The Central Bank of Nigeria (CBN), in a clarification on the operations of domiciliary accounts, has said that export proceeds domiciliary accounts will continue to be operated based on existing regulations which allow account holders make use of their funds for business operations only, with any extra funds sold in the Investors and Exporters (I&E) Window.
This follows different interpretations on the operationalization of domiciliary accounts by different stakeholders and to ensure the stability of the foreign exchange market.
This disclosure was made in a circular dated November 30, 2020, issued by CBN to all authorized dealers and the general public and signed by its Director for Trade & Exchange Department, Dr O.S. Nnaji.
The apex bank pointed out that where ordinary domiciliary accounts are funded by electronic/wire transfer, account holders will be allowed unfettered and unrestricted use of these funds for eligible transactions.
The circular from CBN partly reads, ‘’Following different interpretations on the operationalization of Domiciliary Accounts and to ensure the stability of the foreign exchange market. The Central Bank of Nigeria (CBN) would like to provide the following clarifications;
Export Proceeds Domiciliary Accounts: These accounts will continue to be operated based on existing regulations which allow account holders use of their funds for business operations only, with any extra funds sold in the Investors & Exporters window.’’
The CBN also said that where accounts are funded by cash lodgments, the existing regulations will continue to apply.
While stating that these clarifications are necessary given the vastly improved capabilities of the CBN to monitor transactions, forestall money laundering and prevent the adverse effect of dollarization in Nigeria’s economy, the CBN also noted that all authorized dealers and the general public should be aware that BVN would be used to enforce compliance with these regulations.
These regulations which are clarified by CBN are part of measures implemented by the apex bank to guard against the misuse of the country’s foreign exchange resources and ensure its judicious usage.
It will also ensure the conservation of the country’s scarce foreign exchange and made available to genuine users.
It should be noted that in its earlier guideline on the operation of domiciliary accounts, the CBN said that forex cash lodgments into the accounts can only be done by the accounts owners and that forex inflow cannot be credited to customers until the legitimacy of funds is established.
The guideline also partly states that the account owners can have unfettered access by telegraphic transfers up to a limit of $40,000 monthly for payment of medical bills, school fees, subscription to professional bodies subject to existing CBN guidelines