerian financial institutions.

This scheme, Nigeria CommunicationsWeek gathered was proposed by a local firm but authorities at the CBN turned it down for reasons best know to them.

Many countries especially those in Asia have adopted the local scheme based on each country’s monetary policies and objectives.

Nigeria CommunicationsWeek gathered  that Malaysia’s migration to  EMV domestic chip  based  cards  was designed  to establish links  with other four  neighbouring  countries (Indonesia , Thailand ,Singapore and China) to facilitate cross-border ATM cash withdrawal transactions.

In India and China, they controlled their local currency by creating “Rupay” and “Chinapay” payment systems and allowed the use of Visa/MasterCards to be tied to only domiciliary accounts.

These countries have also adopted their individual migration through the creation of their national EMV standard chips.