NFIU directs discontinuation of cash withdrawal from public accounts

…Gives 1st March, 2023 as deadline

By. Chimezie Godfrey

The Nigerian Financial Intelligence Unit, NFIU, has directed discontinuation of cash withdrawal, in naira and foreign denomination from public accounts at federal, state and local governments.

The Director and Chief Executive Officer, NFIU, Modibbo Haman Tukur who disclosed this at a press conference Thursday in Abuja, said the directive was issued in order to mitigate the risk of exposure of public servants to these crimes and protect the financial system from continuous abuse.

He said,”Here we are today we don’t normally issue certain guidelines for fancy sake because we are guided by our laws. We are guided by our laws and when we notice certain requirements within the law, prompted by certain developments, then that is when we come out to either issue advisory, we have what we use as our own working instruments.

“We have executive alliances, we have advisories, we have guidelines, we have demand orders, we have guidance note and so many of them. So each of them is guided by law as to when it should be resorted.

“So, particularly now, the reason why we called you today is that we found within the operation of the financial system, and legislative amendments from the National Assembly which was appended to by the President, for reasons to discontinue completely cash transactions from public accounts. And the reasons are the provisions of the money laundering Prohibition Act, particularly section (2) create a threshold limits and withdrawals of cash from all corporate body accounts and put them at N10 million.

“But again, Section 13 of the same Act advised that in a situation where you run into new developments, that makes the operationalizing of certain provisions difficult that is Section 13, you have to make recourse to development of new products and response to new technologies to address the issues.

“Then we have Section twenty six (26) of the Proceeds of Crime Act. So the provisions of all of them; (I) Section two (2), provided that the withdrawal of cash above those thresholds should be punished with imprisonment of up to three (3) years or fine of up to three times or twice the amount of the money that was been withdrawn.

“So you are all aware of the inflation in the country and then we also discovered that the federal government withdraw in cash up to N225.72 billion.

“Now it became necessary for us to direct discontinuation of cash withdrawal, in naira and foreign denomination from public accounts at federal, state and local governments.

“So what we advise in the guidelines is that they should make a recourse to technology as the law requested and they should also make requests to training and we are not stopping there because as you know, the Central Bank of Nigeria also is also changing the currency notes.”

Tukur also stressed the need for the new currency provision to adjust to the market operation, adding that this can only achieved by compliance with the withdrawal limits imposed by the central bank.

“From what we are seeing, there is also need for the new currency provision to adjust to the market operation. And the way it will adjust is to go by the withdrawal limits imposed by the central bank. There is no doubt about it. These are not our own issues, they are issues of prudential management of the central bank. They are issues having to do with liquidity management in the financial system,” he said.

The NFIU Director, declared that there has been no threat of corruption from the statistics since the introduction of the new banknotes, as he revealed that withdrawals are higher than deposits.

According to him, this development indicates that the market is not rushing to return the old notes but is interested in getting liquidity to finance market operation

“So far there is no threat of corruption from the statistics we have that we ran over this period that the new banknotes was introduced. Still, withdrawals are higher than deposits. So which means that the statistics still shows that withdrawal still slightly higher than deposits and it is an indication that the market is not rushing to return the old notes but is interested in getting liquidity to finance market operation. So there is no imminent threat.

“If the reverse was the case, for example; there is rush to return the money back to the financial system, in form of deposits, that is when we are going to suspect that people are seriously stuffing cash in their own houses. So, as far as corruption and money laundering are concerned, and we have the records, there is no imminent suspicion or threat and this is statistically proven. So if you have question on the liquidity side of it, you can approach the central bank,” he said.

On the limitations to the guidelines, Tukur stressed that special needs to withdraw cash from any public account anywhere can only be possible through a Presidential approval.

He said,”These are the issues and the guideline is clear and we also limitations as regards to the guidelines. And the limitation is that; One, if there are special needs to withdraw cash from any public account anywhere, there has to be a presidential approval.

“Two, there is not standing waiver to say that “because I’m doing this particular work, I have a waiver anytime because of my work. The waiver is going to be by the president himself. It is going to be on case by case basis.

“Three, we have issued an advisory to all the state governors and all the local governments and all the MDA’s in the federal government. We given them between now and the end of March, 2023 to put all facilities in place to operationalize use of the guideline.

“So what’s the bottom line: by the end of March if there is cash withdrawal from the government account, even if it is one naira, we are going to trigger off money laundering and corruption investigation in either EFCC or the ICPC, the Nigeria Police or all the law enforcement agencies, depending on the relevance.

“As we started with the local government guideline, is not reversible because we are going by the provisions of the law so we are only enforcing the law as far as our responsibility is concerned. If later the National Assembly deems it fit to accompany it with an act of parliament, to outlaw cash withdrawals completely from public accounts, then we are happy, but otherwise it still stands and we are also happy to address any issues arising from that. If they are necessary, they will be addressed,” he stressed.

He added,”This also with the CBN regulation on the cash withdrawal has automatically taken the country to a none-cash economy. That has to be stated clearly, and we are all developing an advisory to the bank but that is not already right now, but the country is already designated a non-cash based economy.

“It is a complete transition that happened through an evolutionary process and circumstance. So, perhaps we can say with effect from March, Nigeria is no longer a cash-based economy.

“The cash in the system is limited, but with this guideline, we espect that the cash withdrawal from the system will go down by about N1 trillion out of the N3 trillion cash that is in circulation on weekly basis, so the government aspect of it is completely taken care of.