The Central Bank of Nigeria (CBN) has announced plans to pursue comprehensive legal action against individuals and entities found to have violated foreign exchange regulations, following the completion of a sweeping forensic audit that exposed extensive irregularities in undelivered forward contracts worth billions of dollars.
In a significant development that underscores the apex bank’s commitment to cleaning up Nigeria’s foreign exchange market, the CBN published detailed findings Thursday, revealing a web of fraudulent activities that had undermined the country’s FX reserves and regulatory framework.
The audit, conducted by international consulting firm Deloitte over nearly two years beginning in September 2023, scrutinized transactions under the Retail Secondary Market Intervention Sales (RSMIS) window—a critical component of Nigeria’s foreign exchange distribution mechanism. The investigation has now concluded with the CBN declaring the matter closed and warning that violators face potential civil, administrative, or criminal sanctions.
Massive Scale of Irregularities Exposed
The forensic review uncovered what officials describe as systematic abuse of the forward contract system, where parties made upfront naira payments in exchange for promised US dollar deliveries that never materialized. The scale of the problem became apparent earlier this year when CBN Governor Olayemi Cardoso revealed that approximately $2.4 billion of an initially reported $7 billion foreign exchange backlog was deemed invalid.
Among the most serious violations identified were widespread mismatches in beneficiary identities, deliberately exaggerated foreign exchange requests, and the submission of incorrect or entirely blank Form M documents—the mandatory paperwork required for import transactions. Perhaps most concerning, the audit revealed approvals for imports that were never permissible under Nigerian regulations.
“The findings revealed extensive irregularities, including mismatches in beneficiary identities, exaggerated FX requests, use of incorrect or blank Form M submissions, and approvals for non-permissible imports,” the CBN stated in its comprehensive FAQ document.
Investigators also discovered instances where companies sought foreign exchange for items they were not authorized to import, while others involved approved FX sale values that exceeded the declared cost of imported goods—a clear indication of potential misrepresentation and currency speculation.
Legal Consequences Loom
The Central Bank has made clear that these violations will not go unpunished. In unusually strong language, the institution announced it would “collaborate with law enforcement and regulatory agencies to pursue civil, administrative, or criminal sanctions, as necessary.”
This represents a marked shift toward accountability in Nigeria’s foreign exchange sector, which has long struggled with transparency issues and regulatory compliance. The CBN’s decision to work with law enforcement suggests that some cases may result in criminal prosecutions, potentially setting important precedents for FX market discipline.
Procedural Fairness Claims
Despite the severity of its findings, the CBN emphasized that affected parties were given opportunities to respond during the audit process before contracts were invalidated. The bank has declared the audit conclusions final and not subject to appeal, citing the independence and thoroughness of the Deloitte review.
“The audit conclusions were based on a rigorous process carried out by an independent forensic expert (Deloitte), acting pursuant to a transparent mandate,” the CBN stated, adding that procedural fairness standards were met throughout the investigation.
For contracts deemed invalid, the Central Bank confirmed that naira payments previously collected were refunded to the relevant parties, but no foreign exchange was disbursed. Only verified and compliant contracts received FX settlements.
Market Cleanup Progress
The completion of this audit represents the latest phase in the CBN’s broader effort to restore integrity to Nigeria’s foreign exchange market. In March 2024, the bank announced the complete clearance of valid foreign exchange backlogs, effectively drawing a line under years of accumulated FX obligations.
According to official correspondence dated August 4, 2025, the CBN has now concluded the entire forensic audit process and completed all refunds of unfulfilled transactions to authorized dealer banks in naira equivalent.
Implications for Nigeria’s FX Market
This development carries significant implications for Nigeria’s foreign exchange landscape, potentially deterring future violations while restoring confidence among legitimate market participants. The CBN’s willingness to pursue legal action sends a strong signal about regulatory enforcement under Governor Cardoso’s leadership.
The audit’s conclusion also provides clarity for authorized dealer banks, which can now operate with certainty about their FX obligations and exposure. However, the threat of legal action means that institutions and individuals involved in the irregularities may face ongoing uncertainty as investigations proceed.
As Nigeria continues to grapple with foreign exchange challenges amid global economic pressures, the CBN’s decisive action on these contract violations represents a crucial step toward establishing a more transparent and reliable FX market framework.
The central bank has indicated that this enforcement action is part of broader efforts to protect Nigeria’s foreign exchange reserves while maintaining regulatory standards that support legitimate international trade and investment.
WHAT YOU SHOULD KNOW
The Central Bank of Nigeria has completed a major forensic audit that exposed $2.4 billion worth of fraudulent foreign exchange transactions involving fake documentation, unauthorized imports, and inflated requests.
The CBN is now pursuing legal action—including potential criminal charges—against violators, while declaring the cleanup process complete with all valid contracts settled and invalid ones refunded.
This represents the CBN’s strongest enforcement action yet to clean up Nigeria’s foreign exchange market, sending a clear warning that FX violations will face serious legal consequences while restoring integrity to the system under Governor Cardoso’s leadership.
