Is Cash Payment for Cars and Land Illegal in Nigeria? The Truth About Aliyu v. FRN (2026)

Imagine saving up for years, finally finding the perfect plot of land in Ibadan or a sleek new car in Lagos, and paying for it with crisp, cash notes. You sign the papers, shake hands, and walk away feeling like a property owner.

But according to the Supreme Court of Nigeria, you might have just walked straight into a criminal offense.

For decades, cash has been king in Nigerian commerce. From bustling open-air automobile markets to informal land sales, cash transactions have been favored for their speed, privacy, and simplicity. However, a landmark apex court judgment has pulled a long-ignored law out of the shadows, turning standard market practices completely upside down.

In the case of ALIYU v. FRN (2026) LPELR-83493(SC), the Supreme Court explicitly confirmed that accepting or making cash payments for the sale of landed property or motor vehicles is a financial crime in Nigeria.

Whether you are a developer building estates, an automobile dealer, an everyday homebuyer, or a diaspora investor sending hard-earned foreign exchange home, understanding this ruling is no longer optional—it is a matter of keeping your freedom.

The Legal Foundation: Section 22 of the Foreign Exchange Act

To understand how cash became illegal for these purchases, we have to look directly at the statute book. The Supreme Court did not invent a new law; rather, it enforced an existing, sleeping giant: Section 22 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act.

In delivery of the judgment, Justice Ogbuinya, J.S.C., noted that it was necessary to pluck the provision verbatim ac litteratim (word for word) from where it has “domiciled quietly in the statute book.”

The law states:

Section 22: Payments for certain goods

(1) Notwithstanding anything to the contrary contained in any enactment or law and except as provided in Subsection (2) of this Section, no person shall, in Nigeria, make or accept cash payment, whether denominated in foreign currency or not, for the purchase or acquisition of the following:

• (a) landed properties;

• (b) securities, including stocks, shares, debentures and all forms of negotiable instruments; and

• (c) motor cars, including other vehicles of any description whatsoever.

(2) Payments for the items specified in Subsection (1) of this Section shall, as from the commencement of this Act, be made by means of bank transfers or cheques drawn on banks in Nigeria only.

Deconstructing the Law: What Does This Actually Mean?

The wording of the Foreign Exchange Act is sweeping, strict, and leaves zero room for semantic loopholes. Let’s break down the most critical components of this law:

1. The Total Ban on “Cash”

The law completely bans the physical exchange of paper currency for these specific high-value assets. It does not matter if the cash is wrapped in bundles, stacked in boxes, or handed over inside a bank vault. If physical notes change hands as the direct payment for a car or piece of land, the law has been broken.

2. Naira vs. Foreign Currency (USD, GBP, EUR)

A common misconception among diaspora buyers is that using foreign currency changes the rules. The statute explicitly shuts this down by stating: “whether denominated in foreign currency or not.” Handing over a stack of US Dollars or British Pounds cash to a property vendor or car dealer in Nigeria is just as illegal as handing over a stack of Naira notes.

3. The Only Approved Payment Channels

Per Subsection 2, the law recognizes only two legal media of exchange for cars, land, and securities:

• Bank Transfers: Electronic funds transfers originating from a verified commercial bank account.

• Cheques: Valid bank cheques drawn on licensed financial institutions operating within Nigeria.

Anatomy of the Crime: How the Prosecution Wins

In many criminal cases, the state must prove a malicious intent—known legally as mens rea. For instance, in a fraud case, the prosecutor must prove you intended to cheat someone.

However, under Section 22 of this Act, the offense is structural. The prosecution does not need to prove you are a money launderer, a corrupt official, or a scammer. They only need to prove that you used the wrong medium of exchange.

As outlined by the Supreme Court in Aliyu v. FRN (2026), the prosecution only needs to establish four straightforward ingredients beyond a reasonable doubt to secure a conviction:

• Ingredient A (The Defendant): The accused must be a person. This applies equally to a natural person (an individual buyer, land vendor, or real estate agent) and a juristic person (a registered real estate company, corporate developer, or limited liability car dealership).

