CBN Penalizes Banks with N150m Fine for Illicit Naira Mint Transactions

By fining negligent Deposit Money Banks (DMBs) N150 million per branch, the Central Bank of Nigeria (CBN) has demonstrated its strong opposition to the illicit transfer of newly printed naira notes to currency hawkers and other dishonest individuals.

This is one of the steps being taken to stop the commercialization of Naira notes, which the CBN claims compromises the effective distribution of cash to Nigerians.

The apex bank voiced its displeasure with the growing tendency of mint Naira notes being sold in cash hawking locations throughout the nation in a circular dated December 13, 2024, and signed by Mohammed J. Olayemi, Acting Director of the Currency Operations Department.
The circular reaffirmed the CBN’s commitment to combating this illegal practice by referencing a previous order dated November 13, 2024.

The CBN states that any bank branch found guilty of enabling, assisting, or abetting the flow of mint notes to hawkers shall be subject to the fine at the first instance of a violation.

The provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 will impose more harsher penalties for subsequent infractions.

Increased enforcement and surveillance
The CBN declared plans to increase recurring spot checks in ATMs and banking rooms, with an emphasis on examining cash disbursement procedures, in order to guarantee compliance.

In order to find cash-hawking hotspots and identify banks involved in the illicit trade, the top bank also plans to carry out mystery shopping activities.

Along with the fines, the CBN has urged banks to strengthen internal controls, cash management processes, and procedures, especially at Cash Management Centers, branches, and teller operations.

The circular stated: “The CBN has expressed dismay at the widespread illegal transfer of mint banknotes to currency hawkers and other dishonest businesspeople who turn Naira banknotes into commodities, preventing banks and the public from receiving cash in an efficient and effective manner.

“CBN will continue to step up its routine spot checks at banking halls and ATMs to examine cash payouts to bank customers. Additionally, it will conduct mystery shopping at all identified cash hawking locations nationwide.”

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“In this regard, any irresponsible deposit money banks or financial institutions that are responsible for directly or indirectly facilitating, aiding, or abetting the illegal flow of mint banknotes to currency hawkers and dishonest economic agents that commodify Naira banknotes will be penalized at first N150,000,000.00 (one hundred and fifty million Naira) per erring branch, and at later times, the full force of relevant provisions of BOFIA 2020.”

In order to prevent cash distribution systems from being used for illegal activities, the apex bank advised financial institutions to take preventative measures.

Things you should be aware of
The CBN has long been concerned about the illegal flow of mint Naira notes to hawkers because it undermines the integrity of banking operations and causes inefficiencies in the cash distribution system. The top bank’s resolve to bring order back to the country’s currency circulation is emphasized in the most recent circular.
As part of its continuous efforts to ensure responsible currency distribution, the CBN earlier issued severe fines for Deposit Money Banks (DMBs) found to be diverting cash to hawkers, according to a report by Nairametrics.
The central bank announced in a circular dated November 13, 2024, that any bank connected to money taken from street vendors will be fined 10% of the total amount of the money taken out.
A 5% additional penalty will be applied for subsequent infractions.
Muhammad J. Olayemi, Acting Director, Currency Operations Department, signed the circular, which emphasized that the goals of these actions are to prevent naira note abuse and support an effective cash distribution system.
It reaffirmed the CBN’s dedication to upholding its Clean Note Policy, which aims to preserve the naira’s integrity by guaranteeing that banknotes are handled and circulated properly.
Additionally, the CBN cautioned DMBs against cash hoarding and diversion, pointing out that these actions make it more difficult to obtain cash, especially during times of high demand like the holiday season.
The CBN will engage closely with law enforcement agencies to increase spot checks and mystery shopping efforts, and banks involved in these activities will be subject to sanctions.