EFFECT OF DIGITAL ASSETS ON MONEY LAUNDERING IN NIGERIA

Abstract

This study investigated the effect of digital assets on money laundering in Nigeria. Specifically, the study sought to ascertain whether cryptocurrencies and Central Bank Digital Currencies (CBDCs) significantly affect money laundering activities in Nigeria. The survey research design was adopted, and primary data were collected through structured questionnaires administered to participants within Nigeria's financial and digital asset ecosystem. A sample size of three hundred and eighty-four (384) respondents was selected, out of which two hundred and eighty-eight (288) valid responses were analyzed using inferential multiple regression analysis with the aid of the Statistical Package for Social Sciences (SPSS) Version 26. The results of the analysis revealed that cryptocurrencies had a positive and significant effect on money laundering activities in Nigeria (p-value < 0.05), indicating that the increasing use of cryptocurrencies significantly contributes to money laundering risks. The study further revealed that Central Bank Digital Currencies (CBDCs) had no significant effect on money laundering activities in Nigeria (p-value > 0.05), suggesting that the eNaira has not yet attained a level of adoption capable of significantly influencing money laundering activities within the country. On the basis of the findings, the study concludes that while digital assets have varying effects on money laundering activities in Nigeria, cryptocurrencies remain the dominant digital asset associated with money laundering risks, whereas CBDCs currently pose limited money laundering concerns due to their regulatory design and low adoption. Therefore, the study recommends strengthening the regulation and monitoring of cryptocurrency transactions through enhanced licensing, blockchain analytics, and compliance enforcement for Virtual Asset Service Providers (VASPs), while continuously improving the eNaira through advanced transaction monitoring, robust AML/CFT controls, regular security audits, and stakeholder awareness programs.