• Ingredient B (The Subject Matter): There must be a physical asset involved—specifically a landed property, a motor vehicle of any description, or corporate securities.

• Ingredient C (Valuable Consideration): The asset must have been exchanged for money. This distinguishes a commercial sale from a genuine gift, a familial inheritance, or a non-monetary barter arrangement.

• Ingredient D (The Actus Reus): The defendant physically accepted or made a cash payment for that sale. Once physical currency is exchanged and verified, the crime is complete.

The Impact on Local Buyers, Developers, and Car Dealers

For local operators within Nigeria, this Supreme Court precedent requires an immediate overhaul of standard operational procedures.

For Real Estate Developers and Agents

Historically, some buyers—particularly those in the informal trading sector—prefer paying for land allocations or documentation fees in cash to avoid banking charges or bureaucratic delays. Accepting these payments is now a fast track to corporate liability. Developers must enforce a strict policy: No physical cash collection at office locations. Every single kobo must hit the corporate bank account via traceable electronic means.

For the Automobile Industry

Car dealerships, from luxury showrooms in Lekki to roadside car lots in Ibadan, must stop accepting cash handovers for vehicles. Point-of-Sale (POS) terminal transactions, internet banking transfers, and bank drafts are perfectly legal because they utilize formal banking rails and leave a digital audit trail. Physical cash payments, however, must be rejected.

Critical Guide for Diaspora Readers and Investors

Diaspora remittances are a major driver of the Nigerian real estate market. If you are living in the US, UK, Canada, or Europe and looking to buy property or send a vehicle home, this ruling directly shields you from risk—provided you follow the correct protocols.

Informal money transfer networks (sometimes called Hawala or parallel market transfers) are popular because they bypass traditional banking hurdles. In these arrangements, a diaspora resident pays foreign currency to an agent abroad, and the agent’s local counterpart in Nigeria delivers physical Naira cash to the property vendor or family member.

Under the current legal landscape, this method is incredibly dangerous.

If an agent carries cash to a family member or a property developer on your behalf, that transaction constitutes a criminal offense under Section 22. If that vendor is placed under financial scrutiny or investigated by agencies like the EFCC (Economic and Financial Crimes Commission), your transaction records, your land title, and your hard-earned investment could be seized or frozen as proceeds of an illegal transaction.

How to Safely Invest from the Diaspora:

1. Direct Bank-to-Bank Rails: Always route your investment funds through official international wire transfers directly into the verified corporate bank account of the developer or vendor.

2. Utilize Supervised Financial Channels: If using fintech remittance platforms, ensure the final payout is deposited directly into the seller’s Nigerian bank account via an electronic transfer, rather than being paid out in cash.

3. Demand Electronic Receipts: Ensure your receipts and contractual documents explicitly state the transaction reference numbers, originating bank, and receiving bank accounts. Never accept a receipt that reads “Paid in Cash.”

Summary Checklist: Navigating Safe Transactions in Nigeria

To protect your investments and maintain full legal compliance, always use this quick checklist before concluding any real estate or vehicle transaction:

Transaction Element	Legal & Compliant (Safe)	Illegal under Section 22 (Avoid)
Payment Medium	Bank Transfer, Mobile App Transfer, Bank Draft, Cheque, POS Terminal	Physical Naira Notes, Physical USD/GBP/Euro Cash, Cash Envelopes
Audit Trail	Clear, downloadable bank statement showing sender and receiver names	Manual paper receipt stating “Cash Received”
Corporate Policy	Funds must go directly to the registered company account	Payments made into an agent’s personal pocket or handed over in cash

Conclusion: A Shift Toward Transparency

The Supreme Court’s definitive stance in Aliyu v. FRN (2026) signals an era where cash is no longer an acceptable shield for high-value transactions. While adapting to these rigid banking requirements might feel cumbersome for those accustomed to informal trading, it ultimately provides a safer ecosystem for legitimate buyers and investors.

By insisting on electronic transfers and bank cheques, you are not just obeying the law—you are ensuring that your land titles, your vehicles, and your financial legacies rest on an unassailable, legally sound foundation.