…as Cardoso seeks to sanitise banking sector
The Central Bank of Nigeria (CBN) has stepped up its monitoring and enforcement of penalties against banks that contravene its regulations as it slammed fines totaling N16.58 billion on Zenith Bank and five other banks for various foreign exchange (FX) and other infractions as at the end of 2024.
Zenith Bank led the charts of the banks penalized with a total fine of N15.427 billion paid to the CBN. The largest component of the fine was N14.647 billion paid to the CBN for foreign exchange (FX) infractions detected after an examination (see below).
Banks are meant to comply with the Banks and Other Financial Institutions Act, 2020 and all relevant CBN circulars, and if not they are expected to attract penalties from the apex regulator.
Stanbic IBTC was another major bank fined by the CBN for numerous violations of its rules to the tune of N579 million, data from its Full Year 2024 Audited financials show. Some of the breakdown of the Stanbic fines are listed below:
The CBN penalised Stanbic IBTC Bank Limited the sum of N104 million for failing to detect and file Suspicious Transaction Report on some reviewed accounts and for failing to conduct Customer Due Diligence on existing business relationship when transactions of significant value take place or there is material change in the way that the account is operated.
The CBN imposed a fine of N176,000,000 on Stanbic IBTC Bank Limited for alleged non-compliance with complaints resolution directive to repay three customers. The CBN also imposed a fine of N44,000,000 on Stanbic IBTC Bank Limited for alleged infraction noted in the CBN Risk Asset Exam December 2020 and RBS June 2022.
The CBN further imposed a fine of N162 million on Stanbic IBTC Bank Limited for: 1. No evidence of enhanced due diligence (EDD) on some customers classified as high risk. 2. Bank’s internal politically exposed persons (PEP) database assessed as not comprehensive.
The Banking subsidiary of FCMB a mid-tier lender had penalties totalling N136.65million during the year for contravening various provisions of the Banks and Other Financial Institutions Act and relevant CBN circulars.
Fidelity Bank on its part was fined a total of N71.28 million by the CBN for numerous contraventions including for AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism) infractions for which it paid N24 million.
Wema Bank was fined N2 million by the CBN in 2024 for a Net open position breach while GTCO was fined a total of N383 million for infractions related to Consumer Protection regulations, Compliance related to email returns and a 2024 CBN’s Mystery Shopping Exercise on the Bank.
Cardoso lays down the law
The Central Bank of Nigeria Governor, Olayemi Cardoso, in January 2025 issued a stern warning to financial institutions, emphasising that violations of the newly launched Nigeria Foreign Exchange Code will attract severe sanctions.
Speaking during the launch of the FX Code at the CBN headquarters in Abuja, Cardoso highlighted the significance of the framework in restoring trust and transparency in the country’s foreign exchange market.
The FX Code represents a comprehensive and enforceable framework designed to address systemic abuse and unethical practices that have plagued the FX market in the past.
According to the governor, these practices severely undermined market integrity, created privileges for a select few, and eroded public trust.
“Let me reiterate: the era of opaque practices is over,” Cardoso declared. “We will not hesitate to act against any institution or individual that undermines the integrity of our financial markets.”
The governor further affirmed the enforceability of the FX Code, which is supported by the CBN Act of 2007, and the Banks and Other Financial Institutions Act of 2020.
These legal instruments provide the framework for imposing penalties and administrative actions on violators. The FX Code is built on six core principles: Ethics, Governance, Execution, Information Sharing, Risk Management and Compliance, and Confirmation and Settlement Processes.
These principles align with international best practices while addressing Nigeria’s unique challenges.
Cardoso called on Board Chairs, Managing Directors, and Chief Compliance Officers to ensure full adherence to the Code’s principles, stressing that embedding these standards within their organisations is non-negotiable.
“Self-regulation and conduct are at the core of the changes in culture we expect to see at play in the industry, and I expect the principles of the FX Code to be applied across other business areas,” Cardoso stated.
The CBN’s enhanced FX rules enforcement has begun to pay off as Nigeria’s net foreign exchange reserves rose significantly to $23.11bn at the end of 2024, marking the highest level in over three years, according to the Central Bank of Nigeria.
In a press statement issued by Cardoso on Tuesday, the apex bank noted that this represents a significant jump from $3.99bn recorded at the end of 2023, $8.19bn in 2022, and $14.59bn in 2021.
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