The Central Bank of Nigeria (CBN) has announced the cancellation of multiple foreign exchange forward contracts deemed invalid following the conclusion of a comprehensive forensic audit.
The apex bank also confirmed it will commence legal action against entities found to have violated foreign exchange regulations.
The development was disclosed in an official document titled “Frequently Asked Questions on the Settlement of Undelivered Forward Contracts”, published Thursday on the bank’s website.
The CBN stated that it is engaging law enforcement and regulatory agencies to pursue civil, administrative, or criminal sanctions against identified violators.
According to the apex bank, the forensic audit—conducted by Deloitte—examined transactions under the Retail Secondary Market Intervention Sales (SMIS), including undelivered FX forward contracts.
The audit focused on verifying documentation, contract authenticity, and compliance with applicable CBN circulars and FX guidelines.
The findings uncovered “significant irregularities” across numerous contracts. These included mismatched company names between approved sales and Form M entries, approved sales values exceeding the cost of imported items, transactions involving non-permissible imports, unauthorized companies importing restricted items such as milk, and blank or rejected Form M and Form A entries.
Other violations identified involved incorrect or missing FX form numbers and inflated sales values relative to demand. The CBN noted that no settlement rights can arise under Nigerian law where a transaction is tainted by illegality, misrepresentation, or non-compliance with regulatory standards.
“All affected counterparties were given an opportunity to respond before final decisions invalidating these contracts were made,” the CBN noted. “No FX payments were made on these contracts, and the naira previously received in respect of them has been returned.”
The apex bank emphasized that paying on these invalid contracts would have undermined market integrity and depleted Nigeria’s foreign reserves. It reaffirmed its mandate to protect financial stability and maintain transparency in the foreign exchange market.
The audit’s conclusions, described as “final and binding,” cannot be appealed. The bank stated that the findings met procedural fairness requirements with Deloitte independently verifying data and engaging authorized dealer banks for clarification before reaching final decisions.
“The case of undelivered forward contracts is now concluded and closed,” the CBN stated.
This latest regulatory action follows Governor Olayemi Cardoso’s earlier disclosure that a forensic audit was underway to address legacy FX liabilities and eliminate loopholes exploited by market participants.
The Central Bank is expected to release additional measures in the coming weeks aimed at strengthening FX compliance, improving transparency, and restoring confidence in Nigeria’s currency market.