CBN Issues N150 Million Penalty for Banks Involved in Illegal Naira Notes Flow to Hawkers

Our reporter

The Central Bank of Nigeria (CBN) has imposed a hefty fine of N150 million on Deposit Money Banks (DMBs) that facilitate the illegal circulation of mint naira notes to currency hawkers across the country. This move follows growing concerns over the impact of such activities on the integrity and effectiveness of the country’s currency distribution system.

 

The fine was announced after the CBN addressed widespread confusion regarding the legal status of the old N1000, N500, and N200 notes. In a statement, the apex bank clarified that these banknotes remained valid legal tender, as upheld by a Supreme Court ruling on November 29, 2023. CBN also reiterated its warning against hoarding of the currency.

 

A circular issued on Friday by the Acting Director of Currency Operations, Mohammed Olayemi, expressed the bank’s alarm over the rising number of hawkers engaged in the illegal trade of freshly minted naira notes. This practice, the CBN said, disrupts the equitable distribution of cash to citizens and negatively impacts the wider financial system.

 

The CBN's directive underscores its commitment to curbing the growing commodification of the naira, as the bank aims to restore order and transparency in the cash distribution process. According to the circular, any branch of a financial institution found guilty of enabling this illicit practice will be subject to an initial penalty of N150 million. Subsequent offenses will result in stricter sanctions under the Banks and Other Financial Institutions Act (BOFIA) 2020.

 

The CBN has pledged to intensify oversight measures, including more frequent spot checks at bank branches and ATMs, as well as deploying undercover agents to monitor known hawking hotspots across Nigeria.

 

The statement read in part: "The CBN has observed with concern the growing trend of mint naira notes being circulated to hawkers and other unscrupulous elements. These actions disrupt the effective distribution of cash to legitimate customers. In response, the CBN will heighten surveillance of banking halls and ATM operations, and use mystery shoppers to track down unlawful hawking activities."

 

Furthermore, the CBN has urged DMBs to strengthen internal controls at their Cash Management Centres, branches, and teller operations to prevent abuse and exploitation of their systems for illicit transactions.

 

This crackdown on the illegal circulation of mint naira notes underscores the CBN’s firm stance on protecting the integrity of Nigeria’s currency system and ensuring that cash reaches the public in a fair and orderly manner.