E.O., Johnson.
LL.B (LASU), B.L. (KANO).
G-mail: oluwadamipe7@gmail.com
E.O., Olojede.
LL.B (Bowen), B.L. (KANO), AICMC.
G-mail: elizabetholojede02@gmail.com
Sequel to the launch of the redesigned ‘200’, ‘500’ and ‘1000’ naira notes, aimed at checking inflation, counterfeiting and corruption, the Central Bank of Nigeria (hereinafter referred as “the CBN”) through a circular referenced BSD/DIR/PUB/LAB/015/069 issued on December 6, 2022 and signed by its Director of Banking Supervision, Haruna Mustafa, directed Deposit Money Banks (DMBs) and Other Financial Institutions to uphold the new cash withdrawal policy which places withdrawal limit for individuals at N20,000:00 (Twenty Thousand Naira Only) per day and N100,000:00 (One Thousand Naira Only) per day for corporate entities.
Scheduled to take effect from January 9, 2023, the CBN, amongst other reasons, cited the need to enhance digitalisation, prevent vote buying, discourage hoarding of local currency and improving the awareness and use of the E-Naira for the promulgation of the policy.
The proposed policy has not escaped public scathing ever since its communication. It has been brazenly described as an opaque policy, unreflective of the present day economic realities of the country and “designed to sentence poor citizens to more excruciating economic hardship”.[1]
While disconnecting from the fuss and socio-economic views expressed about the policy, this paper verifies the legality of the proposed regulation under the prism of the of ultra-vires doctrine.
Cash Withdrawal Threshold under the Money Laundering Act
Section 2(1) of the Money Laundering Act states thus:
“No person or body corporate shall, except in a transaction through financial institution, make or accept cash payment of a sum exceeding –
(a) N5,000,000:00 or its equivalent in the case of an individual; or
(b) N10,000,000:00 or its equivalent, in the case of a body corporate”.
The language and intention of the draftsmen is clear. A cash withdrawal policy of N5 million and N10 million for individuals and body corporate respectively is one that mirages the present day economic realities of the country. Until the provisions of Section 2(1)(a)-(b) of the Money Laundering Act, 2022 is amended, the limitation on cash withdrawal proposed to be set by the CBN is ultra-vires the powers of the CBN and hitherto null and void ab initio.
Powers of the CBN
The Central Bank of Nigeria is a creation of statute.[2] It is the apex bank in Nigeria with the responsibility to provide regulatory oversight on financial institutions while maintaining and promoting sound financial ecosystem in the country.[3]
As an agency of the Federal Government, part of its powers is to (only) administer Acts of the National Assembly touching on its core objects as set out under Section 2(d) of the CBN (Establishment) Act, 2007.[4] An extension of this power (as in the instant case) is a sheer abuse of power. The CBN cannot by its direction or policy override the provisions of an enactment of the National Assembly. Doing so is ultra-vires its powers; it is unconstitutional; it is null and void.
Some have argued for the validity of the policy on the strength of Sections 56 and 53 of the Banks and Other Financial Institution Act, 2022 (BOFIA)[5] and Section 51 of the CBN Act. Contrary to the above, the provisions the BOFIA and CBN Act under which the CBN Governor purportedly acted, encapsulates only acts and actions covering its statutory obligations/objects under the CBN Act.
In Liberty Bank & Ors v. CBN & Ors[6] the Court of Appeal held thus:
“…even though Section 56 of BOFIA and 51 of CBN Act empower the 1st and 2nd Respondents to make rules and regulations for the operation and control of Banks in Nigeria, any such rules or regulations must be made towards achieving their statutory obligations under the Acts. The 1st and 2nd Respondents cannot, whimsically prompted by impulse make rules and regulations in an arbitrary and unreasonable manner. The exercise of discretion granted to the1st and 2nd Respondents must be within the framework of the endowing statutes”.
A Mere Circular is not Law
In view of the penultimate paragraph of the said circular which threatens “severe sanctions” on any Deposit Money Banks (DMBs) and Other Financial Institutions who breach the direction, it is advised that they should dispense with the threats. It is long established that ‘you cannot place something upon nothing’. The policy in itself is null and void ab initio, so does the threat of sanctions – it cannot hold water (in law).
Relying on the tenor in the ruling in Governor of CBN v. Rise Vest Technologies Limited & 5 Ors:[7]
“The law is trite that any conduct that must be sanctioned must be expressly stated in a written law. Being unknown to law, circulars cannot create an offence because it was not shown to have been issued under an Order, Act, Law or Statute”.
Conclusion
Until the provisions of Section 2 of the Money Laundering Act are amended, ipso facto and ipso jure, the cash withdrawal limit remains N5 million and N10 million for individuals and body corporate respectively. The CBN being a statutory creature itself cannot by its policy abrogate the provisions of the Money Laundering Act, such attempt is ultra-vires its powers, it is unconstitutional, it is null and void. The power to do so is constitutionally within the exclusive confines of the National Assembly of the Federation.
[1] According to the Learned Silk, Femi Falana (SAN).
[2] See, Section 1(1) of the Central Bank of Nigeria (Establishment) Act, 2007.
[3] See, Section 2(d), Ibid.
[4] Hereinafter referred as “the CBN Act”.
[5] Seyi Bella, ‘Revised Cash Withdrawal Limits: Legal, Regulatory and Compliance Implications for Businesses’ (2022) < https://www.mondaq.com/nigeria/financial-services/1261950/revised-cash-withdrawal-limits-legal-regulatory-and-compliance-implications-for-businesses > accessed 19 December 2022.
[6] (2019) LPELR-50238(CA)
[7] FHC/ABJ/CS/822/2021 (Unreported)
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