FX amnesty scheme: Banks can trade with deposited foreign currencies, says CBN

The Central Bank of Nigeria (CBN) has permitted banks to trade with foreign currencies deposited under the amnesty initiative for the foreign exchange (FX) deposit window.

CBN gave the directive in a document dated November 5, signed by John Sonojah, its acting director, financial policy and regulation department and Adetona Adedeji, its acting director, banking supervision department.

On October 31, the federal government launched the ‘Disclosure Scheme,’ an amnesty initiative for the foreign exchange deposit window.

According to the ministry of finance, the scheme would span nine months and is designed to enhance transparency in the financial sector and boost Nigeria’s economic resilience, growth, and development.

In the document, CBN provided guidelines for the participation of commercial, merchant, and non-interest banks (CMNIBs) in the implementation of the disclosure scheme that allows individuals or businesses to deposit foreign currencies.

The guidelines took effect on November 6.

According to the document titled ‘Guidelines on Implementation of the Foreign Currency Disclosure, Deposit, Repatriation and Investment Scheme, 2024,’ banks are at liberty to trade with the foreign exchange made available by the scheme participants.

“Commercial, merchant, and non-interest banks may trade with any deposited ITFC (Internationally Tradable Foreign Currencies) not immediately invested by a participant, provided that the funds would be made available to the participant when needed,” the document reads.

“Interest payment by CMNIBs on the balance in the designated domiciliary account shall be in line with relevant provisions of the Guide to Charges by Banks and Other Financial Institutions in Nigeria.”

RESPONSIBILITIES OF CMNIBS

CBN highlighted that banks are to open domiciliary accounts designated for the scheme for intending participants and receive and process applications from intending participants in the scheme in accordance with the scheme guidelines.

The banks are also to accept deposits of disclosed internationally tradable foreign currencies (ITFCs) from participants, either directly or from a legal person nominated by the participant.

CBN said other responsibilities include ensuring that ITFCs deposited by a participant are held in the designated domiciliary account and not later than 24 hours from the time the ITFC is deposited, issuing a receipt to the participant, indicating the originating country of the funds, and acknowledge that such funds were received for the scheme.

“Track and report to the Bank, participants’ ITFC investments in permissible investment instruments or permissible investment sectors; ensure that participants comply with the provisions of this guidelines, the principal executive order, scheme guidelines, and other applicable laws relating to the Scheme,” the CBN said.

“Treat with confidentiality, all information received from participants in the Scheme in line with the Nigerian data protection laws and regulations; render returns to the Bank in accordance with section 5.0 of this Guidelines; obtain from the intending participants the information listed in Section 3.1 of this Guidelines. 

“Maintain appropriate and comprehensive records of data/information relating to transactions under the Scheme; and perform such other functions as the Bank may direct.”

WITHDRAWAL AT WILL AND CONVERSION AT PREVAILING RATE

According to the CBN, the CMNIBs are not to impose any restriction on the withdrawal from the designated domiciliary account of the participant (individual or business) — except as otherwise provided in the scheme guidelines.

The CMNIBS are also not to restrict the termination of any investment made by the participant in a permissible investment instrument or permissible investment sector with any such ITFC.

Also, the banks are to permit a participant to, at any time, exchange part or the whole ITFC in their designated domiciliary account for naira at the prevailing exchange rate, provided that such conversions are properly disclosed and reported in the CMNIB’s foreign exchange returns.

In implementing the scheme, CBN added that CMNIBs are required to comply with extant rules and regulations, including anti-money laundering/combating the financing of terrorism/countering proliferation financing (AML/CFT/CPF) laws and regulations.