CBN Closes Undelivered FX Contracts Investigation, Refunds Naira for Invalid Deals
- The CBN completed a forensic audit into undelivered forward contracts and announced plans to pursue civil, administrative, or criminal sanctions against violators of foreign exchange rules
- The audit, conducted by Deloitte in September 2023, revealed irregularities such as inflated FX requests, false documentation, and unapproved imports, leading to the invalidation of some contracts
- As a result, the CBN reimbursed affected parties in naira, and confirmed that only validated contracts would be honoured, with no appeal allowed against the audit's conclusions
Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
Following the completion of a forensic audit into undelivered forward contracts, the Central Bank of Nigeria (CBN) announced its intention to pursue civil, administrative, or criminal sanctions against parties found to have violated foreign exchange (FX) rules.
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The report, titled Frequently Asked Questions (FAQ) on the Settlement of Undelivered Forward Contracts, was posted on the Bank's website on Thursday.
The audit, which was carried out by Deloitte in September 2023, examined transactions under the Retail Secondary Market Intervention Sales (RSMIS) window.
The document read:
“The Central Bank of Nigeria is reviewing appropriate legal action against parties found to have violated applicable rules and regulations, based on the findings of the forensic audit. The Bank will collaborate with law enforcement and regulatory agencies to pursue civil, administrative, or criminal sanctions, as necessary.”
The CBN stated that the audit was required to confirm the validity of these contracts, safeguard FX reserves, and maintain regulatory standards.
The apex bank claimed that the contracts involved upfront naira payments in exchange for promised US dollar delivery on future dates—many of which were not fulfilled.
The CBN observed that some transactions were based on ambiguous or false documentation, while others involved companies that lacked authorisation for the items they sought to import.
The findings unveiled a wide range of irregularities, including mismatches in beneficiary identities, inflated FX requests, the use of incorrect or blank Form M submissions, and approvals for non-permissible imports.
Questions of misrepresentation were raised in multiple instances where the allowed FX selling value was higher than the disclosed cost of the imported products.
The CBN claims that these violations made the contracts null and unenforceable under Nigerian law and disqualified them from FX settlement. Only contracts that were validated and in compliance were honored.
The Bank explained that before any contract was declared void, the impacted counterparties had been given a chance to respond throughout the audit process. For those judged invalid, the naira previously collected was reimbursed, but no FX was disbursed.
The independence and procedural fairness of the review are the reasons the CBN has declared the audit process closed and not subject to appeal.
“The audit conclusions were based on a rigorous process carried out by an independent forensic expert (Deloitte), acting pursuant to a transparent mandate.
“The auditor contacted the authorized dealer banks concerning those contracts to get their explanations of the infractions before reaching conclusions on them. The findings have therefore met procedural fairness standards. The case of undelivered forward contracts is now concluded and closed,” the document stated.
The CBN declared earlier in March 2024 that the backlog of genuine foreign exchange had been fully cleared.
Olayemi Cardoso, the governor of the CBN, revealed in February that the approximately $2.4 billion foreign exchange backlog was not acceptable for settlement.
According to Cardoso, a forensic audit conducted by Deloitte Management Consultants revealed that approximately $2.4 billion of the federal government's $7 billion FX liabilities were found to be flawed.
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Based on a previous report, the CBN formally wrapped up the forensic investigation into forward foreign exchange (FX) transactions that were not delivered and gave banks a naira refund for all unfulfilled and unvalidated deals.
Okey Umeano, the Acting Director of the Financial Markets Department, signed a letter dated August 4, 2025, informing all authorised dealer banks of the development.
According to the letter, the local currency equivalent of any unconfirmed and outstanding transactions had been returned to the banks, but all certified transactions had been paid.
Manufacturers raise alarm over banks’ mishandling of FX
Legit.ng reported that concerns about certain commercial banks' unwholesome handling of their members regarding unfulfilled foreign exchange (FX) forward obligations have been raised by the Manufacturers Association of Nigeria (MAN).
FX forward commitments, which are used as a hedge against volatile exchange rates, are legally binding agreements to exchange currencies at a specified rate on a future date.
Businesses generally utilise these contracts to safeguard themselves against currency risk while conducting business internationally.
Source: Legit.ng
