CBN, SEC sanction 10 banks for forex violations

• The Central Bank of Nigeria (CBN) and Securities and Exchange Commission (SEC) fined 10 banks for foreign exchange and regulatory violations
• The violations include foreign exchange guideline breaches, customer complaints, cyber security issues, and non-compliance with regulatory directives
• The CBN emphasised that regular stress tests ensure the financial sector's stability and protect depositors' funds 

Regulatory agencies responsible for overseeing the activities of deposit money Banks in Nigeria have sanctioned 10 banks for violations of foreign exchange guidelines and other regulatory offences.

These agencies, including the Central Bank of Nigeria and the Securities and Exchange Commission, imposed fines totalling N1.502 billion as penalties within the first six months of 2024.

These contraventions highlight the ongoing challenges faced by financial institutions in adhering to compliance standards set by regulatory authorities.

The banks penalised include First City Monument Bank of Nigeria, Access Bank, Stanbic  IBTC, Zenith, United Bank of Africa, Guaranty Trust Bank, Sterling Bank, Fidelity, First Bank, and VFD Bank.

An analysis of each bank’s financial statement for the period ending June 30, 2024, filed with the Nigeria Exchange, showed the amount paid to the Central Bank of Nigeria and the Securities Exchange Commission.

The report showed that Zenith Bank paid the highest fine, N427m, within the review period. Access Bank followed this with a payment of N300m. UBA paid regulatory authorities the third highest amount, N279 million, while Stanbic Bank paid a sum of N229 million for contraventions.

Other banks, including GTB, paid N188 million; Fidelity paid N30.11 million; FCMB paid N24.15 million; Sterling paid N9 million; First Bank paid N8 million; and VFD paid N8.1 million.

Recently, there have been serious concerns about banks' financial operations, with some civil society organisations alleging that the activities of tier-one banks are shrouded in secrecy.

The President of Arewa Consultative Movement, Alhaji Yusuf Kabir, signed a petition demanding a forensic audit of the bank’s financial statement, which hit a historic profit in the sector.

Responding to this, the CBN, in a press statement, emphasised its commitment to the stability of the country’s financial system, highlighting that regular stress tests are conducted to identify potential vulnerabilities in banks.

According to the CBN, these stress tests are an integral part of its strategy to safeguard the financial system and protect depositors’ funds.

The tests help the apex bank detect and address emerging risks before they impact the sector's stability.

A breakdown of the fines showed that Access Bank paid N300 million to the CBN on April 30, 2024, as a penalty for the wrong handling of funds received from a government agency.

Stanbic IBTC said N229m as penalties to the CBN, the National Pension Commission, and the Securities and Exchange Commission. The figure was an increase from N159m paid in 2023.

The statement read, “SEC imposed a penalty of N2,475,000 on Stanbic IBTC Asset Management Limited for non-submission of approval of the third Supplement trust deed, custody, and property management agreement.

“SEC imposed a fine of N5,320,000 on Stanbic IBTC Asset Management Limited for alleged violation of the rules on fund management prohibiting fund/portfolio manager from developing and operating a product, discretionary or non-discretionary portfolio/fund without the commission’s prior approval or objection.

“The SEC imposed a fine of N1,000,000 on Stanbic IBTC Capital Limited for allegedly receiving cash inflow/credit into the offer proceeds account after the offer period.

“The CBN imposed a fine of N176,000,000 on Stanbic IBTC Bank Limited for alleged non-compliance with the complaints resolution directive to repay three customers.

“The CBN imposed a fine of N44,000,000 on Stanbic IBTC Bank Limited for alleged infractions noted in the CBN Risk Asset Exam December 2020 and RBS June 2022.”

For Zenith Bank, the infractions include the late resolution of a customer’s complaint, reconciliation of customer charges, anti-money laundering findings, late compliance with CBN directives, risk assessment infractions, penalties for cyber security breaches, and checks on customers’ onboarding documentation.

UBA paid N279 million for the late Rendition of the 2021 Cyber Security Self-Assessment Report and Contravention of Memorandum 8 of the CBN Foreign Exchange Policies.

GTB was fined N188.25m for violations reported during the 2023 CBN’s FX Examination on the Bank, consumer protection regulations, compliance-related/Bank e-Mail Returns, and the 2024 CBN’s Mystery Shopping Exercise on the Bank.

The bank was also fined in Ghana and Rwanda for “breaching foreign exchange market operational guidelines." An equivalent of N1.297 billion was paid in Ghana and N311,000 in Rwanda.

Nigerian banks lost $42.6 billion to fraud in Q2 2024, FITC reports

Meanwhile, TheRadar earlier reported that the Financial Institutions Training Centre (FITC), in its Q2 2024 Fraud and Forgeries report, revealed a surge in fraudulent activities across banking platforms in Nigeria, which has led to a loss of N42.6 billion by Nigerian banks in three months between April and June 2024.    

In response to the alarming rise in fraud, the FITC urged banks to enhance their monitoring and auditing systems, and it also recommended that AI-driven tools be used for continuous and automated monitoring of unusual patterns or anomalies in settlement files.