By Dipo Olowookere
The Central Bank of Nigeria (CBN) has threatened to suspend the foreign exchange (FX) licence of any bank found to have been involved in forex malpractices.
The central bank issued this threat in a circular dated Friday, September 10, 2021, and signed by its Director of Trade and Exchange Department, Dr O.S. Nnaji.
The notice said the FX licence of banks discovered to have participated in FX fraud would be suspended for not less than one year, advising deposit money banks (DMBs) to strictly adhere to the rules and regulations guiding forex sales.
FX shortage in the system has forced the apex bank to tighten its policies concerning transactions around foreign currencies in the country.
In late July, the bank, after its two-day Monetary Policy Committee (MPC) meeting in Abuja, announced the discontinuation of forex sale to Bureaux De Change (BDC) operators over what it described as FX manipulations.
It also announced the suspension in the registration of new BDCs and these actions have put the Naira under undue pressure at the black market.
The exchange rate of the Nigerian currency against the greenback stood at N545/$1 at the close of business on Friday and the central bank is not happy about the situation, which is why it is taking steps to address the issue.
Because of its power to sanction banks as the nation’s regulatory agency for the banking industry, the CBN, which diverted the weekly FX sales to the financial institutions from the BDCs, has vowed to deal with lenders sabotaging the economy in its current investigations.
“We wish to reiterate that the FX operating license of any bank or banks that are found culpable with ongoing investigations could be suspended for at least one year,” a part of the disclosure stated.
The central bank disclosed that it was conducting “surveillance of our financial markets in general and the FX market in particular,” reminding “banks to desist from all and forms of FX malpractices.”
It emphasised that it was “their responsibility to not only know their customers (KYC requirements) but also know their customers’ business (KYCB requirements).”
The apex bank said it was issuing this warning “in view of recent occurrences in the market” and to remind them of their “responsibilities” as authorised forex traders.
When on July 27, 2021, the CBN ban FX sales to BDCs, it directed commercial banks to create a forex desk at their branches for the purpose of honouring genuine requests of retail customers with appropriate documents.
