The Central Bank of Nigeria (CBN) has released new guidelines to banks for the implementation of the Federal Government’s recently announced free foreign exchange deposit window, effective from Wednesday. The guidelines outline how commercial, merchant, and non-interest banks can participate in the scheme, allowing individuals to deposit foreign currency (forex) held outside the formal banking system without scrutiny.
The guidelines, titled ‘Guidelines On Implementation Of The Foreign Currency Disclosure, Deposit, Repatriation, And Investment Scheme, 2024’, were jointly signed by John Onojah, the acting Director of the Financial Policy and Regulation Department, and Dr. Adetona Adedeji, acting Director of the Banking Supervision Department. The scheme is a part of the government’s broader effort to boost forex inflows into the formal economy.
The initiative, which runs for nine months starting from October 31, 2024, enables participants to deposit their foreign currency holdings without facing penalties, taxes, or questions from authorities. In a statement, Finance Minister Wale Edun confirmed that the program was designed to encourage the repatriation of foreign currency back into the country’s banking system.
The CBN guidelines allow banks to trade with any forex deposited by participants, as long as it is not immediately invested by the participant. However, the funds will remain available to the participant when needed. Banks will also be required to pay interest on any balances in the designated domiciliary accounts, in line with relevant banking regulations.
To ensure compliance with anti-money laundering laws, the CBN mandates that banks verify the identities of individuals and entities participating in the scheme. This includes collecting details such as the Bank Verification Number (BVN), National Identification Number (NIN), or Tax Identification Number (TIN) where applicable. Banks are also required to conduct customer due diligence to identify the beneficial owners of funds being deposited, transferred, or repatriated under the program.
The CBN stressed that banks must ensure all transactions comply with existing regulations on wire transfers and must subject funds repatriated from countries that do not adhere to international anti-money laundering standards to enhanced due diligence.
The new deposit window is part of Nigeria’s ongoing efforts to stabilize the foreign exchange market and enhance liquidity by attracting more foreign currency into the formal economy. The CBN’s latest measures are expected to help the country manage its forex reserves more effectively and mitigate pressures on the naira.
