• Sun. Jun 4th, 2023

    FOREX malpractices: Banks risk one year suspension, CBN warns

    ByBassey Udo

    Sep 11, 2021


    The Central Bank of Nigeria (CBN) on Friday reiterated its warning to deposit money banks against foreign exchange malpractices in their operations in the banking system.

    The Director, Trade and Exchange department of the CBN, OS Nnaji, in a letter to all banks in the country said anyone found at the end of the ongoing investigations to be culpable of infractions involving foreign exchange malpractices risks its operational license being suspended for at least one year.

    The letter  titled “Observance of Due Diligence In the Processing of Foreign Exchange Transactions”stressed the importance of the banks taking responsibility of not only knowing their customers, but also knowing the king of businesses their customers are involved in.
    The letter read:

    “In line with our continuing close surveillance of our foreign markets in general and the foreign exchange  market in particular, the CBN wishes to remind all banks that it is their responsibility to not only know their customers (KYC requirements), but also know their customers’ business KYCB requirements.

    “Given these responsibilities, and in view of recent occurrences in the market, the CBN would like to remind to desist from all and any forms of FX malpractices.

    “We wish to reiterate that the FX operating license of any bank or banks that are found culpable with ongoing investigations would be suspended for at least one year.”

    Meanwhile, banks have taken steps to begin enforcing the apex bank’s directive on strict adherence to its policy on foreign exchange.

    Following the massive incidence of foreign currency abuse, particularly where bank customers divert allocations to purposes other than for what were approved, the CBN directed banks to publish the names of their individual or corporate customers indulging in their practices.
    The CBN frowned at various unethical practices by bank customers to circumvent the new CBN policy on the sale of foreign currency, such as the presentation of false travel documents, visas, and the cancellation of flight tickets after purchasing personal travel allowance (PTA) and business travel allowance (BTA).
    The apex regulator of the banking industry warned the banks that it would no longer tolerate these malpractices.
    Insisting on strict adherence to the policy on FOREX sale to customers, the CBN warned that defaulting customers who present fraudulent travel credentials or cancel their tickets and fail to refund the purchased PTA and BTA within two weeks would be sanctioned.
    In line with terms as stated in the signed customer declaration form, the CBN directed the banks to make public the identities of defaulters, by publishing their identities and bank verification numbers (BVNs) in the media.
    Preparatory to the commencement of the implement of the directive, various bank management’s have written to their customers to intimate them of their plans to commence the immediate implementation of the directive.
    The management of First Bank in its correspondence to its customers through emails and text messages said it was committed to be fully compliant with the CBN’s rules and regulations.
    “Our bank is committed to partnering with the CBN to ensure a transparent, efficient and stable FX Market that meets the needs of all legitimate users,” the bank said, warning perpetrators to desist from further malpractices. 

    Leave a Reply

    Your email address will not be published. Required fields are marked *