Commercial banks across the country are now complying with the new regulations of the Nigerian financial Intelligence Unit (NFIU) which barred state governments from spending funds meant for local governments.
Recall that the Federal Government through Nigerian Financial Intelligence Unit, outlawed the meddling of states in the local government allocations across the country through the States’ Joint Local Government Accounts.
It mandated that from June 1, 2019, “it becomes compulsory for all Local Government allocations to go straight to their respective bank accounts.”
In adherence to the directive by the Nigerian Financial Intelligence Unit (NFIU) which has barred state governments from spending funds meant for local governments, banks have started rejecting cheques tendered to them by some state government on behalf of the local government.
Speaking on the level of compliance by the banks, NFIU, through its spokesperson, Mr Sani Tukur, said some states had approached banks for local government funds but banks decided to turn them down in compliance with the directives.
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“So far, there has been 100 per cent compliance, thanks to the banks and the efforts they have made in ensuring that only cheques from local governments are honoured.
“I am aware that 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 that banks will keep rejecting cheques from the state government to avert sanction on them.
“As long as the cheques are not from the local government, they will not be honoured by any bank because they stand the risk of being sanctioned.”
But in a swift fightback, governors, under the aegis of the Nigerian Governors Forum, had in a protest letter to the President on May 19, 2019, argued that nothing in the NFIU Act, 2018 gives the agency the power to give such a directive.
They cited Sections 7 (6) (a) and (b); Sections 162 (6), (7) and (8), and contended that the constitution expressly confers on only the National Assembly and the state Houses of Assembly the powers to make provisions for statutory allocation of public revenue to the local councils in the federation.