The Central Bank of Nigeria (CBN) has imposed penalties totalling N15bn on 29 banks for violations, including breaches of Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regulations.
Governor Olayemi Cardoso, in a keynote speech at the Chartered Institute of Bankers of Nigeria (CIBN) annual dinner in Lagos, described the sanctions as part of efforts to address compliance lapses and strengthen regulatory accountability within the financial sector.
“Starting in 2025, financial institutions will be required to refine their compliance and governance frameworks to address evolving risks,” Cardoso stated.
He emphasized that the penalties not only hold banks accountable but also push for systemic improvements to prevent recurrent violations.
Cardoso also highlighted the positive impacts of reforms in Nigeria’s foreign exchange (FX) market. Foreign portfolio inflows surged by 72 per cent in the first half of 2024 compared to the same period in 2023.
The Nigerian Autonomous Foreign Exchange Market experienced a 226 per cent year-on-year increase in average daily turnover, while foreign exchange reserves grew from $32bn in May 2023 to over $40bn, marking the highest level in three years.
He said: “In the foreign exchange market, we faced a backlog of over $7bn in unfulfilled commitments and a fragmented FX regime characterised by multiple forex rates, which had encouraged arbitrage opportunities.
“This regime stifled much-needed foreign investment and led to the depletion of our external reserves, which fell to $33.22bn in December 2023. It must also be understood that the cost of the FX subsidy regime is estimated to exceed that of fuel subsidies.
“In 2022 alone, the potential revenue lost due to a less flexible FX regime was approximately N6.2 trillion, compared to N4.5 trillion from fuel subsidies. These funds could have significantly contributed to critical investments in education, healthcare, and infrastructure development.”
These reforms aim to attract investments, with the upcoming launch of an electronic FX matching system on December 2, 2024, expected to further enhance transparency and bolster market confidence.
“The unification of the exchange rate is pivotal,” Cardoso said, adding that the initiative would drive diaspora and foreign investments while fostering a resilient and liquid forex market.
Addressing lingering naira scarcity and cash withdrawal challenges, the CBN announced plans to impose stringent penalties on banks and financial institutions found sabotaging cash flow. From December 1, 2024, customers facing withdrawal difficulties can report issues directly to the apex bank via designated channels.
Cardoso explained: “Effective December 1, 2024, customers are encouraged to report any difficulties withdrawing cash from bank branches or ATMs directly to the CBN through designated phone numbers and email addresses for their respective states. Guidelines will be distributed widely to raise public awareness.
“We also urge full regulatory compliance by all stakeholders, including Mobile Money Operators and PoS Agents, to promote digital transaction channels and improve service delivery. I repeat, financial institutions found engaging in malpractices or deliberate sabotage will face stringent penalties.
“The CBN will maintain a robust cash buffer to meet high-demand periods such as the festive season,” Cardoso noted.
He noted further: “Our focus is on ensuring a seamless cash flow for Nigerians while fostering trust and stability in the financial system.
“I must express my concern over recent delays in some payment gateways in settling financial transactions. Trust is fundamental to fostering digital transactions, and we must take every necessary step to preserve that trust in our payment systems.
“These delays often disproportionately affect vulnerable segments of our population. To address this, we will impose strict penalties on non-compliant institutions to safeguard consumer trust and ensure swift redress mechanisms are in place.”
He called for compliance from stakeholders, including Mobile Money Operators and PoS agents, to enhance service delivery and ensure smooth cash availability.
Speaking further, the CBN Governor said, “We also recognise the ongoing challenges with cash availability at ATMs, which disproportionately affect ordinary Nigerians. To address this, we are conducting spot checks across Deposit Money Banks (DMBs) and will impose penalties on underperforming institutions.”