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CBN warns on cross border forex movement

By Chijioke Nelson
05 July 2015   |   11:00 pm
The Central Bank of Nigeria (CBN) has raised alarm over assessed cross border movements of huge foreign exchange against the extant law, which forbids it.
EMEFIELE-G

Godwin Emefiele, CBN Governor

The Central Bank of Nigeria (CBN) has raised alarm over assessed cross border movements of huge foreign exchange against the extant law, which forbids it.

Already, the apex bank said it is collaborating with other relevant agencies of government to ensure compliance to the provisions of the law, while appropriate sanctions and penalties for contravention of the provisions of this Act will be applied.

According to the apex bank, the illegal business is currently perpetrated by individuals and corporate bodies in contravention of the extant law of declaration to the appropriate authorities.

The development, which appears to be a resurgence of the old order, was once suspected to be a source of funding for terrorism and means of money laundering and alleged to have been aided by some Bureau De Change (BDC) operators.

The Section 2 (subsection 3-5) of the Money Laundering (Prohibition) Act 2011 (as amended) states that: “Transportation of cash or negotiable instruments in excess of US$10,000.00 or its equivalent by individuals in or out of the country shall be declared to the Nigerian Customs Service.”

“The Nigerian Customs Service shall report any declaration made pursuant to subsection (3) of this section to the Central Bank of Nigeria.

“Any person who falsely declares or fails to make a declaration to the Nigerian Customs Service pursuant to section 12 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, F34, LFN, 2004 is guilty of an offence and shall be liable on conviction to forfeit the undeclared funds or negotiable instrument or to imprisonments to term of not less than 2 years or to both.”

CBN said that upon receipt of any notice of declaration from the Nigerian Customs Service, it will investigate the source of fund and seek justification for the possession of such volume of cash to ensure that no money laundering activity is involved, while those affected will also be expected to provide evidence of payment of taxes and duties related to the cash transaction.

Meanwhile, CBN has reiterated that BDCs are not authorised to fund import transactions in any form whatsoever, either by cash or wire transfer.

The bank however, stated that the BDCs are only authorised to deal in foreign currency and to sell not more than $5000 to an individual customer and strictly for business travel/personal travel allowance; monthly mortgage payment; school fees abroad; credit card payment; utility bills; and life insurance premium payment.

CBN said it has become necessary to clear the misunderstanding arising from of its circular in respect of import items recently classified as “Not Valid for Foreign Exchange” in any of the segments of the Nigerian foreign exchange market.

However, analysts at Afrinvest Securities Limited, in its weekly report, made available to The Guardian, said though the policy against the 41 listed items on importation was well intended, there was no analysis or data on level of domestic self-sufficiency provided to justify the exclusion of the 41 items.

“While we note that the limits of monetary policy in creating internal and external balance may have been reached and now in need of supportive and pragmatic fiscal policy plans, we are of the opinion that the CBN should start considering alternative measures rather than the current capital control methods that appear to have resulted in little gains and heightened uncertainty.

“A more realistic policy options such as floating the naira, establishing of a naira futures market and use of forward guidance in CBN’s communications need to be considered to reduce uncertainties that have plagued the domestic investment environment in recent times.

The financial market (equities and fixed income) is in dare need of a clear cut policy direction and stability. A lot of foreign investors appear to have taken to their heels leaving only the bandwagon local investors, who also have no clue of the impact of future monetary policy on their investment position, in the scene,” the securities company said.

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