13 August 2015
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Global Tax Alert
Central Bank of Nigeria bans
foreign cash deposits in
domiciliary accounts
Executive summary
On 5 August 2015, the Central Bank of Nigeria (CBN) issued a Circular with reference
number TED/FEM/FPC/GEN/01/015 and titled Developments in the Foreign Exchange
Market Re: Cash Deposit Into Domiciliary Accounts prohibiting all Deposit Money Banks
(DMBs) from accepting foreign currency cash deposits into customers’ domiciliary
accounts1 and has ordered the DMBs to ensure strict compliance with this Directive.
The Directive takes effect from the issue date of the Circular.
Detailed discussion
This Directive was issued following recent statements by the DMBs regarding the
large volumes of foreign currencies in their vaults.
The aim of the Circular is to enhance efforts to stop illicit financial flows in the
Nigerian banking system aligning with the anti-money Laundering stance of the
Federal Government.
In accordance with the Circular, transactions via the domiciliary accounts can only be
made through wire transfers.
Therefore, cash deposits to or withdrawals from domiciliary accounts are no longer
permitted.
The Directive is without prejudice to individuals who wish to source foreign currency
for eligible and legitimate purposes such as business travel allowance (BTA), personal
travel allowance (PTA) medical, mortgage payments, etc. They are expected to source
foreign currencies through recognized channels with the use of the CBN’s Form A for
”invisible” and Form M for ”visible” transactions.
Implications
This Directive should only impact cash transactions in
foreign currency within Nigeria. It is not intended to
impact foreign investment or transactions including
invoicing and foreign payments executed in Nigeria
as such transactions are normally done through wire
transfers.
In addition, this Directive differs from the initial Circular
issued by the CBN in April 2015 on the discontinuation
of currency substitution and dollarization of the Nigerian
economy as this Directive specifically focuses on
restricting cash payments into and withdrawals from
domiciliary accounts.2
Endnotes
1. A domiciliary account is one that primarily holds foreign currency.
2. See EY Global Tax Alert, Central Bank of Nigeria orders banks to discontinue currency substitution and
dollarization of Nigerian economy, dated 21 May 2015.
2
Global Tax Alert
For additional information with respect to this Alert, please contact the following:
Ernst & Young Nigeria, Lagos
• Abass Adeniji
• Edem Andah
• Akinbiyi Abudu
• Ogochukwu Isiadinso
• Oluwatumininu Familusi
+234 802 301 3597
+234 708 768 1113
+234 806 240 4902
+234 802 712 5450
+234 811 209 3186
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
Ernst & Young Advisory Services (Pty) Ltd., Johannesburg
• Justin Liebenberg
+27 11 772 3907
[email protected]
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
• Leon Steenkamp
+44 20 7951 1976
[email protected]
• Gonçalo Dorotea Cevada
+44 20 7951 2162
[email protected]
Ernst & Young LLP, Pan African Tax Desk, New York
• Dele A. Olaogun
+1 212 773 2546
• Mzukisi Ndzipo
+1 212 773 9917
Global Tax Alert
[email protected]
[email protected]
3
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