DRAFT BILL FOREIGN EXCHANGE (MONITORING AND MISCELLANEOUS PROVISIONS) ACT (AMENDMENT) BILL 2016
Why the Review?
The Nigerian Law Reform Commission in pursuance of its mandate decided to embark on this reform exercise with a view to making proposals to reform the Foreign Exchange Act to inter-alia check money laundering and strengthen the Nigerian economy.
Key Points to note
- Section 4:
Sources of Foreign Currency in the Market “Foreign currency sent by Nigerians resident abroad to their relations and friends, and Foreign currency sent by non-Nigerians to their children and friends in Nigeria.”
Translation: Remittances sent to Nigerians from abroad are now listed as a formal source of foreign currency.
- Section 9A:
Prohibition of Possession of Foreign Currency “The possession of foreign currency by any person without depositing same in a domiciliary account within 30 days of its acquisition constitutes an offence 39 liable on conviction to two years’ imprisonment or to a fine of 20% of the amount of the foreign currency involved.”
Translation: Link this back to the inclusion of Remittances as a formal source of forex. This means that remittances cannot be kept as cash, outside the formal, domiciliary accounts.
- Section 12:
Importation and Exportation of Foreign Currencies:
Foreign currency more than US $5,000 or its equivalent, whether being imported into or exported out of Nigeria, shall be in accordance with the terms and conditions as may be prescribed by the Central Bank from time to time.” “Any foreign currency purchased from the Market may be repatriated from Nigeria in accordance with the terms and conditions as may be prescribed by the Central Bank (CBN) from time to time.”
Translation: If Dollars are purchased from the Local market, then any transfer in excess of $5,000 can only be transferred out subject to “terms and conditions” …no longer for “statistically purposes” …in English, it can be stopped.
Section 17:
Domiciliary Accounts Section “No money imported for the purposes of this Act shall be liable to seizure or forfeiture or suffer any form of expropriation by the Federal or a State Government except there is a reasonable ground to believe that the money is imported for illicit purpose(s) or in contravention of the provisions of this Act.”
Translation: Funds sent to Nigeria, from abroad, in Domiciliary Accounts, can now be seized if they suspected of being used for illicit purposes. Question is who determines “illicit purpose”
In summary, these new proposals point to greater control and scrutiny over forex by the CBN, specifically it gives the CBN greater legal powers to control the domiciliation and export of forex. By this measures, the CBN has greater oversight over the Domiciliary account, especially remittances.
Domiciliary Accounts are now in the CBN sights
http://nlrc.com.ng/doc/Commissionforexreform.pdf
