The Central Bank of Nigeria (CBN) is poised to initiate legal proceedings against entities that breached foreign exchange (FX) forward contract regulations, following a forensic audit that exposed significant irregularities. The announcement was made in a Frequently Asked Questions (FAQ) document titled “Settlement of Undelivered Forward Contracts,” published on the CBN’s website on August 7, 2025. The CBN stated, “The Bank will collaborate with law enforcement and regulatory agencies to pursue civil, administrative, or criminal sanctions as necessary.”
The audit, conducted by Deloitte since September 2023, scrutinized transactions under the Retail Secondary Market Intervention Sales (RSMIS) window, where banks paid naira upfront for future US dollar deliveries, many of which were not fulfilled. Ordered by CBN Governor Olayemi Cardoso, the review examined contract documentation, trade confirmations, import/export records, Form M submissions, and compliance with CBN guidelines to verify the legitimacy of counterparties and transactions.
The findings revealed widespread violations, including mismatched company names between approved sales and Form M portals, inflated FX requests exceeding declared import costs, unauthorized imports like milk, vague or false item descriptions, and blank or incorrect Form M submissions. Some transactions involved rejected Form A applications or companies lacking import authorization, rendering contracts legally void. The CBN canceled these invalid contracts, refunded naira payments without FX disbursements, and emphasized that settling non-compliant contracts would reward misconduct and deplete Nigeria’s FX reserves.
To ensure fairness, counterparties were given opportunities to respond before contracts were invalidated. The CBN declared the audit, conducted independently by Deloitte, as final and non-appealable, citing its rigorous and transparent process. “The findings met procedural fairness standards, and the case of undelivered forward contracts is now concluded,” the bank noted. The CBN is now working with law enforcement to address potential fraud and misrepresentation, reinforcing its mandate to uphold market integrity and financial stability.
This crackdown follows earlier efforts to clear a $7 billion FX backlog, with $2.4 billion deemed invalid in a March 2024 audit. The CBN’s reforms, including $4.1 billion in H1 2025 forex interventions and unified exchange rates, have supported a 67.12% surge in capital importation to $5.64 billion in Q1 2025. However, challenges like naira volatility (N1,565/$1 in the parallel market) and inflation (22.22% in June) persist, underscoring the need for robust oversight to sustain economic gains.
