CBN, EFCC Investigate Banks, Firms Over Alleged Forex Racketeering

The Central Bank of Nigeria (CBN), under the leadership of Governor Olayemi Cardoso, has initiated a probe alongside the Economic and Financial Crimes Commission (EFCC) into suspected forex racketeering involving banks and firms, focusing on transactions amounting to $2.4bn deemed invalid.

This investigation follows the completion of an audit into $7bn debts inherited by the current administration of the apex bank from its predecessor. The audit, conducted by global firm Deloitte, revealed significant discrepancies, with Cardoso stating that approximately $2.4bn of the forex allocations were found to be invalid.

Speaking to journalists after the Monetary Policy Committee meeting in Abuja, Cardoso emphasized the need for law enforcement agencies to scrutinize transactions failing to meet regulatory standards, citing lack of valid documentation and other irregularities outlined in the Deloitte report.

Among the anomalies uncovered were allocations to fictitious entities and discrepancies between allocated foreign exchange and corresponding naira values. Cardoso underscored the gravity of these irregularities, labelling them as “clearly unlawful.”

While affirming that the CBN had cleared valid forex backlogs, Cardoso assured stakeholders of the market’s transparency and urged them to utilize it for their forex transactions. However, the ongoing probe may result in summoning bank CEOs and industry leaders, with the duration of the investigation remaining uncertain.

In response to concerns from stakeholders, Cardoso reiterated the market’s openness for addressing outstanding obligations, emphasizing the CBN’s commitment to transparency. Regarding the crypto market, he clarified that the CBN is collaborating with relevant agencies for enforcement, highlighting the Securities and Exchange Commission’s jurisdiction over cryptocurrency regulation.

Additionally, the CBN directed deposit money banks to expedite capital base increases to fortify the financial system against potential risks, echoing previous announcements regarding banking recapitalization efforts.

Meanwhile, the Nigerian naira continued its upward trajectory against the US dollar, reaching N1,382/$, a testament to recent forex reforms. Cardoso emphasized the importance of forex stability in bolstering investor confidence and attracting foreign investments to Nigeria, amidst ongoing efforts to anchor inflation expectations and ensure sustained exchange rate stability.

Despite the naira’s appreciation, concerns linger over its impact on inflation, as a weaker currency tends to inflate the prices of imported goods and services in import-dependent economies like Nigeria.