Financial Intelligence Unit, local government autonomy and legal quagmire
The inexplicable misfortune of the Local Government Councils/Areas ingloriously perceived in some quarters as administrative units of states and to others as the third tier of government resonates whenever the issue of grassroots governance takes the front burner.
In retrospect, the Nigerian Financial Intelligence Unit, an agency of the Federal Government in a proactive manner to emasculate the 774 local councils from the ravenous and banditry grip of the states commenced a new financial regime of direct disbursement of monthly statutory allocation to strengthen the councils. It meant that with effect from June 1, 2019, local councils would be receiving directly like states their “statutory” monthly allocation from Abuja. The furore generated therefrom has pitched the protagonists against the antagonists on this score.
Constitutional ambiguity of the furore
With special reference to S.2 (1) CFRN (1999 as amended) provides that Nigeria is one indivisible and indissoluble sovereign state to be known by the name of the Federal Republic of Nigeria. S.2 (2) further provides that “Nigeria shall be a federation consisting of states and Federal Capital Territory. The import of these provisions above referred to is to the effect that Nigeria strictly is a federation of two distinct entities with a minor appendage: Federal Government, States, and the Federal Capital Territory. The draughtsmen of the 1999 constitution never had the local councils at heart and subsequent amendments made by the National Assembly so far never contemplated the incursion by the Nigerian Government Financial Intelligence Unit.
The quagmire and discomfiture of the council system is further exacerbated by S.7 (1) which provides that the system of local government by democratically elected local government councils is under this constitution guaranteed and accordingly, the government of every state shall subject to section 8 of this constitution, ensure their existence under a law, which provides for the establishment, structure, composition, finance, and functions of such councils. S.7 (3) provides further that it shall be the duty of a local government council within the state to participate in economic planning and development of the area referred to in S.7 (2) and to this end, an economic planning board shall be established by a law enacted by the House of Assembly of the state.
Uninterestingly, the functions of a typical council in an ideal system are well captured in S.7 (5) and the 4th schedule of the extant constitution. S.7 (6) (a) provides: Subject to the provisions of this constitution, the National Assembly shall make provisions for statutory allocation of public revenue to local government councils in the federation.
Functions of the council
Disappointedly, the functions of an ideal council include the following: 1. a. The consideration and the making of a recommendation to a state commission planning or any similar body on i. the economic development of the state, particularly in so far as the areas of authority of the council and of the state are affected, and ii. Proposals made by the said commission or body. b. Collection of rates, radio and television licenses, c. Establishment and maintenance of cemeteries, burial grounds, and homes for the destitute or inform. d. Licensing of bicycles, trucks (other than mechanically propelled trucks), canoes, wheelbarrows & carts. e. Establishment, maintenance, and regulation of slaughterhouses, slaughter slabs, markets, motor parks, and public conveniences. f. Construction and maintenance of roads, street, street lightings, drains, and other public highways, parks, gardens, open spaces, or such public facilities as may be prescribed from time to time by the House of Assembly of a state, g. The naming of roads and streets, and numbering of houses, h. Provision and maintenance of public convenience, sewage, and disposal i. Registration of all births, deaths and marriages j. Assessment of privately owned houses or tenements for the purpose of levying such rates as may be prescribed by the Houses of Assembly of a state and k. Control and regulation of i. Outdoor advertising and hoarding ii. Movement and keeping of pets of all description iii. Shops and kiosks iv. Restaurants, bakeries and other places for sale of food to the public v. Laundries vi. Licensing, regulation, and control of the sale of liquor.
2. The functions of a Local Government Council shall include participation of such council in the Government of a state as respects the following matters: (a) the provision and maintenance of primary, adult and vocational education (b) the development of agriculture and natural resources, other than the exploitation of minerals (c) the provision and maintenance of health services, and (d) Such other functions as may be conferred on a local government by the House of Assembly of the state. Further reference to the unfortunate predicament of our local council system is captured by S. 162 (8) which provides that the amount standing to the credit of local government councils of a state shall be distributed among the local government councils of that state on such terms and in such manner as may be prescribed by the House of Assembly of the state.
States and local government councils’ unholy alliance
The impunity and recklessness at which state governors undermine the autonomy of local councils is derived from S.162 (5) which provides that the amount standing to the credit of local government councils in the federation Account shall also be allocated to the states for the benefit of their local government councils on such terms and in such manner as may be prescribed by the National Assembly. S.162 (6) goes further to provide that each state shall maintain a special account to be called “State Joint Local Government Account” into which shall be paid all allocations to the local government councils of the state from the Federation Account and from the government of the state. It is obvious from the framers of our constitution that the local councils are meant to be mere administrative units.
The Nigerian financial intelligence unit and local government councils’ autonomy
In view of the abysmal performances of the 774 in relation to their constitutional functions as enumerated in the 4thForth Schedules of the 1999 CFRN (as amended) the direct intervention by the NGFIU was seen by many especially staff of the Local Government as a welcomed relief.
