Business
CBN finds ‘irregularities’ in unpaid FX contracts

The Central Bank of Nigeria (CBN) has concluded a forensic audit into undelivered foreign exchange (FX) forward contracts, revealing extensive irregularities in several contracts.
The audit, conducted by Deloitte, reviewed transactions under the Retail Secondary Market Intervention Sales (RSMIS) window since September 2023.
In a document titled “Frequently Asked Questions (FAQ) on the Settlement of Undelivered Forward Contracts”, published Thursday on its website, the apex bank detailed numerous compliance violations, including discrepancies in beneficiary identities, inflated FX requests, blank or incorrect Form M submissions, and approvals for imports that are not permitted under Nigerian regulations.
The CBN stated thus: “The forensic audit uncovered significant irregularities in the execution of some of the foreign exchange forward contracts,
“Each finding was based on objective and verifiable data, and all affected counterparties were given an opportunity to respond before final decisions invalidating these contracts were made”, it added
The audit, which reviewed transactions conducted under the Retail Secondary Market Intervention Sales (RSMIS) window since September 2023, focused on FX forward contracts, agreements involving upfront naira payments in exchange for future dollar delivery, many of which were never fulfilled.
The CBN also explained that the review was aimed at verifying the legitimacy of the transactions, safeguarding the country’s foreign reserves, and upholding regulatory standards.
Among the specific infractions, the CBN cited cases where the company name on approved sales results differed from the name on the Form M portal.
It further identified sales approvals that exceeded actual demand, approvals for non-permissible items of import (such as unauthorised companies importing milk), and transactions with vague or blank descriptions of the import items.
Other issues included the use of incorrect or missing Forex Form Numbers, approvals based on rejected Form A applications, and instances where the approved sales value was higher than the cost of the import item listed on the Form A or Form M portals.
According to the document, “The cumulative value of the approved FX Forward Sales on this Forex Form Number from Auction 1 in 2021 to date of this auction exceeds the total value of the forex Form Number.
“The legal implications of such action is that no right to FX settlement can arise under Nigerian law where the underlying transaction is tainted by illegality, misrepresentation, or non-compliance with binding regulatory rules.”
As a result of these findings, the CBN said all invalid contracts were cancelled, and no FX payments were made in respect of them.
“Paying invalid contracts would have rewarded non-compliance, encouraged abuse of the FX system, and unnecessarily depleted the nation’s FX reserves.
“Settling contracts that were legally void or irregular would have contravened the CBN’s statutory responsibilities and potentially exposed it to legal liability and loss of public trust, ” CBN further said.
The apex bank confirmed that it was considering legal action against violators and would collaborate with law enforcement and regulatory bodies where necessary.
“The Bank will collaborate with law enforcement and regulatory agencies to pursue civil, administrative, or criminal sanctions, as necessary,” the document stated.
On the finality of the audit process, the CBN emphasised that the review is now 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 authorised 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.”
Reiterating its commitment to regulatory enforcement, the CBN urged all banks and FX market participants to maintain strict compliance going forward.
“The CBN’s mandate is to maintain market integrity and protect Nigeria’s financial stability,” the document read. “We urge banks and their clients to maintain proper documentation, adhere strictly to FX regulations, and ensure that only valid transactions are submitted for settlement.”
The apex bank also reaffirmed its willingness to honour all valid FX forward obligations, while strengthening oversight to prevent future abuse.