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By Chinwendu Obienyi
The Central Bank of Nigeria (CBN) has directed banks to continue monitoring and documenting the purpose of foreign currency transfers from domiciliary accounts, warning that failure to comply could attract fines of up to N100 million.
The clarification comes despite the apex bank’s decision to waive the requirement for ordinary domiciliary account holders to complete Form A before making foreign currency remittances from their accounts.
In guidelines contained in the fourth edition of the Foreign Exchange Manual, the CBN said holders of ordinary domiciliary accounts are free to access and use funds in their accounts for legitimate transactions without the need for Form A.
However, the regulator stressed that banks must still record the purpose of every transaction and classify it correctly under the Foreign Exchange Management System (FEMS) Code Book.
The move is expected to make it easier for customers to transfer foreign currency from their domiciliary accounts while ensuring that regulators can still track the flow of foreign exchange within the financial system.
Under the guidelines, account holders can make withdrawals and payments through cash, telegraphic transfers, bank drafts and other approved channels.
The CBN also allows customers to use cash deposits of up to $10,000 daily, or its equivalent in other foreign currencies, for telegraphic transfers, provided banks submit reports detailing the purpose of the transactions.
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The apex bank further stated that individuals opening or funding domiciliary accounts are not required to declare the source of their foreign currency deposits. Nevertheless, all transactions must comply with anti-money laundering and counter-terrorism financing regulations.
The renewed emphasis on documentation is part of the CBN’s broader efforts to strengthen oversight of Nigeria’s foreign exchange market and improve compliance among financial institutions.
According to the guidelines, any authorised dealer bank that processes foreign exchange transactions without adequate documentation could face severe sanctions.
The manual stipulates a penalty of N100 million for documentation failures, in addition to a N10 million fine for each transaction found to be in breach of the rules.
Exporters will continue to enjoy unrestricted access to funds in their domiciliary accounts for eligible transactions. However, where funds are transferred to third parties, banks must ensure the purpose of the transaction is properly documented and captured under the relevant utilisation code.
Industry analysts say the latest directive reflects the CBN’s attempt to strike a balance between easing access to foreign currency and maintaining transparency in the foreign exchange market.
By removing the Form A requirement while tightening reporting obligations for banks, the regulator aims to reduce delays for customers without weakening oversight of foreign exchange transactions.
The measures are also expected to support the CBN’s wider drive to improve data quality, boost market discipline and strengthen monitoring of foreign currency flows across the banking sector.
