Ensuring alignment with international standards on anti-money laundering (AML) promulgated by global bodies such as the Financial Action Task Force forms a significant part of the regulatory framework in financial sectors across Africa. The costs of compliance for countries are high while the economic and reputational consequences of noncompliance can be severe. Nevertheless, the effectiveness of the tenets of international AML standards as applied to date in African financial sectors can be questioned. Examples where these have led to the sanctioning of major domestic financial crime, such as corruption, appear to be few in number. Some commentators have also highlighted potential harmful effects of the diffusion of these standards, namely ‘de-risking’ of the region by global banks and obstacles laid down to financial inclusion.
Different reasons are cited in the literature for the apparent ineffectiveness of international standards. These include the lack of local ownership in designing programmes; that standards modelled on industrialised countries are a poor fit for less developed financial sectors; and the overall lack of evidence on what measures are effective. What is also a critical factor but has received insufficient attention is the political economy dimension to the development of AML regimes. A political economy approach, which focusses on how elite interests and informal networks coalesce to help or hinder the work of formal AML institutions, can teach us much about how the effects and intended goals of international initiatives are shaped in local contexts. The paper will present a qualitative review of Nigeria’s experience since 2002. In particular, it will analyse the response of domestic regulators and financial sector actors to prominent cases of grand corruption involving Nigerian political leaders which have been established in UK courts. It will consider whether AML regimes might be better framed to take account of political economy factors and improve their domestic uptake.