CBN issues stern warning to banks involved in illegal sales of forex

The Central Bank of Nigeria (CBN) has issued a warning regarding potential repercussions for financial institutions involved in illegal sale of dollars or unauthorized forex transactions.

The warning follows the unfortunate decline of the Nigerian currency, the naira, against the dollar both on official and unofficial markets.

Folashodun Shonubi, the acting Governor of the CBN, conveyed this message while delivering a lecture titled "Diaspora Remittances and Nigerian Economic Development" in Abuja.

Shonubi underscored the significance of implementing stringent measures to curtail illicit remittances, emphasizing the need to direct them through proper channels to enhance overall economic growth.

According to The Guardian, the apex bank boss declared the establishment of a committee that will conduct surprise visits to financial institutions accused of engaging in the unauthorized sale of dollars.

Shonubi said: We need to name and shame commercial banks involved in such malpractices.

The interim governor further highlighted the deficiencies of the current remittance mechanism.

He approximated that sending funds to Sub-Saharan Africa from the diaspora incurs a cost of around 8-9 percent per $100, a figure recognized as the global peak.

Nonetheless, he acknowledged that remittances to Nigeria amounted to approximately $16.7 billion, with the majority of these funds operating within the informal sector.

He stated: We are working hard to encourage individuals to bring money into the formal sector rather than relying on informal channels, which have become difficult to manage.

In spite of attempts to encourage individuals to participate in formal market transactions through a N5 refund incentive, it was observed that this approach yielded unsatisfactory results. As a result, the decision was made to discontinue the N5 rebate.

The CBN had in the past expressed optimism that the naira will bounce back as it continues to intervene with policies that will save the naira.

The head of the CBN recognized the effectiveness of incentives in enticing individuals to enter the formal market.

He added: We will rename the foreign exchange market, known as the I & E market, to the Nigerian Foreign Exchange Market, as it is the sole market we acknowledge.