A SEMINAR PAPER ON ECONOMIC IMPACT OF MONEY LAUNDERING IN NIGERIA

ABSTRACT : This study examines the impact of suspicious transaction reports, illicit financial flows, money laundering prosecutions, and convictions on Nigeria’s real GDP growth rate. Using a regression analysis model, the study evaluates the significance of financial crime indicators in shaping economic stability. The findings reveal that illicit financial flows negatively affect real GDP growth rate by diverting resources from productive sectors, leading to capital flight and reduced investment. In contrast, money laundering prosecutions and convictions positively impact real GDP growth rate, suggesting that stringent legal actions and enforcement measures act as deterrents against financial crimes, promoting economic stability. However, suspicious transaction reports exhibit a weaker influence on real GDP growth rate, indicating gaps in enforcement, regulatory oversight, and the effectiveness of financial intelligence mechanisms. The study contributes to the existing literature by integrating multiple financial crime indicators into a comprehensive model, offering a nuanced perspective on their combined economic effects. Additionally, it highlights the need for a more proactive approach to financial crime mitigation. The study provides critical insights for policymakers, financial institutions, and regulatory bodies to strengthen anti-money laundering frameworks and improve financial governance. Key recommendations include enhanced inter-agency collaboration to foster information sharing, stricter enforcement of AML regulations to deter illicit activities, judicial reforms to ensure effective prosecution and conviction of financial criminals, improved financial intelligence mechanisms to strengthen monitoring and detection, and the adoption of advanced technologies such as artificial intelligence and blockchain to combat money laundering. By addressing these issues, Nigeria can enhance economic stability, reduce financial crime, and foster sustainable economic growth.

KEYWORDS: Money laundering, illicit financial flows, economic growth, anti-money laundering (AML), financial crime.