The Central Bank of Nigeria (CBN) has issued a severe warning to institutions that are participating in the unlawful circulation of mint naira notes. The apex bank noted that any financial institution found to be assisting the unlawful flow of mint naira notes will face a heavy fine of N150 million per branch.
In a circular signed by Solaja Olayemi, acting head of the CBN’s Currency Operations Department, the regulator voiced great worry about the diversion of newly issued banknotes to currency hawkers and other unscrupulous economic agents. This illegal activity, according to the CBN, impedes the proper distribution of cash to bank customers and the general public.
The CBN proposed ways to fight this issue, such as increased spot checks at banking halls and automated teller machines (ATMs), as well as mystery shopping in recognised currency hawking areas. These initiatives seek to monitor and guarantee that banks do not distribute new naira notes to unauthorised individuals.
The circular said unequivocally that any deposit money bank or financial institution implicated in enabling the unlawful flow of mint naira notes will face a fine of N150 million per erring branch. In cases of repeat offences, the CBN would apply all applicable sections of the Banking and Other Financial Institutions Act (BOFIA) 2020.
“In this regard, any erring deposit money banks or financial institutions that is culpable of facilitating, aiding or abetting, by direct actions or inactions, illicit flow of mint banknotes to currency hawkers and unscrupulous economic agents that commodify Naira banknotes, shall be penalised at first instance N150,000,000.00 (One hundred and fifty million Naira) only, per erring branch and at later instances apply the full weight of relevant provisions of BOFIA 2020,”
The CBN also encouraged banks to improve their internal controls, particularly cash management systems at branches and during teller operations. The bank also underlined its appeal for increased cash disbursement efficiency, reminding banking institutions of an earlier directive issued on November 15 that prioritised ATM cash withdrawals. Furthermore, the CBN cautioned that banks that engage in cash hoarding, diversion, or any other activities that impede the correct circulation of money, such as violations of the Clean Note Policy, will face harsh penalties.
