. Insists on due diligence
Foreign exchange
The Central Bank of Nigeria (CBN) has denied in its entirety speculations that it plans to convert domiciliary account holdings into naira.
The banking industry regulator also declared such speculations as “a completely false narrative aimed at triggering panic in the foreign exchange market.”
The denial followed what it described as a fake circulation, in social media circles, of a circular with a fake CBN logo curiously dated “13 September 2021”, and purportedly issued by its Trade and Exchange Department to the effect that all Deposit Money Banks, International Money Transfer Operators (IMTOs).”
Reacting swiftly in a counter-circular, titled: CBN Categorically Denies, and Strongly Condemns Peddlers of, Rumour on Domiciliary Account Holdings, issued by the Director, Corporate Communications, Osita Nwanisobi, the apex bank reiterated that it “has not contemplated, and will never contemplate, any such line of action.”
Besides, it recalled that the Bank had previously assured members of the public that there was no plan whatsoever to convert the foreign exchange in the domiciliary accounts of customers into Naira in order to check purported shortage of availability of the United States dollars.
It went on to advise operators of domiciliary accounts and other members of the banking public “to completely disregard these fictitious documents and malicious rumours, and go about their legitimate foreign exchange transactions, as we have no doubt that these rumours are only aimed at impugning the integrity of the CBN and activating chaos in the system.”
Furthermore, it urged the public to note that any circular issued by the CBN, is posted on its website (www.cbn.gov.ng) like the current one for the attention of the general public.
The Bank therefore, warned “corporate bodies and members of the public against the unauthorized use of the Bank’s logo for any purpose whatsoever. We have drawn the attention of appropriate authorities to this, and culprits will be sanctioned accordingly.”
The banking public should completely disregard these fictitious documents and malicious rumours, and go about their legitimate foreign exchange transactions, as we have no doubt that these rumours are only aimed at impugning the integrity of the CBN and activating chaos in the system.
Due diligence
Recall that on Friday, the apex bank in its Letter to All banks, titled: Observance of Due Diligence in the Processing of Foreign Exchange Transactions, reminded “all banks that it is their responsibility to not only Know their Customers (KYC requirements), but also Know their customers’ business (KYCB requirements).”
This was contained in a letter to banks signed by CBN’s, Director Trade and Exchange Department, Dr O.S. Nnaji, which it said was issued “in line with our continuing close surveillance of our financial markets in general and the FX market in particular.”
The circular further reads: “Given these responsibilities and in view of recent occurrences in the market, the CBN would like to remind banks 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.
“Please note and ensure compliance.”
Since the ban of bureaux de change (BDCs) from the official sale of FX in July, the CBN has maintained a close monitoring of affairs in the commercial banks, issuing strict directives regarding FX transactions and accompanying sanctions for both operators and customers.
Generally, due diligence is required of financial institutions to establish internal controls and procedures to ensure compliance with foreign exchange administration (FEA) rules.
This includes obtaining relevant documentation for verification and audit purposes in accordance to their risk management framework whilst balancing market efficiency.
