Corruption and Cryptocurrencies in Nigeria

Corrupt politicians in Nigeria are using cryptocurrencies to conceal illegitimate wealth, as highlighted by Ola Olukoyede, the Executive Chairman of the Economic and Financial Crimes Commission (EFCC).

During remarks at the African Union Anti-Corruption Day event, Olukoyede raised concerns about the threats posed by increasing cryptocurrency adoption, particularly regarding investment fraud. He focused on “rogue politicians” associated with the surge in cryptocurrency fraud within the country.

Olukoyede stated, “Our findings showed that fraudulent politicians are perfecting schemes and hiding their loot in cryptocurrencies to evade the investigative efforts of anti-corruption agencies. Stolen funds and unaccounted wealth are being stored in wallets, and payments for services occur via this method.”

Although the EFCC did not provide more details in its press release nor respond to Decrypt’s request for comments, anti-corruption experts in Africa agree that cryptocurrency is becoming intertwined with political corruption, even though there is no consensus on the magnitude.

David Ugolor, Executive Director of the Africa Network for Environment and Economic Justice (ANEEJ), stated there is currently no verifiable data indicating the precise amount of unexplained wealth that Nigeria’s political elite may hold in cryptocurrency. He acknowledged that the EFCC’s concerns are valid, though he noted it would be speculative to provide exact figures.

Ugolor pointed out a rising trend in digital asset usage linked to illicit financial flows (IFFs), often aided by the pseudo-anonymity of crypto transactions and disjointed international regulation. Nigeria’s prominent position as a peer-to-peer crypto market, combined with the long-standing issues of transparency and poor asset disclosure among politicians, makes it feasible that cryptocurrencies are increasingly used to store illegal wealth.

Rise of Crypto in Nigeria

Olayemi Cardoso, the governor of the Central Bank of Nigeria, remarked on the remarkable growth of cryptocurrency use in the country, noting over $56 billion in crypto-related transactions recorded between July 2022 and June 2023. However, this expansion has been paralleled by a notable increase in fraud, as revealed in the Central Bank’s Financial Stability Report 2024, which documented a 45% rise in financial fraud cases last year. Approximately 70% of these cases relate to digital channels, including crypto exchanges, and more than 30 Ponzi schemes involving cryptocurrencies have been identified by Nigeria’s financial regulators.

Combating Crypto-Related Corruption

Ugolor proposed several measures to mitigate the potential for cryptocurrency to be misused for corrupt purposes, beginning with the implementation of robust regulatory frameworks. “Nigeria must adopt a balanced approach that fosters innovation while ensuring AML/CFT compliance,” he asserted. This involves the licensing and monitoring of virtual asset service providers.

Additionally, enhanced international cooperation is crucial. Ugolor suggested that Nigeria strengthen its collaborations with global law enforcement agencies such as Interpol and utilize crypto intelligence firms like Chainalysis and Elliptic more effectively.

A pivotal aspect will be generating political will and the means to effectively tackle corruption. Ugolor asserted that this should include requiring politicians to disclose all assets, including cryptocurrencies, under an updated public assets disclosure regime, effectively addressing a gap in current reporting systems.

Lastly, he expressed the need for collaboration between NGOs such as ANEEJ and the EFCC, alongside cooperation with regulators like the SEC and the Central Bank of Nigeria. Such entities should jointly work with the crypto sector to establish whitelists, identify suspicious activities, and create whistleblowing channels.