Forex Ban: Sanctions Remain Till 9 Banks Remit $2.334bn To TSA

…As Diamond Bank assures of quality service delivery

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By Nse Anthony-Uko

ABUJA (Sundiata Post) – The Central Bank of Nigeria (CBN) has said that the ban imposed on nine banks  for failure to remit $2.334 billion belonging to the Nigerian National Petroleum Corporation (NNPC) to the Treasury Single Account (TSA) would remain until the funds are remitted.

Officials of the CBN have said that the sanction would remain until the DMBs could remit the funds to the CBN, adding that further disciplinary actions awaited the errant banks after remitting the funds in full to the Federal Government’s coffers.

The CBN on Tuesday suspended nine banks from all foreign exchange transactions for failure to remit over $2 billion in various NNPC/NLNG accounts in their vaults to the Treasury Single Account as ordered by President Muhammadu Buhari last year.
The  nine banks, made up of three tier-one lenders and another six tier-two deposit money banks were barred for hiding some $2.12 billion belonging to the nation’s oil corporation, the Nigerian National Petroleum Corporation (NNPC) and failed to remit the funds into the Treasury Single Account.
The banks are: First Bank of Nigeria Limited ($469m); Diamond Bank Plc ($287m); Sterling Bank Plc ($269m); Skye Bank Plc ($221m); Fidelity Bank ($209m); United Bank for Africa ($530m); Keystone Bank ($139); First City Monument Bank (FCMB) $125m; and Heritage Bank ($85m).
In a swift reaction to the ban, Diamond Bank Plc, one of the nine banks, has reassured its customers of enhanced quality service delivery and commitment to meet its banking obligations despite the ban.
The bank stated that as a financial institution built on a foundation of sound corporate governance, full disclosure of the outstanding TSA funds were made to the CBN.
“We are currently engaging with relevant stakeholders, with the support of the Regulator, to resolve this industry-wide issue quickly.
“Our primary responsibility is to our customers. This development does not affect customers own deposits, both local and those in foreign currency.  It also means that services such as payments – local and international, will go through as normal whenever our customers need to make them.  “Remittance service will continue as normal and customers can transact anywhere in the world, any time of the day, on their mobile application or internet banking,” the bank said in a statement on Wednesday.
On Monday, the banks came under fire from the apex bank, which accused them of engaging in round tripping and threatened punish them for doing so.
In a circular addressed to authorised dealers titled: Re: Transactions in ‘Free Funds’ by Authorised Dealers’, signed by its Acting Director, Trade & Exchange, W.D. Gotring, the apex bank accused banks of buying and selling forex without following stipulated guidelines.
“The CBN has noticed that some Authorised Dealers have continued to buy and sell foreign exchange referred to as ‘free funds’ despite the provision of the circular of March 4, 2004 on the subject,” he said and cautioned the lenders that their action was a breach of extant regulations.
“Against the background, authorised dealers are to note that dealing in foreign exchange without appropriate documentation, which includes relevant entries, blotters, physical documents and non-disclosure to the Regulatory Authorities is a breach of extant regulations”.
He stressed that as provided for in the laws and regulations governing dealings in foreign exchange, authorised dealers shall not sell foreign exchange without appropriate documentation and disclosure to the regulatory authorities, irrespective of the source of the funds.
“Accordingly, authorised dealers shall deal in eligible transactions only, and not engage in any foreign exchange transactions on terms inconsistent with the extant laws and or regulations,” he said.
The banks, further findings showed, are engaging in round-tripping, taking advantage of the huge forex gaps between the official and the parallel markets.

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