Forex Racket: More Banks Set To Expose Dubious Customers

By Fola James

Commercial banks in the country are compiling names and Bank Verification Number, BVN of customers involved in forex malpractice with the aim of publishing the same, the magazine has learnt. The development comes as tier one bank UBA published names and BVN of three customers, it claimed failed to return unspent forex to the bank.

The bank, had in a report on its website, mentioned three customers it accused of not returning unused forex to the bank. Its decision to expose the customers, the lender said is “In compliance with the directive of Central Bank of Nigeria mandating banks to publish the names of defaulters of the forex exchange regulation, based on regulatory directives, the following customers cancelled their trip and failed to return the PTA availed to them despite several mails, text messages and follow up phone calls.”

Close watchers in the industry informed the magazine that other banks will follow suit in a matter of days due to serious infractions going on among customers despite warning by the Godwin Emefiele-led apex bank that anyone caught in forex racketeering will be punished.

“Many customers are not ready to obey the rules. The only way out is for these people to be exposed and punished. When this is done it will serve as a warning to others who may want to circumvent the rules. But my worry is that the commercial banks are not likely to publish the names of big players, except those of small customers who have no Godfather,” a source said.

But some top executives of the banks who spoke to the magazine on the issue, said the banks are already cooperating with the apex bank on the matter. “We have no other option than to abide by the rules set by the Regulator on forex transactions. It is in our interest and that of the country to do so,” a director of a tier one bank told the magazine

Another source said “some customers have already been warned to return unspent forex. We have sent text messages and in some cases letters to them. We are still expecting their response. Anytime from now we will let the public know who they are, because we are not prepared to risk the relationship we have with the Regulator.”

The CBN had last month directed banks to publish the details of customers involved in forex malpractice, failure to do so will attract sanctions, the government bank said.

According to a circular addressed to all banks on August 30, and signed by the bank’s Director, Banking Supervision Department, Haruna Mustafa, the apex bank said it has noticed fraudulent practices, which include the use of fake visas and cancellation of air tickets after purchase of Personal Travel Allowance and Business Travel Allowance among customers.

CBN warned that “this trend, if not curbed, portends risk to the integrity and stability of the forex market.

“Consequently, further to the various measures already put in place, all banks are hereby directed to publish on their websites the names and BVN of defaulting customers who present fake travel documents or cancel their tickets and fail to return the purchased PTA/BTA within two (weeks) as stipulated in the customer declaration form signed by them.”

In spite of the warning the apex bank said on September 11 that the sharp practices still continued, following which it threatened to withdraw the license of any commercial bank who failed to expose any customer involved in foreign exchange malpractice.

According to a letter addressed to all banks in the country and signed by OS Nnanji CBN’s Director, Trade and Exchange Department the apex bank said it will not hesitate to descend heavily on collaborating banks.

In the letter titled “Observance of Due Diligence In the Processing of Foreign Exchange Transactions,” the CBN said the banks must know the full details of customers who purchase forex from them.

The apex bank said “In line with the continuing close surveillance of our foreign markets in general and the foreign exchange market in particular, the CBN wishes to remind all banks that it is their responsibility to not only know their customers (KYC requirements) but also know their customers’ business KYCB requirements,” the letter said.

“Given these responsibilities, and in view of recent occurrences in the market, the CBN would like to remind us to desist from all and any forms of FX malpractices.

“We wish to reiterate that the FX operating license of any bank or banks that are found culpable with ongoing investigations would be suspended for at least one year.”

  The CBN stopped the sales of forex to Bureau de Change, BDCs in July after it accused them of funding Boko Haram and bandits. Since then, the bank has been allocating foreign exchange to banks who now sell directly to customers.