SAN: Lawyers Risk Forfeiting Fees over Improper KYC On Client’s Fundings 

Alex Enumah in Abuja 

A Senior Advocate of Nigeria, Mr. Michael Numa, SAN, has warned that legal practitioners who fail to conduct a proper ‘Know Your Client’ (KYC) on the sources of their client’s funding risk forfeiting fees for services to the federal government.

According to the senior lawyer, beyond carrying a KYC on their clients, it is imperative that lawyers also do a due diligence on where the money for their fees comes from.

He gave the advice in a keynote he delivered at a conference organised by the BNH Governance and Professional Network Forum in Abuja.

The conference which has as theme, ‘Beyond Compliance: The Role of Stakeholders in Corporate Governance, Public Accountability, and Nigeria’s Institutional Future’, had in attendance legal practitioners, representatives from the Corporate Affairs Commission (CAC), Bureau of Public Procurement (BPP), the National Assembly among others.

While observing that Nigeria has several laws in place towards ensuring corporate governance, Numa noted that the challenge is in the area of implementation of those laws.

The senior lawyer who spoke on Foreign Direct Investment, Capital Flow, Ease of Doing Business in Nigeria, stated that Nigeria’s efforts in the area of transparency, governance, and compliance, resulted in the removal of the country from the watchlist of the Financial Action Task Force (FATF), last October.

“Nigeria’s exit from the grey list does not guarantee investment, but it stands as a perfect example of institutional reforms changing the external assessment of the country on compliance.

“It shows a level of transparency on the part of Nigeria and how the international community now perceives us, because of the decisive initiatives that were taken,” he added.

Numa also disclosed that the National Assembly, through legislative reforms, had successfully overruled the decision of the Court of Appeal in a case between the Nigerian Bar Association (NBA) and the Central Bank of Nigeria (CBN), which had initially exempted lawyers who fulfilled the requirements of the Special Control Unit Against Money Laundering (SCUML) from disclosing the sources of funds accruing to them as legal fees.

The SCUML was created to monitor, supervise, and regulate Designated Non-Financial Businesses and Professions (DNFBPs) to prevent illegal financial flows.

“You now have an obligation to conduct KYC not just on your client, but also on how your fees are paid,” he said, adding that a lawyer could equally be held liable, “if your fees are paid from a high-risk or sanctioned country and you fail to do due diligence.”

He added that, “The funds can be forfeited to the federal government, and you can also be exposed to penalties for failing to conduct proper KYC.”

Also speaking, Mr. Oyetola Atoyebi, SAN, who pointed out that governance is not solely a regulatory responsibility, stated that professionals also have a role to play in bridging the gap.

“Legal practitioners, company secretaries, auditors, compliance professionals, risk professionals, accountants, and other governance advisers occupy a unique position at the point where regulatory standards meet institutional reality, and that position carries with it a significant responsibility.

“Our responsibility cannot end with identifying the relevant section of an Act, regulation, or code; professionals must translate it.

“We must help institutions understand not merely what the law says, but why the requirement exists, what risk it is intended to address, what governance outcome it seeks to achieve, what meaningful implementation looks like, and how its underlying principle should guide decisions in circumstances that legislation may never have expressly contemplated. This is where professional judgement becomes critical.

“A professional who merely identifies the applicable provision may provide technically accurate advice, but a professional who can explain the implications of that provision, anticipate governance risks, challenge institutional assumptions, and recommend a course of action that protects both compliance and institutional integrity is providing something much more valuable.

“The professional, therefore, should not merely be a translator of rules; the professional must increasingly become a translator of governance principles into institutional behaviour. And perhaps that is one of the most important responsibilities of our generation of professionals: not merely to tell institutions what the law permits, but to help them understand what responsible governance requires,” he added.

In her welcome address, the representative of the BNH group, Maryam El-Yakub, said the conference was a determined effort towards ensuring that the issue of good governance is seen as a shared responsibility between the public and private sectors of the country’s economy.

Dignitaries at the event included the Director-General of the Bureau of Public Procurement (BPP), Dr. Adebowale A. Adedokun; the Chairman of the Senate Committee on Capital Market and Institutions, Senator Osita Izunaso; as well as the Deputy Dean, Faculty of Law at Baze University, Prof. Effiong Asukwo Esu.