The Central Bank of Nigeria (CBN) recently released a new circular on Naira cash withdrawal limits on the 21st of December,2022 as a result of feedback from relevant stakeholders in response to its earlier circular on cash withdrawal limits issued on the 6th of December,2022.
This article will be focused on the provisions of this circular and their regulatory effects on financial transactions in Nigeria.
The provisions of this circular are as follows :-
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– The maximum weekly limit for cash withdrawals across ALL channels by individuals and corporate entities shall now be 500 Thousand Naira and 5 Million Naira respectively.
– In compelling circumstances where cash withdrawals above the limits earlier mentioned are requested, such requests shall be subject to a processing fee of 3% & 5% for individuals and corporate entities respectively.
– Further to the paragraph mentioned above, a Financial Institution (FI) shall obtain the following information from the customer at the minimum and upload same on the CBN portal created for the purpose :-
- A valid means of identification.
- The Bank Verification Number BVN of the payee.
- The Tax Identification Numbers(TINs) of both the payer and payee.
- An approval in writing by the Managing Director/Chief Executive Officer of the FI authorizing the withdrawal.
– 3rd party cheques above 100 Thousand Naira shall not be eligible for payment over the counter while the extant limit of 10 Million Naira on clearing cheques still subsist.
– Monthly returns on cash withdrawal transactions above the specified limits should be rendered to the Banking Supervision, Other Financial Institutions (OFIs) & Payment Systems Management Departments as applicable.
– Compliance with extant Anti-Money-laundering & Combating the Financing of Terrorism (AML/CFT) Regulations relating to KYC (Know-Your-Customer) , ongoing CDD (Customer Due Diligence) & CTRs/STRs ( Currency Transaction Reports & Suspicious Transaction Reports) is mandatory in all circumstances.
– Customers should be encouraged to use alternative channels (interest banking, mobile banking apps, USSD, cards and Point-of-Sale (POS) terminals, E-Naira, etc) to conduct their banking transactions.
– Bank & mobile money agents are important participants in the financial system, enabling access to financial services in underserved and rural communities. They will continue to perform the strategic functions in line with existing regulations governing their activities.
– These directives supersede the earlier provisions contained in the CBN Cash Withdrawal Limit circular of December 6,2022.
Legal Opinion
While still constituting a limitation on the right to own and use moveable and immoveable property guaranteed in the 1999 Constitution of the Federal Republic of Nigeria (as amended), the recent cash withdrawal limit policy is a major improvement.
The circular was however unclear about the specific sanctions to be levied in cases of violations of its provisions and also failed to identify the scope of its directives which at best qualify as Regulatory fee impositions easily susceptible to a reversal. The CBN also failed to properly state the reasons for this directive and how it can help achieve its cashless Policy and financial inclusion objective regarding underbanked sections of the country.
These concerns need to be looked at and addressed.