•Erring banks will refund illegal withdrawals —NFIU

By Sanya Adejokun



WITH most states already reeling under the yoke of heavy indebtedness, the guideline of Nigeria Financial Intelligence Unit (NFIU) on local government finance, which came into effect on June 1 is already putting state governors in severe stress.

Many of the governors rely heavily on local government statutory allocations to run the affairs of their states since debt service has eaten deep into allocations of their states.

A recent report put total debt by states at N3.9 trillion as of May 29, 2019 with Lagos leading the pack owing N1.043 trillion.

NFIU spokesman, Mr Sani Tukur, told Saturday Tribune on Friday that “any bank that honours cheques to withdraw money from any local government account when such cheques do not emanate from authorised local government functionaries will be made to refund any such amount withdrawn 100 percent.”

He insisted that “NFIU will not allow the whole country to suffer any international sanction for money laundering just because of the fault of a few individuals. Such individuals will be made to bear the sanctions.”

He reiterated, however, that banks have fully complied with the directive since it became operational on June 1.

In the original directive to banks on May 6, NFIU requested “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 from 1st June, 2019.

“Having realised through analysis that cash withdrawal and transactions of the State, Joint Local Government Accounts (SJLGA) pose biggest corruption, money laundering and security threats at the grassroots level and to the entire financial system and the country as a whole, NFIU decided to uphold the provisions of Section 162 (6) (of the 1999 Constitution, as amended, which designate “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.

“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 purposes].

“As far as the NFIU is concerned, the responsibility of the account as a collection account is fully reinstated.

“In addition, taking such measures was necessitated by prompting reasons on the NFIU to respond to threats of isolating 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.

“Henceforth, 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.

“To be precise, with effect from 1st June, any bank that allows any transaction from any local government account without monies first reaching a particular local government account will be sanctioned 100%, both locally and internationally.

“In addition, a provision is also 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.

Any other transaction must be done through valid cheques or electronic funds transfer.

“The complete guidelines have been released to the Governor of the Central Bank of Nigeria, the Chairman, Economic and Financial Crimes Commission (EFCC), the Chairman, Independent Corrupt Practices and Other Related Offences Commission (ICPC) and Chief Executive Officers of all banks and other financial institutions.

“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 NFIU said.

According to Tukur, the directive was without prejudice to the constitutional provision of paying local government allocations through the Joint State/Local Government Account but they must be distributed to respective local governments before they would be spent.

He commended the banks for fully complying with the agency’s directive since its commencement date.

“Some banks have been calling to say they received cheques from state governments but they have not been cleared by the bank. Of course, they should know by now that only cheques issued by specific local governments will be cleared,” he added.

https://tribuneonlineng.com/217226/

Double wahala for poor states like osun and ekiti state who are heavily indebted. They may need loans from Dangote this time.

Sucks to be them. Lol they should of planned based on their IGR. Alot these states ignore rather subsist of allocation than increase tax revenue. Look at the state tax to GDP ratio for 2017 for proof.

ex: Akwa Ibom Tax/GDP is less than 1%.

Oh check my signature

Women

I think its a good one if it will be adhered to!!

Citytrend:

please Can someone tell me What our Law Enforcement agencies been waiting for all the while? 

Just to tell you how corrupt the system we found ourselves 

Cant enforce laws that dont exist.

Next level

Many states are going to sit up and start performing now....

The years of corruption in LG allowances has come to an end. Time to run states properly. No more looting.

best news ever

No wonder Makinde was shouting

*30k minimum wage mean all cadre of workers would demand an upward review in Salary, there by increasing wage bill and decreasing State Revenue sharply.

*No local Goverment Chairman would ever agree to use his or her name to issue a cheque and give it to the governor to squash when EFCC now have zonal offices every state

*With External Debt for all states standing at over N3.trn and Domestic debt owed pensioners , workers and Contractors also quite heavy then only God can save Governors from the wrath of the masses

*Since Oyo State citizen complained bitterly about paying N3000 school levy in a year (less than N10 a day per child), I wonder who he would tax to increase IGR




.

Hmm

Very good, all these lazy governors waiting for month ending to share monthly allocation go hear word , all Nigeria governors should sit up generate income themselves .

tactius:
Many states are going to sit up and start performing now....

The years of corruption in LG allowances has come to an end. Time to run states properly. No more looting.

I see them battling this to the supreme court. Akwa Ibom made the first move already.

Bold step from Buhari Administration

All these governors go get sense now. No more LG allocation funds for them. Local govt chaimen/chairperson would take responsibilities and be in charge of their LGAs.

Gaddafithe2nd:
All these governors go get sense now. No more LG allocation funds for them. Local govt chaimen/chairperson would take responsibilities and be in charge of their LGAs.

Lol funny enough LG are much less transparent that states. Most dont even have a website. Then theirs an issue with them raising their own IGR. Its its dumb for states to wait on allocation the same is true about local government. The great thing is none of them have immunity though.

Nice one from NFIU, local government autonomy is the best way to go.

