The Central Bank of Nigeria (CBN) has signaled its intent to impose civil, administrative, or criminal penalties on parties found violating foreign exchange (FX) regulations, following a forensic audit of undelivered forward contracts. The announcement, detailed in a Frequently Asked Questions (FAQ) document published on the CBN’s website on August 7, 2025, underscores the bank’s efforts to restore transparency and integrity in Nigeria’s FX market.
The audit, conducted by Deloitte starting in September 2023, examined transactions under the Retail Secondary Market Intervention Sales (RSMIS) window, where banks paid naira upfront for promised future US dollar deliveries, many of which were not fulfilled. The CBN stated that the review was essential to validate contracts, safeguard FX reserves, and enforce regulatory compliance. Findings revealed widespread infractions, including mismatched beneficiary identities, inflated FX requests, incorrect or blank Form M submissions, and approvals for non-permissible imports. Some transactions relied on vague or falsified documents, while others involved unauthorized companies, rendering many contracts void under Nigerian law.
The CBN emphasized that counterparties were given opportunities to respond during the audit, ensuring procedural fairness. Validated contracts were settled, while naira payments for invalid contracts were refunded without FX disbursement. The audit, described as rigorous and independent, is now closed, with no appeal process, as confirmed in the FAQ: “The findings met procedural fairness standards, and the case of undelivered forward contracts is concluded.”
The crackdown follows earlier CBN actions to clear a $7 billion FX backlog, with $2.4 billion deemed invalid in a March 2024 audit, as announced by Governor Olayemi Cardoso. A letter dated August 4, 2025, from Acting Director Okey Umeano confirmed the refund of naira equivalents for unverified transactions to authorized dealer banks. The CBN’s measures align with broader reforms, including unified exchange rates and $4.1 billion in FX interventions in H1 2025, aimed at stabilizing the naira, which traded at N1,565/$1 in the parallel market in July.
The audit’s revelations highlight years of opaque transactions and alleged rent-seeking in the FX market, prompting the CBN to strengthen oversight and pursue legal action against violators in collaboration with law enforcement and regulatory agencies. While these steps bolster market confidence, reflected in Nigeria’s 67.12% capital importation surge to $5.64 billion in Q1 2025, they underscore persistent challenges like inflation (22.22% in June) and forex volatility, necessitating sustained reforms to maintain economic stability.
