CBN cracks down on FX contract irregularities — Offenders face sanctions

The Central Bank of Nigeria (CBN) says it has uncovered “significant irregularities” in several undelivered foreign exchange (FX) forward contracts following a forensic audit conducted by Deloitte.

According to a document titled ‘Frequently Asked Questions (FAQ) on the Settlement of Undelivered Forward Contracts’ published on Thursday, the audit revealed mismatched beneficiary identities, exaggerated FX requests, blank or incorrect Form M submissions, and approvals for non-permissible imports.

“The forensic audit uncovered significant irregularities in the execution of some of the foreign exchange forward contracts,” the CBN stated.

The contracts, processed under the Retail Secondary Market Intervention Sales (RSMIS) window, involved naira payments for future dollar deliveries — many of which were never fulfilled. As a result, the apex bank has invalidated several contracts and warned of legal consequences for violators.

“The Bank will collaborate with law enforcement and regulatory agencies to pursue civil, administrative, or criminal sanctions, as necessary,” the CBN said.

The audit found that some contracts were supported by flawed documentation, including sales exceeding declared demand, unauthorized imports like milk, vague import descriptions, and transactions without proper Form A or M submissions.

“No right to FX settlement can arise under Nigerian law where the underlying transaction is tainted by illegality, misrepresentation, or non-compliance with binding regulatory rules,” the CBN emphasized.

The apex bank clarified that “no FX payments were made on these contracts, as they did not meet the required standards for settlement,” and stressed that honoring them would have “rewarded non-compliance” and depleted national reserves.

“The case of undelivered forward contracts is now concluded and closed,” the document stated.

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