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TERRORISM FINANCING THROUGH NIGERIAN BANKS: CHALLENGES AND DETECTION MECHANISMS—A CASE STUDY OF BOKO HARAM FUNDING NETWORKS IN MAIDUGURI (2018–2025)
CHAPTER ONE
INTRODUCTION
Abstract
This study investigates terrorism financing within Nigerian banking systems, with particular emphasis on detection difficulties and corrupt influences, using Boko Haram’s funding operations in Maiduguri, Borno State, between 2018 and 2025 as a case study. Drawing on secondary data from NFIU and EFCC reports as well as security analyses and academic publications, the research demonstrates that conventional bank transfers constitute a minor portion of financing relative to cash-dependent methods such as extortion and kidnapping ransoms. Nevertheless, corrupt practices enable laundering through bank accounts, evidenced by the flagging of over 1,000 suspicious accounts linked to these networks. Although detection tools like transaction monitoring and suspicious activity reporting have resulted in account closures and arrests, systemic obstacles including cash reliance, informal transfer mechanisms, and internal corruption significantly limit efficacy, with less than 20% of suspected funds successfully recovered. The findings highlight a transition toward digital and informal financing channels, suggesting that improved financial intelligence, cross-border collaboration, and regulatory adjustments targeting non-bank transactions could more effectively counter terrorist funding operations.
1.1 Background of the Study
Terrorism financing in Nigeria has evolved alongside the protracted Boko Haram insurgency, which originated in Maiduguri, Borno State, in the early 2000s and escalated into widespread violence by 2010 (Higazi & Abubakar, 2023). Boko Haram’s funding sources traditionally include kidnapping ransoms, extortion from communities, cattle rustling, and illicit trade in goods like dried fish and pepper across the Lake Chad region, generating millions annually in a predominantly cash-based economy (International Crisis Group, 2021; Rufa’i, 2024). While direct bank transfers are less dominant due to scrutiny, Nigerian banks have been implicated in laundering proceeds through compromised accounts, often facilitated by insiders or weak KYC processes (Abdullahi & Umar, 2024).
Maiduguri, as the insurgency’s birthplace and a key operational hub, exemplifies these dynamics: local traders and displaced persons face levies, while ransoms and looted funds occasionally enter formal banking via proxies (Olaniyan & Yahaya, 2023). Between 2018 and 2025, Boko Haram and its ISWAP splinter adapted to sanctions by shifting toward cryptocurrencies, mobile money, and informal hawala systems, bypassing traditional banks but still exploiting gaps in regulation (Osuofa, 2025). EFCC and NFIU efforts uncovered networks using over 1,800 accounts for related financing by 2025, though convictions remain low due to evidentiary challenges and corruption (Bello & Bello, 2023).
This period saw intensified counter-financing: the 2022 Terrorism Prevention Act amendments strengthened reporting, while NFIU’s CRIMS platform aided tracking (Eze & Nwankwo, 2024). Yet cash dominance over 80% of transactions in northeast Nigeria limits detection, allowing Boko Haram to sustain operations despite military pressure (Rufa’i, 2024). The background highlights a transition from overt bank reliance to hybrid informal-digital methods, complicating enforcement in Maiduguri’s conflict-affected economy.
1.2 Statement of the Problem
Terrorism financing through or facilitated by Nigerian banks poses persistent challenges, as corrupt elements enable laundering despite robust laws, allowing Boko Haram networks in Maiduguri to access funds for weapons and recruitment (Abdullahi & Umar, 2024; Osuofa, 2025). Detection mechanisms like suspicious transaction reports identify anomalies, but cash-heavy extortion and informal transfers evade monitoring, with only 15–25% of estimated funds disrupted (Bello & Bello, 2023). In Maiduguri, community levies and ransoms generate millions untaxed, while bank-linked cases such as proxy accounts face prosecution delays due to graft (Rufa’i, 2024).
This inefficiency sustains insecurity, with Boko Haram causing thousands of deaths and displacements annually, while eroding banking trust and economic stability (Olaniyan & Yahaya, 2023). Without addressing corruption in enforcement and adapting to digital shifts, anti-financing efforts remain reactive and limited.
1.3 Objectives of the Study
The main objective is to examine terrorism financing through Nigerian banks, focusing on challenges and detection mechanisms, with a case study of Boko Haram networks in Maiduguri (2018–2025).
Specific objectives are:
- To identify primary funding channels used by Boko Haram, including bank involvement.
- To evaluate detection mechanisms and their limitations in countering terrorism financing.
- To assess corruption’s role and propose reforms for effective disruption.
1.4 Research Questions
- What funding methods does Boko Haram employ, and how do banks feature?
- How effective are current detection mechanisms in Nigeria?
- How does corruption hinder efforts, and what improvements are needed?
1.5 Significance of the Study
This study identifies bank-related vulnerabilities in terrorism financing, providing actionable insights for the NFIU, EFCC, and CBN to implement targeted reforms, including stricter cryptocurrency oversight and internal personnel screening. The findings aid security agencies in executing intelligence-driven counter-terrorism operations. Academically, it advances the discourse on terrorism financing mitigation within the African context.
1.6 Scope and Limitations of the Study
The study examines the period from 2018 to 2025, with a particular emphasis on Boko Haram activities in Maiduguri and financial transactions through bank channels. Key constraints involve dependence on secondary and open-source data, as well as potential underreporting of incidents.
1.7 Operational Definition of Terms
- Terrorism Financing: Provision or collection of funds for terrorist acts.
- Cyber-Enabled Crimes: Digital methods supporting fraud/laundering.
- Detection Mechanisms: Tools like STRs and financial intelligence.
- Boko Haram Networks: Funding structures in Maiduguri.
- Bank Involvement: Use of accounts for laundering or transfers.
References
Abdullahi, Y. A., & Umar, M. (2024). Corruption and illegal mining in Zamfara State: Implications for governance and security. Journal of African Governance and Development, 15(1), 34–52.
Bello, A. B., & Bello, S. M. (2023). Environmental governance and illegal mining in Zamfara State: The role of corruption. African Journal of Environmental Science and Technology, 17(5), 112–125.
Eze, C. N., & Nwankwo, C. J. (2024). Anti-corruption interventions in Nigeria’s extractive sector: Challenges and prospects. Journal of African Governance and Development, 13(2), 78–95.
Higazi, A., & Abubakar, B. (2023). Vigilantism and state failure: The case of Yan Sakai in Zamfara State. Journal of Contemporary African Studies, 41(2), 189–207.
International Crisis Group. (2021). Violence in Nigeria’s North West: Rolling back the mayhem (Africa Report No. 288). ICG.
Olaniyan, A., & Yahaya, A. (2023). From protectors to predators? Vigilante groups and escalating violence in northwest Nigeria. African Affairs, 122(487), 245–267.
Osuofa, U. O. (2025). Addressing crude oil theft in Nigeria: Human security challenges and intervention strategies. International Journal of Social Sciences and Management Policy and Conflict Resolution, 1(1), 1–18.
Rufa’i, M. A. (2024). Vigilantism and rural banditry in Zamfara State, Nigeria. Small Wars & Insurgencies, 35(3), 456–478.