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The Central Bank of Nigeria (CBN) has introduced stringent penalties for violations in the foreign exchange market, including a N100 million fine for banks that process foreign exchange transactions without adequate documentation.
The sanctions are contained in the fourth edition of the Foreign Exchange Manual, released by the apex bank’s Trade and Exchange Department in May 2026, marking the first major revision of the framework since 2017.
Under the new compliance regime, authorised dealers found guilty of consummating foreign exchange transactions with insufficient documentation will pay a N100 million penalty in addition to N10 million for each affected transaction.
The revised manual forms part of the CBN’s efforts to strengthen oversight of Nigeria’s foreign exchange market, improve transparency, enforce compliance standards, and curb market abuses among banks and other participants.
According to the apex bank, the updated framework establishes clearer documentation requirements, enhances reporting obligations, strengthens enforcement mechanisms, and ensures foreign exchange resources are directed toward productive sectors of the economy.
Tougher Sanctions for Market Violations
The manual outlines a range of penalties for breaches of foreign exchange regulations.
Banks that exceed their approved Net Open Position limits will face escalating sanctions, beginning with a warning letter for a first offence. A second violation attracts a 10-working-day suspension from the foreign exchange market, while a third offence will result in a 90-day suspension.
The CBN also tightened reporting requirements for authorised dealers. Banks must submit daily foreign exchange transaction returns by 10 a.m. for the preceding day and file monthly returns within five working days after month-end.
Failure to comply will attract a N500,000 fine for late submission, while non-rendition of returns carries a minimum penalty of N5 million, plus an additional N500,000 for every day the violation persists.
The apex bank further warned against the unauthorised reallocation of foreign exchange funds, stating that offenders could face financial penalties, suspension of authorised dealership licences for at least six months, or outright licence revocation depending on the severity of the breach.
Stricter Rules for Importers and Exporters
Under the revised framework, importers are required to submit Exchange Control Documents within 90 days of negotiating shipping documents with overseas correspondent banks.
Those who fail to comply will face restrictions from accessing foreign exchange transactions and processing Form M applications. Penalties range from a 90-day restriction for first-time offenders to a complete ban from the foreign exchange market after a fourth violation.
Banks that fail to report such defaults will receive warnings and incur a N10 million penalty for each affected transaction.
Exporters are also subject to stricter compliance requirements. Non-oil export proceeds must be repatriated within 180 days of shipment, while proceeds from oil and gas exports must be received within 90 days.
Exporters who fail to repatriate funds within the prescribed period will pay a penalty equivalent to one per cent of the naira value of the outstanding proceeds. Banks that fail to enforce compliance will be fined 0.5 per cent of the outstanding amount.
The CBN also reserved the right to sanction banks for delays in approving export documentation, non-remittance of export supervision levies, and failure to submit returns on export proceeds.
Key Reforms to Boost Market Efficiency
In addition to the compliance measures, the apex bank introduced several reforms aimed at improving efficiency and reducing transaction bottlenecks in the foreign exchange market.
Among the changes are an increase in the allowable advance payment for imports from 15 per cent to 30 per cent, a permissible import shortfall or excess margin of plus or minus 10 per cent of the Cost and Freight value on Form M, and the removal of processing fees for Form NXP used by exporters.
The revised manual also includes provisions for service exports, technology-related remittances, Pan-African Payment and Settlement System transactions, non-resident investment accounts, and tuition fee remittances of up to $25,000 per semester for undergraduate and postgraduate studies abroad.
Furthermore, the CBN removed the mandatory requirement for Form A for remittances funded through ordinary domiciliary accounts, although banks are still required to verify the legitimacy and purpose of such transactions.
CBN: Reforms Will Strengthen Market Confidence
The apex bank said the reforms followed extensive consultations with banks, exporters, corporates, regulators, and development partners, and are designed to promote a transparent, rules-based, and market-oriented foreign exchange system.
CBN Governor, Olayemi Cardoso, said the revised manual reflects the bank’s commitment to strengthening macroeconomic stability and modernising foreign exchange administration amid changing global and domestic economic realities.
Also speaking, Muhammad Abdullahi said the review aligns Nigeria’s foreign exchange framework with international best practices and forms part of broader reforms aimed at restoring confidence, improving transparency, deepening liquidity, and enhancing market efficiency.
He noted that the reforms are expected to reduce transaction frictions, improve processing timelines, encourage formal market participation, attract investment inflows, and strengthen the overall integrity of Nigeria’s foreign exchange market.
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