CBN FX Compliance Report Due January 31

The Central Bank of Nigeria (CBN) has directed participants in the foreign exchange (FX) market to submit a compliance report on adherence to the Nigeria FX Code by January 31, 2025.

This directive is part of the CBN’s efforts to enhance ethical practices, governance, and transparency in the FX market.

According to the FX Code document released on Monday, market participants are required to conduct a self-assessment and submit to the CBN a report on the institution’s level of compliance with the FX Code by January 31, 2025. All market participants will thereafter be required to submit to the CBN a detailed compliance implementation plan that is approved and signed by its Board along with the extracts of the Board meeting.

The Nigeria FX Code, which came into effect on December 2, 2024, outlines principles of good practice to ensure a robust, fair, and transparent FX market. It applies to authorized dealers licensed under the CBN Act 2007, the Bank and Other Financial Institutions Act 2020, and other institutions engaged in wholesale FX activities.

Participants are required to perform a self-assessment and submit a compliance report signed by their board of directors. This report must include a detailed implementation plan addressing any gaps in compliance, along with relevant board meeting minutes to demonstrate oversight.

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After the initial January deadline, quarterly compliance reports must be submitted to the CBN’s Financial Markets Department (FMD) within 14 days of the end of each quarter, with the first report due by March 31, 2025.

The CBN has emphasized the enforcement of these guidelines, stating that non-compliance may attract monetary penalties as stipulated under the CBN Act 2007 and the Bank and Other Financial Institutions Act 2020. Administrative sanctions may also be applied, further underscoring the importance of compliance.

The Nigeria FX Code is modeled on the Global FX Code and incorporates global best practices while addressing the unique dynamics of Nigeria’s FX market. Its principles include upholding high ethical standards and professionalism, establishing sound governance frameworks for FX operations oversight, ensuring fair and transparent transactions, maintaining confidentiality and accuracy in communications, implementing robust frameworks to manage risks, and facilitating efficient post-trade processes for smooth transactions.

The CBN’s directive reflects its commitment to building a more transparent and resilient FX market. By fostering confidence among participants and aligning transactions with global behavioral standards, the FX Code is expected to enhance the stability and integrity of Nigeria’s foreign exchange system. Market participants are encouraged to align their operations with the principles of the FX Code to avoid penalties and support the broader stability of Nigeria’s FX market.