…Targets civil, criminal action over breached fx contract
By Charles Ebi
Central Bank of Nigeria ,CBN, has concluded a forensic audit of undelivered forward foreign exchange ,FX, contracts and is set to initiate civil, administrative, or criminal sanctions against parties found to have violated applicable rules and regulations.
This move follows months of investigation into irregularities in Nigeria’s FX forward market, which has long been plagued by opaque transactions and allegations of abuse.
The Bank disclosed its intentions in a document titled Frequently Asked Questions ,FAQ, on the Settlement of Undelivered Forward Contracts, published on its website Thursday.
The document noted that the CBN would collaborate with law enforcement and regulatory agencies to hold offenders accountable, marking a decisive step toward restoring credibility and transparency in the FX market.
“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 statement read. “The Bank will collaborate with law enforcement and regulatory agencies to pursue civil, administrative, or criminal sanctions, as necessary”.
The audit was conducted by global accounting and advisory firm Deloitte and spanned several months beginning in September 2023. It focused on forward FX transactions carried out under the Retail Secondary Market Intervention Sales ,RSMIS, window. Under these contracts, businesses made upfront Naira payments in exchange for future dollar deliveries many of which were never fulfilled.
According to the CBN, the audit revealed widespread abuses of the system. These included mismatched beneficiary identities, inflated FX requests, submission of blank or incorrect Form M documentation, and approvals granted for non-permissible imports.
In many instances, companies involved lacked proper authorization for the goods they claimed to import, and in some cases, the approved FX sale value exceeded the actual cost of the imported items, raising significant concerns about misrepresentation and regulatory evasion.
The CBN stated that such infractions rendered the affected contracts null and void under Nigerian law and ineligible for FX settlement. Only contracts verified to be compliant with extant guidelines were honoured.
The Bank emphasized that affected parties were given ample opportunity to respond during the audit process. Where a contract was deemed invalid, the naira previously collected was refunded to the counterparties, but no dollar disbursement was made.
“The audit conclusions were based on a rigorous process carried out by an independent forensic expert “Deloitte” acting pursuant to a transparent mandate”, the CBN explained. “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 CBN further announced that the audit process is now formally closed and not subject to appeal, describing it as final and binding. This position is expected to draw a line under one of the most contentious episodes in the country’s foreign exchange management history.
The forensic audit and subsequent enforcement actions come at a time when the apex bank is implementing broader reforms to stabilize the FX market, rebuild investor confidence, and plug systemic leakages.
The findings of the audit reaffirm concerns that Nigeria’s FX forward market had, over the years, become susceptible to manipulation, rent-seeking, and non-compliant transactions.
As part of its renewed commitment to market discipline, the CBN reiterated its pledge to honour all valid forward obligations, even as it tightens oversight and improves transparency across FX dealings.
This development highlights the apex bank’s resolve to clamp down on malpractice and enforce accountability, in line with its statutory mandate to safeguard Nigeria’s financial system and protect its foreign exchange reserves
