Details of the Central Bank of Nigeria (CBN) Circular on Operations of Domiciliary Accounts in Nigeria
The Central Bank of Nigeria (CBN) on the 30th of November 2020, released a circular seeking to provide clarifications on the operations of domiciliary accounts in Nigeria with a view to ensuring the stability of the Foreign Exchange market.
This circular went forward to provide defined categorizations of domiciliary accounts in Nigeria and their operations as follows:-
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Export Proceeds Domiciliary Accounts
These accounts will continue to be operated based on existing regulations which allow account holders use of their funds for business operations only, with any extra funds sold in the Investors & Exporters (I & E) window.
Ordinary Domiciliary Accounts
Where accounts are funded by electronic means/wire transfers, account holders will be allowed unfettered and unrestricted use of these funds for eligible transactions.
This regulation will remain where accounts are funded by cash lodgments.
The circular goes further to state that these clarifications are necessary given the vastly improved capacity of the CBN to monitor transactions in order to forestall money-laundering and prevent adverse effects of dollarizing the Nigerian economy.
Finally, the circular states that Bank Verification Numbers (BVNs) are to be used to ensure compliance with the circular and all other relevant CBN regulations.
The CBN Circular on Compliance Requirements with the SWIFT Universal Payment Confirmations.
The Central Bank of Nigeria (CBN) released on the 23rd of September,2020 a circular addressed to all banks in Nigeria on compliance requirements with the SWIFT Universal Payment Confirmations.
By virtue of this circular, all banks operating in Nigeria are by this circular reminded of the need to ensure full compliance with SWIFT Universal Payment Confirmation requirements.
What this means is that :-
– All SWIFT customers are required to provide confirmation on the outcome of all their incoming single customer payment (MT 103) messages to SWIFT via a tracker, also known as Universal confirmations.
– The confirmation should get to SWIFT within 2 business days on whether the beneficiary’s account has been credited, payment is rejected or pending.
– All Financial Institutions in the Nigerian Banking & Finance ecosystem will be assessed on whether they confirm at least 80% of their weekly payments.
– SWIFT offers different ways to provide status upgrades through automated or manual methods. These channels are :-
a). The basic tracker manual
b). API calls
c). Automated MT 199 Confirmations
d). Batch confirmation
e). Full GPi
f). ISO 20222(Available from 2022)
– All banks are strongly advised to review and select the appropriate channel that suits their operations with a view to meeting the deadline set for compliance which has actually lapsed since the 22nd of November,2020.
Details of The CBN Circular on The Treatment of Composed Banknotes in Nigeria
The Central Bank of Nigeria CBN on the 31st of March,2022 released a circular on the use and treatment of composed banknotes. This circular and its contents will be forming the focus of this article which will highlight each detail of the circular as follows :-
– The CBN released this circular based on its rather worrisome observation of an increase in the number of composed banknotes deposited by Deposit Money Banks as well as requests for the replacement of such banknotes by the members of the public.
– The existence of composed banknotes in the economy according to the CBN falsifies the true value of currency in circulation and has also been identified as a possible opportunity for fraudulent activities.
– The CBN specifically defines a composed banknote as a banknote that is composed or made up of several parts of different banknotes of the same denomination put together with the intention of receiving value.
– The CBN, as a result stated that by virtue of its circular which is to take effect from the 1st of April 2022, any banknote discovered to be in the deposit of DMBs shall attract a penalty of 400% of the value.
The CBN Circular on The Regulatory and Supervisory Framework For The Operations of a Mortgage Refinance Company – Approval To Refinance Non-Member Banks.
The Central Bank of Nigeria on the 21st of October 2020, issued a circular pursuant to S. 7.3.1.5 of the extant regulatory and supervisory framework for the operations of a mortgage refinance company.
This section states that a Mortgage Refinance Company (MRC) shall not, without CBN prior approval, extend total outstanding credit to any single borrower which is equal to one or more than 20 times the value of the borrower’s shares with the MRC or 25% of its shareholders funds unimpaired by losses.
This provision was discovered to have a negative impact on the Mortgages sub sector as it constrains MRCs from refinancing the mortgages of non-shareholder banks.
As a result, the CBN Circular states that the restriction on non-member mortgage lenders from refinancing their mortgages with MRCs has been removed.
MRCs are also now permitted to refinance the qualifying mortgages of lenders that do not hold its equity, subject to all relevant provisions specified in the framework.
This means that according to the circular,an MRC shall not without prior approval from the CBN, extend total outstanding credit to any single borrower which is equal to or more than 25% of its shareholders fund unimpaired by losses.
This provision of the circular is to have immediate effect.