The Central Bank of Nigeria has announced intentions to seek civil, administrative, or criminal penalties against organizations identified as having breached foreign exchange regulations after a forensic audit into unfulfilled forward contracts
This was revealed in a document titled Frequently Asked Questions (FAQ) on the Settlement of Undelivered Forward Contracts, published on the Bank’s website on Thursday.
According to the CBN, “The Central Bank of Nigeria is reviewing appropriate legal action against parties found to have violated applicable rules and regulations, based on the findings of the forensic audit. The Bank will collaborate with law enforcement and regulatory agencies to pursue civil, administrative, or criminal sanctions, as necessary.”
The audit, conducted by Deloitte starting in September 2023, examined transactions under the Retail Secondary Market Intervention Sales (RSMIS) window. These transactions involved upfront naira payments in exchange for future delivery of U.S. dollars many of which were never fulfilled.
The CBN explained that the audit was carried out to verify the legitimacy of the forward contracts, protect FX reserves, and enforce regulatory standards.
The investigation uncovered a range of irregularities including mismatched beneficiary identities, inflated FX requests, blank or erroneous Form M submissions, and approvals for imports outside the permissible scope.
The Bank noted that some of the contracts were backed by false or vague documentation, while others involved companies that were not authorised to import the items listed.
In multiple instances, the value of approved FX far exceeded the declared cost of imported goods, prompting concerns over misrepresentation.
“Such infractions rendered the contracts void under Nigerian law and ineligible for FX settlement,” the Bank stated, adding that only contracts deemed verified and compliant were honoured.
The CBN clarified that affected counterparties were given a fair opportunity to respond during the audit process before any contracts were invalidated. For contracts found invalid, naira payments made in advance were refunded, but no FX was disbursed.
Declaring the audit process officially closed, the Bank emphasized that it would not entertain any appeals, citing the fairness and independence of the review process.
“The audit conclusions were based on a rigorous process carried out by an independent forensic expert (Deloitte), acting pursuant to a transparent mandate. The auditor contacted the authorized dealer banks concerning those contracts to get their explanations of the infractions before reaching conclusions on them. The findings have therefore met procedural fairness standards. The case of undelivered forward contracts is now concluded and closed,” it stated.
The development highlights the CBN’s efforts to restore transparency and accountability to the FX market after years of controversy amid failed forward contracts, opaque deals, and claims of rent-seeking.
The Bank reiterated its commitment to honouring all valid FX obligations while improving regulatory oversight going forward
