CBN Issues Warning to Banks Over Naira Notes Distribution

The Central Bank of Nigeria (CBN) has strongly cautioned banks against the unauthorized distribution of newly created naira notes.

If any financial institution is discovered to be involved in this illegal activity, they will incur a significant penalty of N150 million for each affected branch.

In a notice from Solaja Olayemi, the Acting Director of the CBN’s Currency Operations Department, the bank expressed serious concern regarding the redirection of new banknotes to currency hawkers and other unethical agents.

This illegal distribution, the CBN pointed out, hampers the proper allocation of cash to customers and the general public.

To address this matter, the CBN has proposed several measures, such as increasing spot checks in bank branches, ATMs, and mystery shopper initiatives at key locations where currency hawking is prevalent. These actions aim to ensure banks do not distribute new naira notes to unauthorized entities.

The notice clarified that any deposit money bank or financial institution found guilty of facilitating the illegal flow of new naira notes will be fined N150 million for each offending branch. For institutions that offend repeatedly, the CBN will apply stringent penalties under the Banking and Other Financial Institutions Act (BOFIA) 2020.

“To this end, any deposit money bank or financial institution found guilty of facilitating, assisting, or ignoring actions that lead to the illegal distribution of naira notes to currency hawkers and dishonest agents will be penalized N150 million (One hundred and fifty million Naira) per erring branch initially, with the possibility of harsher penalties for subsequent offenses under BOFIA 2020,” states the notice.

In addition, the CBN has urged banks to strengthen their internal controls, especially regarding cash management at branches and during transactions. The bank also called for enhanced efficiency in cash withdrawals, reiterating a previous directive from November 15 that prioritizes ATM access.

Moreover, the CBN warned that banks found hoarding cash, diverting funds, or engaging in any actions that disrupt the proper distribution of currency, including breaches of the Clean Note Policy, will face significant penalties.