KEY POINTS
- CBN to prosecute violators of FX forward rules.
- Invalid contracts uncovered through forensic audit.
- Naira refunded on cancelled forward contracts.
The Central Bank of Nigeria says it is reviewing legal action against individuals and institutions that violated foreign exchange (FX) forward contract rules, following the conclusion of a sweeping forensic audit.
The apex bank made the announcement through a Q&A update on its official website. It said the probe revealed “significant irregularities” in the way some forward contracts were executed, adding that affected counterparties had been given a chance to respond before their contracts were cancelled.
CBN flags abuse in FX forward contracts
The CBN forensic audit showed cases of fraud, misrepresentation, and failure to comply with existing FX guidelines and circulars. It said the contracts were nullified due to issues like falsified documents, regulatory breaches, and failure to meet legal thresholds.
“Invalid contracts were cancelled in line with audit findings,” the bank stated. “No FX payments were made… and the Naira previously received has been returned.” The bank emphasised that FX contracts can only be enforced if they comply with documentation, trade verification, and regulatory guidelines.
Apex bank defends FX reserves and market trust
Furthermore the regulator warned that settling invalid contracts would have encouraged non-compliance and drained Nigeria’s FX reserves. It added that doing so would have breached the CBN’s legal responsibilities and exposed it to litigation and reputational damage.
“To reward these contracts would have undermined market integrity,” the bank said. It also confirmed collaboration with law enforcement to impose civil, administrative, or criminal sanctions where necessary.
