NFIU ENFORCEMENT AND GUIDELINES FOR COMPLIANCE WITH SECTIONS 2 (CASH TRANSACTION OUTSIDE FINANCIAL INSTITUTIONS LIMIT), SECTION 13 (USE OF NEW PRODUCTS, BUSINESS PRACTICES AND NEW TECHNOLOGIES) OF THE MONEY LAUNDERING (PREVENTION AND PROHIBITION) ACT, 2022 AND SECTION 26 (SEIZURE AND DETENTION OF CASH) OF THE PROCEEDS OF CRIME (RECOVERY AND MANAGEMENT) ACT, 2022
DISCONTINUATION OF CASH WITHDRAWAL IN NAIRA AND FOREIGN DENOMINATION FROM PUBLIC ACCOUNTS AT FEDERAL, STATE AND LOCAL GOVERNMENTS
In compliance with its statutory responsibility under Section 3(1) a – s and Section 23 (2) a of the NFIU Act, 2018, and other provisions under the Money Laundering (Prevention and Prohibition) Act, 2022 (MLPPA, 2022), the Nigerian Financial Intelligence Unit (NFIU) hereby provides the following Guidelines for compliance by all Financial Institutions, Non-Financial Institutions and public officials in Nigeria.
REASONS FOR THE GUIDELINES
In considering the provisions and enforcement requirements of the law, particularly Sections 2 and 13 of the MLPPA, 2022, Section 26 of the Proceeds of Crime (Recovery and Management) Act, (POCA) 2022, and the Central Bank of Nigeria (CBN) circular on the revised cash withdrawal limits, issued pursuant to its powers under the CBN Act, 2007, and Banks and Other Financial Institutions Act, 2020, the NFIU noticed in the process of its financial transactions analysis that civil servants are becoming more and more vulnerable to money laundering and its predicate offences due to their exposure to cash withdrawals from public accounts.
According to NFIU analysis covering the period 2015 to 2022 (Annex 1), the Federal Government withdrew N225.72 billion cash, State Governments withdrew N701.54 billion cash, and Local Governments withdrew N156.76 billion cash.
The cash withdrawals directly contravene the provisions of the MLPPA, 2022 and the Proceeds of Crime (Recovery and Management) Act, 2022 (POCA, 2022) which provide the legal framework setting limitations on cash transactions and sanctions for infringement of the provisions.
Section 2 of the MLPPA, 2022 restricts cash payments of a sum exceeding N5 million (or its equivalent) for individuals, and N10 million or its equivalent for a body corporate. Section 19 of the MLPPA, 2022 imposes a fine of at least N10 Million or imprisonment for a term of at least three years (or both), in the case of individuals; and a fine of N25 Million in the case of a body corporate.
Section 26 of POCA, 2022 makes provision for the seizure and detention of cash over the prescribed amount under the law.
Most cash withdrawals from public accounts are in excess of N5 Million and N10 Million respectively which is prohibited and liable to imprisonment upon conviction. 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.
By the principles of Section 2 (Cash Transaction Outside Financial Institutions Limit), and Section 13 (Use Of New Products, Business Practices And New Technologies) of the MLPPA, 2022, cash withdrawals must be prohibited in order to mitigate the risk of exposure of public servants to these crimes and protect the financial system from continuous abuse.
In the meantime, this is not only indicting chief accounting officers of Ministries Departments and Agencies (MDAs) but in the context of Nigeria’s democracy, it gives room for adversaries, political opponents and antagonists to exploit the law against their competitors, or to their individual political advantage.
Considering the provisions of Section 13 of the MLPPA, 2022, which depicts that in the light of the vulnerability stated above and risk, there must be redesign of products and technologies to respond to new circumstances and developments which directly applies in this particular case, for the protection of the innocent public servants against terms of imprisonment.
Convictions on account of Section 2 of MLPPA, 2022 were becoming frequent in the law courts.
Sections 3(1)(e),(n), and (l) as well as 23(2)(a) of the NFIU Act empowers the Unit to respond in line with our primary duty and issue guidelines, advise, monitor and report compliance on this to law enforcement and prosecutorial authorities.
We support the CBN circular on cash withdrawal limit which is in harmony with the law, provided in Section 2 of MLPPA, 2022. This guideline will support the efforts of the CBN.
Anticorruption and Audit Trail:
Although this guideline is meant to enforce the provisions of Sections 2 and 13 of MLPPA, 2022, to discontinue cash withdrawal from public accounts and establish clear audit trail, and mitigate corruption and other vices in public expenditure; it is also aimed at supporting law enforcement and the entire criminal justice system by strengthening transparency in investigation.
EXCEPTIONS TO THE GUIDELINES
There is nothing in these guidelines to suggest or indicate there is reason to compel or warrant a public official at federal, state and local government to go to a financial institution to withdraw cash. In the unlikely event that a public official feels he may need cash withdrawal, he may apply for approval for waiver from the Presidency which may be granted on case-by-case basis. Under no circumstance, shall any category of public officers be given a standing or continuous waiver to withdraw cash from any public account in any financial institution or designated non-financial institution.
The application of these Guidelines includes all foreign Missions operating in Nigeria, accounts of all development partner institutions, and the accounts of all instituted funds in form of independent funds to be operated as mutual funds such as insurance funds, cooperative funds, brokerages funds, political party funds or pressure group/union funds, once the funds are designated to exist as funds or to operate independently for management and/or investment.
By these Guidelines, the local government N500,000 cash withdrawal limit with regards to public accounts and instituted funds are hereby discontinued. These Guidelines supersede and repeal the N500,000 cash withdrawal limit of local government funds and also, since it is for criminal purpose, supersedes the CBN’s Regulation on cash withdrawal limit with regards to public accounts and instituted funds.
EFFECTIVE DATE
The effective date for the enforcement and/or implementation of this guideline by all public authorities, institutions and organizations in the financial sector, financial institutions and designated non-financial institutions is 1st March, 2023.
PROVISIONS OF THE GUIDELINES:
Provision 1: Cash withdrawal from public accounts is hereby prohibited by requirement of the laws under reference.
Provision 2: The payment of estacodes and overseas allowances to civil and public servants in cash is hereby prohibited.
SANCTIONS AND PENALTIES:
It is hereby stated clearly that any individual or corporate body who violates the provisions of these Guidelines is in direct contravention of provisions of Section 2 of MLPPA, 2022, Section 13 of MLPPA, 2022, NFIU Act, 2018 and Section 26 of POCA, 2022, and their attendant principles and interpretations and will be liable to necessary prosecution and penalties from the effective said date. Cash withdrawals from public accounts would be treated as a money laundering offence.
Also, it is hereby provided that any public officer or any citizen who comes into contact with the provisions of these Guidelines with its attendant principles shall as a matter of obligation promote the implementation and success of the Guidelines.
Modibbo R. HammanTukur
Director/CEO