But neither Britain nor Nigeria are taking the problem seriously, it said.
“Private-sector fraudsters and corrupt public officials and British companies have profited from the general Western focus on terrorist financing, drugs and people trafficking,” it said.
Britons now closely associate the African country with the so-called “advance fee” scam whereby people are contacted by e-mail and offered the opportunity to earn millions of dollars.
The recipient is told they will earn a commission in exchange for aiding the sender in transferring funds.
The victim has to send bank details or even cash, ostensibly to help pay off corrupt officials, and then the victim’s bank account is stripped.
“The frauds are often mischievously inventive and run on an industrial scale,” the report said.
Among the variations, victims have been offered the chance to benefit from a share of Saddam Hussein’s family savings and even money “looted” from the rubble of the World Trade Center after the September 11 attacks.
According to the Chatham House report, an analysis by Dutch-based consultancy Ultrascan concluded the total losses from advance fee fraud scams to British companies and individuals in 2005 was $520 million (275 million pounds).
Only the United States was worse off, losing $720 million that year. Nigeria was not the only source of such scams.
Although the scam has been widely publicized, people still fall for it through a mixture of greed, naivete and a sense of racial superiority, the British study said.
“The fraudsters play on the enduring myth of African infantilism and simple-mindedness: a European who believes in this might find it unremarkable that a Nigerian holding tens of millions of dollars would be clueless about what to do with it. In such circumstances, what could be more natural than to turn to the clever white person for help?”
Nigeria is also becoming a center for “phishing” attacks in which people receive e-mails, purportedly from their banks, asking for account details and PINs.
Other Nigerian-origin crimes include forged checks and postal orders, with 20 million pounds ($38 million) worth of such items found in one day at Heathrow Airport during a spot check.
Corrupt Nigerian officials have also traditionally used London to launder embezzled money, the study says, noting about $1.3 billion looted by the late Nigerian dictator General Sani Abacha was processed via British financial institutions.
Britain and Nigeria must work closer together if there is to be any chance of tackling the problem, the report concluded.
Ultrascan FIU Financial Intelligence Unit - A mixture of intelligence gathering, investigations, reputational risk mitigation and Innovative Technology in line of objectives. Focused on external information and stakeholder engagement, to detect exposure to financial crime risk.