Aftermath of NFIU Directive, Banks Reject Cheques From Govs

By David Olalekan

Banks are reportedly turning down cheques issued by state governors on behalf of local governments, INSIDER has learnt. The refusal to honor the cheques issued by the state chief executives is said to be in adherence to the directive recently issued by the Nigerian Financial Intelligence Unit (NFIU) which preclude state governments from spending funds meant for local governments.

The spokesman for the NFIU, Mr Sani Tukur, confirmed to a PUNCH reporter that the directive had recorded 100 per cent compliance.

According to him, “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.

“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.”

It will be recalled that the NFIU had on May 6, 2019 issued ‘Guidelines to Reduce Vulnerabilities Created by Cash Withdrawals from Local Government Funds throughout Nigeria,’ a situation that cut off the access of state governors to funds meant for local government areas from June 1.

According to the new NFIU guidelines, the joint account between states and local governments, which hitherto had been operated by the governors in ways that shortage the local governments, would now just a transit accounts from which funds will be distributed directly to the third tier of government which the local governments represent.

Financial institutions were also directed by the new directive to ensure the full implementation of the guidelines with effect from June 1.

Since news of a possible direct payment of allocation to local governments came to the fore, governors, under the aegis of the Nigerian Governors Forum had protested the new move. The governors had, in a protest letter dated May 19,2019, which was addressed to President Buhari; argued that nothing in the NFIU Act 2018 gives the agency the power to give any directive disbanding the operation of a joint account between states and local governments.

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