The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has issued a stern warning to financial institutions, stressing that any violations of the newly launched Nigeria Foreign Exchange (FX) Code will lead to severe sanctions.
During the launch of the FX Code at the CBN headquarters in Abuja on Tuesday, January 28,, Cardoso emphasised the critical role the framework will play in restoring trust and transparency in Nigeria’s foreign exchange market.
He described the FX Code as a comprehensive and enforceable set of guidelines designed to address past abuses and unethical practices that have undermined the integrity of the market.
“The era of opaque practices is over,” Cardoso declared.
“We will not hesitate to act against any institution or individual that undermines the integrity of our financial markets.”
The CBN governor revealed that the forensic verification of $7 billion in FX backlogs, a process that has taken over 12 months to complete, is nearing its final stages.
This verification exercise uncovered multiple unethical and illegal practices that have contributed to distortions in the FX market.
He reassured stakeholders that final settlements for the FX backlogs would be processed shortly, marking a key step in rectifying past irregularities.
“We must not forget where we are coming from. The era of multiple exchange rates, which created privileges for a select few at the expense of most Nigerians, severely undermined market integrity,” Cardoso said.
Cardoso noted that the forensic review of the $7 billion in FX backlogs had revealed a range of unethical and even illegal activities that the CBN is determined to prevent in the future.
The verification process is now nearly complete, and final settlements are set to be processed in due course.
The FX Code, Cardoso explained, is supported by both the CBN Act of 2007 and the Banks and Other Financial Institutions Act of 2020, which provide the legal basis for imposing penalties and administrative actions on violators.
He called on Board Chairs, Managing Directors, and Chief Compliance Officers in the financial sector to ensure their organisations fully adhere to the Code’s principles, underscoring the importance of embedding these standards across the industry.
“Self-regulation and conduct are at the core of the changes in culture we expect to see at play in the industry,” he said.
“I expect the principles of the FX Code to be applied across other business areas.”
The FX Code is built on six core principles: Ethics, Governance, Execution, Information Sharing, Risk Management and Compliance, and Confirmation and Settlement Processes.
These principles are designed to align with international best practices while addressing Nigeria’s unique challenges.
Cardoso described the Code as a binding commitment to accountability and transparency, urging stakeholders to view it as a collective pledge to ethical conduct in the financial system.
He also highlighted recent reforms in the FX market, which have already led to improvements in transparency and efficiency.
Notably, the introduction of the Electronic Foreign Exchange Matching System in December 2024 has had a significant impact, with the naira appreciating substantially from N1,663.90 in early December to N1,536.72 as of January 27, 2025.
Cardoso’s strong stance on enforcement and the introduction of the FX Code signal the CBN’s determination to create a more transparent and accountable foreign exchange market in Nigeria, one that operates with the highest standards of integrity.
Financial institutions will now be under increased scrutiny as the CBN moves to ensure compliance with the new regulatory framework.
