Banks to face penalties for non-compliance with CBN Forex reporting rule

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.

The Central Bank of Nigeria has instructed Deposit Money Banks and all other foreign exchange market participants to provide compliance reports for the FX Code by December 31, 2024.

This requirement is part of the CBN's initiative to enhance the integrity and efficiency of Nigeria's foreign exchange market, aiming to meet international standards.

CBN Issues New Directive to Access, Zenith, Other Banks on Forex Compliance
Source: UGC

The FX Code, implemented by the CBN on October 14, 2024, establishes a detailed framework of principles to govern the conduct of market participants and promote ethical and professional behaviour in Nigeria's FX market.

The CBN stated that the FX Code is issued under the authority of the CBN Act 2007 and BOFIA Act 2020, which grant it the power to establish standards for institutions involved in foreign exchange operations in Nigeria.

It also noted that market participants must conduct a self-assessment and submit a report to the CBN detailing their level of compliance with the FX Code by December 31, 2024.

The document stated:

“All market participants will thereafter be required to submit to the CBN a detailed compliance implementation plan that is approved by its board by December 31, 2024. The FX Code should be fully implemented, and each market participant be in full compliance by December 31, 2024.”

The apex bank clarified that the FX Code applies to market participants, specifically banks licensed by the CBN under the CBN Act 2007 and the Bank and Other Financial Institutions Act 2020, which engage in wholesale foreign exchange activities in Nigeria as part of their licensed operations.

From December 31, 2024, market participants must also submit quarterly reports to the Financial Markets Department of the CBN regarding their adherence to the FX Code, ensuring ongoing compliance.

This quarterly reporting will serve as a continuous monitoring tool to promote transparency and efficiency in the FX market.

The CBN stated that non-compliance with this requirement may result in sanctions, including financial penalties, as outlined in the CBN Act of 2007 and the Bank and Other Financial Institutions Act of 2020.

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Source: Legit.ng