CBN raises alarm over huge movement of foreign currency across Nigerian borders

The Central Bank of Nigeria (CBN) yesterday raised concerns over the increasing trafficking of huge sums of foreign currency across its borders -contrary to legal provisions.

The CBN said this practice is in defiance of the extant dictates of Section 2 (subsection 3-5) of the Money Laundering (Prohibition) Act 2011 (as amended) which categorically states that:

“Transportation of cash or negotiable instruments in excess of US$10,000.00 or its equivalent by individuals in or out of the country shall be declared to the Nigerian Customs Service.” (subsection 3).

“The Nigerian Customs Service shall report any declaration made pursuant to subsection (3) of this section to the Central Bank of Nigeria.” (subsection 4).”

The law further provides that “Any person who falsely declares or fails to make a declaration to the Nigerian Customs Service pursuant to section 12 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, F34, LFN, 2004 is guilty of an offence and shall be liable on conviction to forfeit the undeclared funds or negotiable instrument or to imprisonments to term of not less than 2 years or to both.” (subsection 5).

But Nigeria’s loose borders encourage currency trafficking and money laundering in a country where the government has failed to tighten controls on foreign exchange transactions, across the markets.

Bulk of illegal FX transactions often happen at the local money changers, explaining why the parallel market rates have consistently headed North for a while now. These nefarious acts have contributed to a significant pressure on the naira, which as at last week was exchanging N199/$ at the interbank and had hit N230/$ at the Bureau De Change.

There are also reports that Nigerian bank officials perpetrate round tripping of foreign currencies, exploiting the wide gap between the official and parallel market rates.

The CBN warned on Sunday in a statement signed by its Director, Corporate Communications, Ibrahim Mu’azu that it would intensify collaboration with the Customs Service to fish out possible defaulters and ensure that they are investigated and prosecuted.

“The general public is hereby informed that upon receipt of any notice of declaration from the Nigerian Customs Service, the CBN will investigate the source of fund and seek justification for the possession of such volume of cash to ensure that no money laundering activity is involved,” it warned

It said those affected will also be expected to provide evidence of payment of taxes and duties related to the cash transaction.

“For the avoidance of doubt, the general public is hereby notified that the CBN (in collaboration with other relevant regulatory and security agencies) will promptly apply appropriate sanctions and penalties for contravention of the provisions of this Act,” the CBN further warned.