LG Funds: Again, NFIU Warns Banks, Others on Full Compliance with Financial Regulations

TRACKING >>he Nigeria Financial Intelligence Unit (NFIU) Wednesday reinforced the June 1, 2019 deadline to all financial institutions, other relevant stakeholders, public servants and the entire citizenry to ensure full compliance with the provisions of the guidelines already submitted to financial institutions and relevant enforcement agencies including full enforcement of corresponding sanctions against violations.

The unit observed that there had been isolated comments from a section of the public which were in conflict with its initial pronouncement regarding the commencement of investigations into revenue allocations to local government areas across the states of the federation and the need for relevant stakeholders to abide by financial regulations as spelt out in the constitution.

The unit, in a follow up statement issued by its Chief Media Analyst, Ahmed Dikko, a copy of which was emailed to THISDAY, reiterated its warning that any contrary action to its circular to affected institutions will be sanctioned.

It stated: “The Nigerian Financial Intelligence Unit (NFIU) is using this second press statement on the above subject to reiterate its position that the 1st June effective date of the guidelines to all financial institutions and public officials on the local government funds stands.

“The unit also maintains its understanding of the 1999 constitution that no debit is allowed on any local government funds unless and until the funds are credited to and reach the bank accounts of a local government in any state of the federation.”

It further stressed that: “The provision of the cumulative cash withdrawal not exceeding N500,000 per day is also firmly in place effective 1st June 2019.

“We observed isolated comments to the contrary in the past few days which in our assessment only amounted to wilful misinterpretation of the 1999 constitution and therefore of no consequences to the operations of the entire financial system.

“The provision of the guidelines to the financial institutions was also on account of legitimate powers provided by the NFIU Act 2018 and any violations of the said guidelines will be sanctioned appropriately.”

The NFIU, had in its May 6 release, reaffirmed its resolve to “uphold the full provisions of section 162 (6) (8)of the 1999 Nigerian Constitution as amended which designated State Joint Local Government Account into which shall be paid allocations to the local government councils of the state from the federation account and from the government of the state”.

It noted that its action had become necessary in order to check abuses and embezzlement of funds meant for the local government development which are often seized or siphoned by state governors.

He said the move was also to avoid a possible isolation of the entire Nigerian financial system by other international financial systems “because of deficiencies in our anti-money laundering and counter terrorism financing implementation”.

“Therefore, it is no longer possible to allow the entire system to suffer the deliberate and expensive infractions or violations by public officials and/or private business interests,” it said.

It further warned that going forward, all erring individuals and companies will be allowed to face direct international and local targeted sanctions, in order not to allow any negative consequences to fall on the entire country.

The NFIU specifically stressed that effective from June 1, 2019, any bank that allows any transaction from any local government account without monies first reaching a particular local government account will be sanctioned 100 per cent , both locally and internationally.

The statement further noted that a provision had also been made to the effect that there shall be no cash withdrawal from any local government for a cumulative amount exceeding N500,000:00 per day, adding that any other transaction must be done through valid cheques or electronic funds transfer.

The local government council have severally protested to relevant quarters including the National Assembly in order to devise another means where such monies could get to them directly.

The NFIU particularly drew attention to a provision establishing the joint account that: “The amount standing to the credit of local government councils of a state shall be distributed among the local government councils of that state” and not for other unspecified purposes.

“Any state government that is willing to seek any expert economic advice in the unlikely event of these guidelines constituting an inconvenience to the management of the state can work with the NFIU and /or CBN,” the statement added.