CBN Imposes ₦150 Million Fine on Banks Enabling Illegal Mint Naira Trade

The Central Bank of Nigeria (CBN) has announced a penalty of ₦150 million on Deposit Money Banks (DMBs) found guilty of enabling the illegal circulation of mint naira notes to currency hawkers.

This action comes in response to concerns over the commodification of naira notes, which the apex bank says disrupts efficient cash distribution to the public.

Validity of Old Banknotes Reaffirmed

The CBN’s decision follows its clarification regarding the continued validity of the old ₦1000, ₦500, and ₦200 notes, as upheld by the Supreme Court ruling of November 29, 2023. A statement from Sidi Ali Hakama, Acting Director of Corporate Communications, reassured Nigerians that these denominations remain legal tender and warned against hoarding.

Measures to Curb Illicit Practices

In a circular issued on Friday by Mohammed Olayemi, Acting Director of Currency Operations, the CBN expressed concern over the growing trade of mint naira notes by hawkers. This practice, according to the circular, undermines cash distribution and violates earlier directives, including one issued on November 13, 2024.

The new directive outlines the following:

• First Offense: A ₦150 million penalty for any bank branch found culpable.
• Subsequent Offenses: Stricter sanctions under the Banks and Other Financial Institutions Act (BOFIA) 2020.

Enhanced Monitoring and Enforcement

To enforce compliance, the CBN plans to intensify spot checks at banking halls and ATMs. The bank also intends to deploy mystery shoppers to identify and investigate illicit cash hawking locations nationwide.

The circular read:

“The CBN has noted with dismay the prevalence of illicit flow of mint banknotes to currency hawkers and other unscrupulous economic agents that commodify naira banknotes, thus impeding efficient and effective cash distribution to banks’ customers and the general public.

“In this regard, any erring deposit money banks or financial institutions culpable of facilitating, aiding, or abetting the illicit flow of mint banknotes shall be penalized ₦150,000,000 per branch for the first violation. Subsequent infractions will attract the full weight of relevant BOFIA 2020 provisions.”

Strengthened Cash Management Controls

The CBN urged DMBs to bolster their internal controls, processes, and procedures at Cash Management Centres, branches, and teller points to prevent exploitation for illegal transactions.

This measure underscores the CBN’s commitment to protecting the integrity of the naira and ensuring equitable cash distribution for the Nigerian public.