In reference to S2 (1) Nigerian Financial Intelligence Unit Act, 2018 provide that “there is established the Nigerian Financial Intelligence Unit (in this Act referred to as “the unit”) charged with the responsibility for receiving, requesting, analyzing and disseminating financial intelligence reports on money laundering, terrorist financing and other relevant information to law enforcement security and intelligence agencies and other relevant authorities. Basically S.1 NGFIU Act makes provisions for the principal objectives of this act to include:
• established the Nigerian Financial Intelligence Unit
• create the legal, institutional and regulatory framework to ensure transparency, effective and efficient management, administration and operation of the Nigerian Financial Intelligence Unit
• institutional best practices in financial intelligence management in Nigeria
• strengthen the existing system of combating money laundering and associated predicate offenses, financing of terrorism and proliferation of weapons of mass destruction • make provision for the unit to exchange information with Financial Intelligence Institutions or similar bodies in other countries in matters relating to money laundering, terrorist financing activities and other predicate offenses
• to make the unit an autonomous body.
In contrast distinction to other statutory bodies and Government agencies S.3 of the Act provide for the functions of the NGFIU to wit:
• receive, request analyze and disseminate financial intelligence reports on money laundering, terrorist financing and other relevant information to law enforcement security and intelligence agencies and other relevant authorities
• receive and collect currency transactions reports, suspicious transactions of wire transfers relevant to money laundering, financing of terrorism, proliferation of weapons of mass destruction and associated predicate offenses for financial institutions, designated non-financial institutions, law enforcement agencies, security agencies, anti-corruption agencies, and relevant regulatory and administrative authorities
• analyze, process, interpret and assess the information and reports received under paragraph
• and undertake strategic and operational analysis, related to them
• disseminate spontaneously, and upon request, information and the results of analysis, related to money laundering, terrorist financing, proliferation of weapons of mass destruction, associated predicate offences or other unlawful activity has taken place, is taking place or is about to take place in a secured manner to law enforcement agencies, security agencies, regulatory agencies and other competent authorities; • advise the supervisory authorities as it considers appropriate to combat money laundering, financing of terrorism, proliferation of weapons of mass destruction and associated predicate offences;
• maintain financial intelligence network with regulatory authorities, law enforcement, and security agencies, anti-terrorism (prevention) Act, • assist in the identification of the proceeds of unlawful activities, the combating of money laundering, the financing of terrorism and proliferation of weapons of mass destruction, and related activities;
• make information collected and analyzed by it available to investigating, security and law enforcement agencies to facilitate the administration and enforcement of relevant laws; • exchange information with financial intelligence units, law enforcement agencies, anti-corruption agencies and competent authorities in other countries regarding money laundering, the financing of terrorism and proliferation of weapons of mass destruction and associated predicate offences;
• respond to requests for information by law enforcement and security agencies and other competent authorities;
• maintain a comprehensive secured financial intelligence database for the storage of information and intelligence to enable the unit exchange the intelligence with law enforcement agencies, security agencies in Nigeria and financial intelligence units and competent authorities in other countries with a mandate to fight financial crimes;
• advise the Government, law enforcement and security agencies, supervisory authorities, and reporting institutions on the prevention of money laundering, the financing of terrorism and proliferation of weapons of mass destruction, and associated predicate offences;
• develop and implement policies and procedures to guide the sharing of financial intelligence in a confidential and secure manner’
• monitor compliance by reporting institutions, and advise supervisory authorities as to the discharge by those institutions with regards to their obligations under this act;
• monitor and undertake studies and risk assessments on emerging trends and patterns of money laundering, the financing of terrorism and proliferation of weapons of mass destruction, and associated predicate offences;
• maintain comprehensive statistics on matters relevant to the effectiveness and efficiency of money laundering, financing of terrorism and proliferation of weapons of mass destruction and associated predicate offences, including statistics on suspicious transactions received and disseminated, money laundering and convictions, property frozen, seized and confiscated, mutual legal assistance or other international requests for cooperation;
• receive and provide feedback, general or specific on the value of information, reported by reporting institutions, regulatory authorities, law enforcement, and security agencies and any other competent authority;
• direct the monitoring of accounts, transfers and any other means of payment or transfer of funds; and
• do such other things as are necessary or expedient for the attainment of the objectives of the unit under this Act.
Ensuring the survival of our councils
Arguably, the framers of the 1999 constitution even with the few amendments made thus far by the National Assembly did not envisage these barrages of contraception.
For Example S.2 (2) recognizes two tiers of government (central & state including FCT which enjoys the status of a state). S. 7 (1) conceptualizes the local councils as more administrative units whose structures compositions finances are determined by the whims and caprices of the State House of Assemblies and more worrisome is the validity given to the existence of S.162 (6) which prescribes the “State Joint and Local Government Account” The independence, autonomy, and survival of the local council is predicated on the devolution of powers from the centre and states, an amendment of Sections 2(2), 165(2), tinkering with the exclusive list, a review of the multiple tax regime/rates paid by corporate bodies and individuals.
Recourse to a comprehensive review of the functions of the local councils in line with these amendments will be mandatory; so with the scrapping of the state local government joint account. No doubt, the present council system is wobbling and awkward in such an embarrassing manner that even the most cosmopolitan and urbane councils cannot survive vis-a-vis the functions as captured in the extant constitution, the gesture of the Nigerian Financial Intelligence Unit notwithstanding. A rejig of the council system to guarantee its financial independence is laudable and to be applauded subject to constitutional review, else any proactive measures vide a fiat by any agency of Government to release a fresh breath into the council system is an aberration and smacks of unconstitutionality.
Omote is a Benin based attorney and commentator on public issues.