Most people think using a loan for anything other than what it was approved for is money laundering or a criminal offense.

But that’s not true.

In the case of Nwaoboshi v. F.R.N. (2023) 16 NWLR (Pt. 1911) 539, the Supreme Court stated that there is no law in Nigeria that says when loan is given to a person and the person using the funds for something different from the purpose for which the loan was given, such person has committed a crime or laundered money. Diverting funds for a different purpose does not qualify as money laundering under Sections 14(1)(a) & 15(2)(d) of the Money Laundering (Prohibition) Act 2011.

For instance, when you borrow a person money to execute a project and the person uses it to party or build a structure, it is at best a breach of contract and not a crime.