Referring to a previous directive issued on November 13, 2024, the circular emphasized the central bank's commitment to combatting the commercialization of the naira. According to this directive, any financial institution branch found guilty will incur a penalty of N150 million for the initial offense.
The CBN cautioned that repeated violations would lead to more severe penalties in accordance with the Banks and Other Financial Institutions Act (BOFIA) 2020.
To ensure adherence to these regulations, the central bank announced plans to enhance its routine inspections of banking halls and ATMs, as well as to employ mystery shoppers to identify locations where illegal cash hawking occurs throughout the nation.
The circular stated, “The CBN has expressed concern over the rampant illegal distribution of mint banknotes to currency hawkers and other unscrupulous economic agents, which hinders the efficient and effective cash distribution to customers and the general public.
“CBN will continue to intensify periodic spot checks in banking halls and ATMs to monitor cash disbursements to customers, along with mystery shopping at all identified cash hawking locations nationwide.”
In this context, any deposit money banks or financial institutions found guilty of facilitating, assisting, or enabling the illegal distribution of newly minted banknotes to currency hawkers and unethical economic agents who exploit Naira banknotes will face an initial penalty of N150,000,000.00 (One hundred and fifty million Naira) for each offending branch. Subsequent violations will result in the full enforcement of applicable provisions under the BOFIA 2020.
The Central Bank of Nigeria (CBN) has also called on deposit money banks to enhance their controls, processes, and procedures related to their Cash Management Centres, branches, and teller operations to safeguard their systems against exploitation for illegal activities.
Recent reports indicate that the CBN has issued a strong warning to deposit money banks regarding cash hoarding and diversion, emphasizing that such practices will incur severe penalties.
In a circular dated November 13, 2024, signed by the Acting Director of Currency Operations, Mohammed Olayemi, the CBN announced heightened measures to promote efficient and transparent cash disbursement.
The CBN reminded banks of its ongoing mystery shopping initiatives and spot checks aimed at deterring the misuse of Naira notes and ensuring responsible cash distribution, particularly as the festive season approaches.
According to the circular, these initiatives are intended to prevent the diversion of newly minted banknotes to hawkers and to facilitate effective cash disbursement to the public.
The central bank has announced that any deposit money bank found to be withdrawing cash from unauthorized vendors will be subject to financial penalties. These penalties will consist of a 10% fine on the total value of cash withdrawn from the CBN on the day of the violation. Recidivist behavior will result in an additional 5% penalty for each subsequent offense.
Furthermore, the CBN issued a warning against cash hoarding, diversion, and other practices that disrupt cash flow, emphasizing that such actions are in violation of the Clean Note Policy.
Non-compliant institutions will face appropriate penalties, which may include increased fines or other regulatory actions.