The Nigerian Financial Intelligence Unit (NFIU) has announced on January 5, 2023, that cash withdrawals from public accounts will be treated as money laundering offence from March 2023. The unit also added that payment of estacode and oversea allowances to civil and public servants in cash has been outlawed. The new guidelines on this were released with the aim of mitigating money laundering, terrorist financing, and the proliferation of weapons. This is a drive to complement the efforts of the Central Bank of Nigeria (CBN) in tackling terrorism-related financing and promoting a cashless economy.
Mr. Modibbo Hamman Tukur, the director of NFIU, signed the guidelines entitled “The Enforcement, Guidelines, and Policies for Mitigation of Money Laundering, Terrorist Financing, Proliferation of Weapons and Prevention of Predicate Crimes” and the unit made it available to the press. The agency also announced that the full enforcement and/or implementation of the guideline by all public authorities, institutions and organisations in the financial sector, financial institutions, and designated non-financial institutions will commence on March 1, 2023.
Tukur says CBN’s circular on cash withdrawals in harmony with the law.
The director said that the unit supports the CBN’s circular on cash withdrawal limits, which is in harmony with the law. The law is provided in Section 2 of the Money Laundering (Prevention and Prohibition) Act, 2022 (MLPPA, 2022). The agency head added that the new guidelines will support the efforts of the CBN. According to him, the discontinuation of cash withdrawal in naira and foreign denominations from federal, state and local government public accounts are in compliance with its statutory responsibilities under Section 3(1) a-s and Section 23(2) of the NFIU Act 2018 as well as other provisions under the MLPPA 2022.
These guidelines became necessary because of the relevant laws. He also said that the agency noticed for it’s financial transactions analysis that civil servants were more susceptible to money laundering and its predicate offences due to their exposure to cash withdrawals from public accounts. The agency’s analysis shows that the federal government, states and local governments withdrew about N225 billion, N700 billion and N150 billion respectively. These transactions were all in cash.
Results from this analysis contravenes the law.
Tukur said that the cash withdrawals directly contravene the provisions of the MLPPA 2022 and the Proceeds of Crime (Recovery and Management) Act2022, both of which provide the legal framework for the limitations on cash transactions and sanctions for the infringement of the provisions. He reiterated that Section 2 of the MLPPA 2022 restricts cash payment of more than N5 million (or its equivalent) for individuals and N10 million (or its equivalent) for corporate bodies.
According to the MLPPA 2022, the punishment for breaking these laws in Section 19 is a fine of at least N10 million or imprisonment for a term of at least three years (or both) in the case of individuals. For corporate bodies, it is a fine of at least N25 million. Section 26 of Proceeds of Crime Act 2022 also makes provisions for the seizure and detention of cash over the prescribed amount under the law. Tukur revealed that most cash withdrawals from public accounts were in excess of N5 million and N10 million respectively which was prohibited and liable to imprisonment or fines upon conviction.
Inflation is also a factor in these withdrawals.
His statement continued, “the breach of this particular provision became so rampant because there are heavy withdrawals of cash from public accounts necessitated by inflation and changes in the economy, and also due to payment for overseas travels in terms of estacode and other overseas allowances.” He added that in the meantime, it is not only indicting chief accounting officers of Ministries, Departments and Agencies (MDAs) but, in the context of Nigeria’s democracy, also gives room for adversaries, political opponents and antagonists to exploit the law against their competitors, or to their individual political advantage.
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