ABUJA — The Central Bank of Nigeria (CBN) has introduced a stringent regulatory framework for the nation’s foreign exchange market, headlined by a hefty ₦100 million penalty for banks that process transactions without adequate documentation. This measure is the cornerstone of the bank's newly released fourth edition of the Foreign Exchange Manual, the first comprehensive update since 2017.

The revised manual, issued by the CBN’s Trade and Exchange Department in May 2026, aims to curb market abuses and foster a more transparent, rules-based financial environment. Under the new regime, authorized dealers face a penalty of ₦100 million in addition to ₦10 million per transaction for any deal consummated with insufficient documentation.

Escalating Sanctions for Market Violations

The apex bank has introduced a tiered system of punishments to ensure stricter oversight of market participants. Banks found violating Net Open Position limits now face escalating consequences, starting with formal warnings for first-time offenders and progressing to a 10-day suspension from the forex market for a second violation. A third breach will result in a 90-day suspension.

Reporting obligations have also been tightened. Authorized dealers are now mandated to submit daily transaction returns by 10 a.m. the following day, with monthly returns due within five working days of month-end. Late submissions will attract a fine of ₦500,000, while non-rendition carries a minimum penalty of ₦5 million, plus an additional ₦500,000 for every day the default persists.

Furthermore, the CBN has warned that unauthorized reallocation of foreign exchange funds could lead to severe penalties, including the potential revocation of a bank’s authorized dealership license.

New Rules for Importers and Exporters

Import-related transactions are now subject to a 90-day window for the submission of Exchange Control Documents. Failure to meet this deadline will trigger a 90-day market restriction for first-time offenders, which increases progressively to a total ban after a fourth violation. Banks that fail to report these defaults will also face a ₦10 million fine per transaction.

Exporters face similarly rigorous compliance requirements. Non-oil export proceeds must be repatriated within 180 days of shipment, while oil and gas proceeds must be received within 90 days. Exporters failing to repatriate funds will be fined one percent of the naira value of the outstanding proceeds, with banks liable for a 0.5 percent fine for failing to enforce these rules.

Operational Reforms and Market Efficiency

Despite the emphasis on sanctions, the manual introduces several operational reforms aimed at reducing transaction friction. These include increasing the allowable advance payment for imports from 15 percent to 30 percent and permitting an import margin of plus or minus 10 percent of the Cost and Freight value on Form M.

The manual also streamlines processes for service exports, technology-related remittances, and tuition fee payments, which are now capped at $25,000 per semester. Additionally, the mandatory requirement for Form A has been removed for remittances funded through ordinary domiciliary accounts, although banks remain responsible for verifying the legitimacy of such transactions.

Governor Olayemi Cardoso stated that these updates are essential to modernizing Nigeria’s foreign exchange administration in response to shifting global economic conditions and domestic structural reforms. Deputy Governor Dr. Muhammad Abdullahi added that the new framework is designed to restore market confidence, improve liquidity, and create a more efficient experience for legitimate market participants.