In the Nigeria I know where god-fatherism and who-know-who style of politics is the order of the day.. I am very very very very sure that most LG chairmen who obviously were installed by their state governors have signed independent MOUs to allow the state government continue managing their funds despite the NFIU recommendations. Some were even taken to shrines to swear oaths that they would not interfere with the state governors access to LG funds. They are basically cashiers for state governors!

Hopefully roads in interior and environs will be graded regularly even if it's not tarred as was the norm before governors especially APC governors hijacked local government allocation and started borrowing with reckless abandon knowing that they can use local government allocation to be servicing the dept.

Watch and see I know borrowing will reduce in most states since the banks now know local government allocation is separate from state allocation.

But this is Nigeria I trust the governors to find a way to still be controlling the allocation

SLAP44:
Double wahala for poor states like osun and ekiti state who are heavily indebted. They may need loans from Dangote this time.

Are you sure of this?? talking about Osun state, Where did you put Kwara State And Kogi state oooo.. LMAO

The governor's controls the LGA chairmen, they got the chairmen into the offices

Hence the governor's will simply order the chairman to sign cheques for whatever amount the want.

I advice the FG to setup a commission that will oversee the LGA activities and finances.

This commission members should be appointed by the FG with the NEFU and EFCC as members.

Whatever would make states and governors sit up is welcomed.

iammo:



No wonder Makinde was shouting

*30k minimum wage mean all cadre of workers would demand an upward review in Salary, their by increasing wage bill and decreasing State Revenue sharply.

*Since Oyo State citizen complained bitterly about paying N3000 school levy in a year (less than N10 a day per child), I wonder who he would tax to increase IGR

Lol they should stop whining and get their fiscal house in order. They're options are to raise taxes, cut expenses or cut workforce. Citezens should wake up to reality that government services arent free. They're going pay on the front or back end.

Even Zamfara has the funds to pay minimum wage if they raised taxes. Zamfara GDP in 2017 was N1,100,458,020,000 yet their igr was N6,023,994,930.23. Thats less than 1% of their GDP. 

Assuming the IGR/GDP ratio is 5% they'll collect 55,022,901,000. At 10% it's 110,045,802,000. That should cover minimum wage increase and this is without taking allocation into account.

Ps: Nigeria tax to GDP ratio is abysmal anyway. Its mot even 10%. Look at the other countries on chart. Services aren't free if they're stealing jail them.

Cherrybae:
The governor's controls the LGA chairmen, they got the chairmen into the offices

Hence the governor's will simply order the chairman to sign cheques for whatever amount the want.

I advice the FG to setup a commission that will oversee the LGA activities and finances.

This commission members should be appointed by the FG with the NEFU and EFCC as members.

Using LG funds for state purposes is misappropriation.

EFCC will pick the LG boss quickly.

Blue3k:


Lol funny enough LG are much less transparent that states. Most dont even have a website. Then theirs an issue with them raising their own IGR. Its its dumb for states to wait on allocation thesane is true about local government. The great thing is none of them have immunity though.

You stated good points. Many LGAs workers are corrupt, though only few LGAs can generate IGRs. With this new development Many LG chairmen would be prosecuted by EFCC.

Blue3k:


Lol they should stop whining and get their fiscal house in order. They're options are to raise taxes, cut expenses or cut workforce. Citezens should wake up to reality that government services arent free. They're going pay on the front or back end.

Even Zamfara has the funds to pay minimum wage if they raised taxes. Zamfara GDP in 2017 was N1,100,458,020,000 yet their igr was N6,023,994,930.23. Thats less than 1% of their GDP. 

Assuming the IGR/GDP ratio is 5% they'll collect 55,022,901,000. At 10% it's 110,045,802,000. That should cover minimum wage increase and this is without taking allocation into account.

Problem with IGR/GDP or Tax/GDP is that most state economy are controlled by the informal untaxable sector of the economy, take Zamfara's example for instance , the GDP value is solely due to Peasant Agriculture and Livestock Rearing.. The Banks are majorly located and active during Farmers market day where people trooping from far and near to shop, Now how would Matawele convince get Mayetti Allah in to the tax bracket without them raising daggers, or Peasant farmers that enjoy nothing from goverment, even ferterlizers, Agroloans and seedlings are giving to Political Jobbers.

But i think this would truely help Diversification Agenda in the long run, and prepare us for Post crude oil price fall

chloride6:


Using LG funds for state purposes is misappropriation.

EFCC will pick the LG boss quickly.

The question is how will efcc trace this, the LGA chairmen can write a cheque for frivolous stuff and drop the cash wit the governor

I don't see this implementation by NEFU yielding any fruit at all

Blue3k:
Sucks to be them. Lol they should of planned based on their IGR. Alot these states ignore rather subsist of allocation than increase tax revenue. Look at the state tax to GDP ratio for 2017 for proof.

ex: Akwa Ibom tax/GDP is less than 1%.

Pathetic so say the least for Governors