FORENSIC ACCOUNTING TECHNIQUES AND MONEY LAUNDERING IN NIGERIA

Money laundering severely undermines Nigeria’s financial integrity, facilitating crimes such as corruption and terrorism financing, with vast sums illicitly channeled through sophisticated schemes yearly. This study evaluates the efficacy of forensic accounting techniques—Benford’s Law, ratio analysis, trend analysis, and document analysis—in countering money laundering within Nigeria’s financial sector. Despite the Economic and Financial Crimes Commission’s (EFCC) efforts, limited regulatory enforcement and minimal use of forensic tools impede progress. The research seeks to bridge these gaps by assessing how these methods detect and prevent illicit financial activities, focusing on their application in Nigeria’s banking and public sectors. Utilizing a mixed-methods survey design, data were gathered from 50 professionals, including forensic accountants, bank compliance officers, EFCC/NFIU officials, and CBN regulators, through structured questionnaires and semi-structured interviews. Descriptive statistics and chi-square tests assessed each technique’s effectiveness. Results indicated document analysis as the most effective (grand mean = 3.18), adept at uncovering fictitious transactions, followed by ratio analysis (2.96) for identifying irregular financial patterns. Trend analysis (2.92) excelled in detecting abnormal transaction volumes, while Benford’s Law (2.84) showed moderate effectiveness, constrained by limited adoption in Nigerian institutions. Hypothesis testing verified that all four techniques significantly enhance money laundering detection (p < 0.05). Nonetheless, challenges like insufficient technological infrastructure, a scarcity of trained professionals, and a cash-dominated informal economy hinder their widespread implementation. The study emphasizes the need for improved training, integration of digital tools, and regulatory reforms to bolster anti-money laundering (AML) strategies. This research enriches understanding by providing empirical support for forensic accounting’s role in Nigeria’s AML initiatives, offering actionable recommendations for policymakers and law enforcement. It advocates for broader adoption of forensic tools, enhanced capacity building, and collaborative efforts to combat financial crimes, promoting Nigeria’s economic stability and global AML adherence.