Nigeria's President Olusegun Obasanjo has signed the country's new Money Laundering Bill into law.

The law is designed to enhance Nigeria's payment credibility abroad, but some Nigerian bankers say the new legislation does not go far enough.

Cash limits

The new law now makes it an offence for any individual to carry cash above 500,000 naira (N500,000 - about US$3789) or its equivalent. For corporate bodies, the limit of cash that can be carried is raised to N2 million (about US$15,151).

Individuals who are found to have broken the money laundering law would be liable to a prison term of not less than 2 years or a fine of not less than N250,000 (about US$1895), the same minimumfine that corporate bodies wouldbe liable to pay if they are found in breach of the law.

L/C acceptability

The bill, which is said to comply with international standards, is aimed at helping Nigeria's reputation amongst international financial institutions and the authorities hope the new law will make Nigeria's letters of credit (L/Cs) acceptable.

The new law was pushed through Nigeria's National Assembly following threats of sanctions by the Paris-based Financial Action Task Force (FATF) to enforce global trading sanctions against Nigeria unless it moved to strengthen its legislation against financial crimes.

Alternative payments

If the new law succeeds in its purposes, alternative methods of payment to cash could develop in Nigeria. These could include credit and debit cards for smaller amounts and perhaps an increasing volume of L/Cs for larger trade transactions.

Some bankers, however, fear the new law in itself will not make a significant difference until the authorities overhaul legislation and implement existing laws such as the Dishonoured Cheques Act and the Bills of Exchange Act.

The views in this article are those of the author and not necessarily those of ICC or the other partners in DC-PRO.