Banks face N100m penalty for forex violations

The Central Bank of Nigeria has set a N100m penalty for banks that process foreign exchange transactions without adequate documentation as part of a sweeping compliance regime unveiled in its newly released Foreign Exchange Manual. Under the offences and sanctions section of the fourth edition of the manual, the apex bank stated, “Authorised dealers shall pay N100m in addition to N10m per transaction” for consummating foreign exchange transactions with inadequate documentation. The sanction forms part of a broader framework aimed at tightening oversight of Nigeria’s foreign exchange market, strengthening compliance standards, and curbing abuses among authorised dealers and other market participants. The revised manual, issued by the CBN’s Trade and Exchange Department in May 2026, is the first major update since 2017. It serves as a regulatory guide for banks, authorised buyers, exporters, investors, and members of the public participating in foreign exchange transactions. According to the CBN, the manual seeks to promote transparency in foreign exchange inflows and outflows, establish clear documentation and reporting requirements, strengthen enforcement mechanisms, and support national economic priorities by ensuring foreign exchange is channelled to productive uses. Beyond the N100m sanction, the manual introduces a range of penalties for violations in the Nigerian Foreign Exchange Market. Banks that exceed their approved Net Open Position limits face escalating punishments. A first offender will receive a warning letter, while a second offence attracts a 10-working-day suspension from the foreign exchange market. A third violation will result in a 90-day suspension from the market. The apex bank also tightened reporting obligations for authorised dealers. Banks are required to submit daily returns on foreign exchange transactions by 10 a.m. for the preceding day and monthly returns within five working days after month-end. Failure to comply attracts sanctions. Under the new rules, late rendition of returns will attract a penalty of N500,000, while non-rendition carries a minimum fine of N5m and an additional N500,000 for every day the violation continues. The CBN further warned banks against reallocating foreign exchange funds without regulatory approval, stating that such actions could attract monetary fines, suspension of authorised dealership licences for at least six months, or outright licence revocation, depending on the severity of the breach. Import-related transactions also received significant attention in the revised framework. The manual