LAST-MINUTE intervention by the Central Bank of Nigeria (CBN) has saved all Nigerian diplomatic missions in the United States (U.S.) from being left without a U.S. bank to meet their banking needs, The Guardian learnt.This is because, several foreign missions in the U.S., including Nigeria’s diplomatic posts in New York, Washington DC and Atlanta are having a tough time securing new banking relationships with local American banks as the stringent regulations of the U.S. Patriot Act meant to fight terrorism and its funding are forcing the banks to drop accounts of foreign embassies and missions.

Several U.S. banks including top ones like J.P Morgan Chase, Bank of America, among others, have had to shed the accounting relationships of diplomatic missions in the last two years, and the trend has now caught up with Nigeria’s embassies and other African missions, including permanent missions to the United States.

Actually, some embassies are now known to be transacting business in raw cash due to this situation, which according to U.S. government sources is currently receiving the official attention both from the U.S. State Department and the Treasury Department.

In the case of Nigeria, it was learnt that it took the intervention of the CBN for all the Nigerian missions in the U.S. to get new accounts with Citibank, which has branches in Nigeria.

After the accounts of Nigerian missions here were shut by a local U.S. bank, M&T, the CBN was said to have intervened requesting Citibank to offer the banking services needed by the Nigerian missions considering their relationship with the Federal Government, Nigeria as a country and their business interests in the country. Citibank, U.S., is known to be interested in the Nigerian Sovereign Wealth Fund, while also managing some of Nigeria’s foreign reserves.

A State Department official was reported as saying that at a time within the last several months there were about 37 embassies in Washington alone, which faced the problem.

In New York, the South African Ambassador Baso Sanqgu last year told the press that “we cannot get banking services. We are shopping around.”

Yesterday, Nigeria’s Ambassador to the U.S., Prof. Ade Adefuye also noted in an interview with The Guardian that while the Patriot Act has been on for a while, most African embassies did not expect to be affected by it until terror groups like Al-Shabaab started getting into the picture as an Al-Qaida affiliate in Somalia.

Specifically, the main challenge the U.S. Patriot Act imposed on the local banks here is the detailed and comprehensive reporting that is required when a banking transaction of over $10,000 could be perceived as potential money laundering, since many terrorist activities are financed through such suspicious financial activities.

What the USA Patriot Act has done and which is now being actively implemented against the embassies including the Nigerian missions in the U.S., is that the U.S. Bank Secrecy Act stands amended as to make it easier for law enforcement and regulatory agencies to police money laundering operations.

A summary of that new provision says: “The BSA was amended to allow the designated officer or agency who receives suspicious activity reports – to notify U.S. intelligence agencies.”

Also, the amendment legislated by the Patriot Act “also addresses issues of record keeping and reporting by making it a requirement that financial institutions report suspicious transactions; through the creation of anti-money laundering programs and by better defining anti-money laundering strategy; and by making it a requirement that anyone who does business files a report for any coin and foreign currency receipts that are over U.S. $10,000.”

In the case of Nigeria, the bank that closed the missions’ accounts not too long ago in Washington DC, M&T had given a three-month notice to the embassy earlier this year.

Although Mr. Philip Hosmer, the spokesperson of the bank was not immediately available for comments yesterday, it was learnt that M&T Bank asked the Nigerian Embassy in January to close its accounts by March this year. But that was later extended till April due to the investment forums the embassy was hosting about the same time.

But most of the U.S. banks that closed the accounts of foreign missions are determining that the cost of running all those reports and monitoring overtakes their profits and so they decide to cut-off the embassies.

Indeed, the $10,000 bar for the banks to file reports and undertake such monitoring is considered very low considering the size and volumes of how many of such amounts are being transacted by the embassies.

A former African Diplomat and now the United Nations Under Secretary-General and Special Adviser for Africa, Ambassador Maged Abdelaziz, in an earlier report in the media said he understood that the U.S. government requirements that JP Morgan and other banks monitor foreign accounts for money laundering or transactions that could be linked to terrorist groups made those parts of their business too costly.

According to him, the banks feel “overburdened” by the requirement of submitting reports to the government.

Adefuye, who said that the Nigerian mission accounts were now running smoothly with Citibank, also confirmed that ambassadors from Africa who are mostly the ones feeling the impact of the banking problem have met with the U.S. Department of Treasury top officials on how to “lessen the rigours on the U.S. Patriot Act.”

Last month, Reuters quoted a U.S. government official Payton Knopf, a spokesman for the U.S. mission to the UN, saying: “Over the last two years, several U.S. banks have decided to close all or some of their diplomatic missions banking business and a number of foreign missions in the U.S. have been affected.”

Author of this article: From Laolu Akande, New York  – Guardian

Posted by admin on Jun 27 2012. Filed under American Politics, Headlines. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry