The Central Bank of Nigeria (CBN) has introduced a N100 million penalty for banks that process foreign exchange transactions without adequate documentation, as part of a comprehensive revision of its foreign exchange regulatory framework aimed at strengthening compliance and enhancing market transparency.

The sanction is contained in the fourth edition of the Foreign Exchange Manual, which serves as the primary operational guide for foreign exchange transactions in Nigeria.

Under the revised framework, authorised dealer banks found to have completed foreign exchange transactions without the required supporting documentation will be liable to a N100 million fine in addition to a N10 million penalty for each affected transaction.

Issued by the CBN’s Trade and Exchange Department, the updated manual is designed to improve accountability, strengthen enforcement mechanisms, curb market abuses, and reinforce confidence in the foreign exchange market.

According to the manual, the offence of processing foreign exchange transactions with inadequate documentation attracts significant sanctions for defaulting institutions.

The revised guidelines introduce stricter documentation requirements for foreign exchange transactions, including spot transactions, forward contracts, swap arrangements, imports, and exports.

Banks are now required to obtain and verify all supporting documents before delivering foreign exchange to customers. Similar requirements apply to forward and swap contracts, where underlying transaction documents must be available before settlement can take place.

The apex bank also retained existing import documentation requirements, including Form M registration, certificates of origin, invoices, packing lists, and shipping documents.

Importers are required to submit Exchange Control Documents within 90 days of negotiating shipping documents with overseas correspondent banks.

The manual provides for escalating sanctions for non-compliance. First-time offenders will face a 90-day restriction from participating in foreign exchange transactions. A second violation attracts a 180-day restriction, while a third violation carries a 360-day suspension.

A fourth violation may result in a complete ban from participating in foreign exchange transactions.

Banks that fail to report documentation defaults to the CBN will also face penalties under the revised framework.

Beyond documentation-related breaches, the apex bank introduced tougher sanctions for other foreign exchange market infractions.

Banks that fail to submit mandatory daily and monthly returns will be liable to a N500,000 penalty for late submission and a minimum fine of N5 million for non-submission. Additional penalties of N500,000 per day will apply for every day the violation remains unresolved.

The CBN also strengthened penalties relating to Net Open Position limits. Banks that exceed approved foreign currency exposure limits will receive a warning on the first offence, a 10-working-day suspension from the Nigerian Foreign Exchange Market on the second offence, and a 90-day suspension on the third violation.

For unauthorised reallocation of foreign exchange funds, defaulting banks will face sanctions of N10 million per transaction and may be referred to the Bankers’ Committee ethics framework for further disciplinary action.

The CBN stated that the revised manual forms part of broader efforts to build a transparent, efficient, and rules-based foreign exchange market. According to the regulator, the framework is intended to promote consistency in foreign exchange transactions, strengthen documentation standards, improve compliance levels, and enhance confidence among investors and market participants.

The revised guidelines took effect from June 2026 and are expected to shape foreign exchange operations across the banking industry while reinforcing the CBN’s commitment to maintaining discipline and transparency within the market.