Why FG Imposed N500,000 Daily Cash Withdrawal Limit On LGs – Malami

The federal government has explained why it imposed a daily cash withdrawal limit on local governments across the country.

The Office of the Attorney General of the Federation has urged the Federal High Court sitting in Abuja to dismiss the suit by Nigerian governors which sought a “declaration that the Nigerian Financial Intelligent Unit, NFIU, does not have the statutory powers by its establishment Act to make guidelines for the regulation, monitoring and operation of the State Joint Local Government Accounts or any other account into which funds from the Joint Account are paid into.”

The State Joint Local Government Account is an account where allocations of LGAs and states are deposited from the Federation account for onward distribution and spending between the two tiers of government.

The case is between the AGs of the 36 states, Incorporated Trustees of Nigeria Governors’ Forum and the AGF, NFIU and Nigeria Union of Local Government Employee ( 1st to 3rd Defendants); and it was argued upon on Wednesday before Justice Inyang Ekwo.

Part of the Act limits cash withdrawal to N500,000 daily while other withdrawals are to be by cheques or cash transfer.

The state AGs argued in their court processes (Suit No: FHC/ABJ/CS/563/2019) that Section 3(1) and 23 (2) (a) of the NFIU Act, 2018 gives “excess powers” to the NFIU because it subjects the state governments to its control and directives.

They asked the court to declare that the NFIU guidelines (Guidelines to Reduce Crime Vulnerabilities Created by Cash Withdrawal From Local Government Funds) is unconstitutional, unlawful, null and void.

But in its counter affidavit, the AGF through its counsel, T.A. Gazali, SAN, denied interfering with local or state governments mode of operation.

He argued that the Act was crucial because investigation showed that the State Joint Local Government Account is one of the accounts through which cash withdrawals are used for money laundering.

He stated in his brief statement of facts that it was for the purpose of curbing financial corruption that the NFIU Guidelines of 2019 was drafted and came into effect in June same year.

“ We further submit my lord that a perusal of the guidelines did not in any way establish the assertion that the NFIU guidelines interfered with local administration in the country. The guidelines did not stop the payment of statutory allocations pursuant to Section 162 of the CFRN into the State Joint Local Government account. The guidelines did not put a benchment or limitation on what local governments intend to spend in a day but rather curtails cash withdrawal to an amount not exceeding N500,000 per day. A local government council can transfer whatever amount to any account in a day; where however, the need is for a cash withdrawal, it should not exceed N500,000 in a day,” he stated, adding that the Act is to prevent “corrupt practices”.

Justice Ekwo fixed May 23 for judgment on the matter.