CBN Hits Importers, Others, Moves against FOREX Scam, Blocks Over-invoicing
The Central Bank of Nigeria (CBN) Monday moved strongly to end decades of over-invoicing and foreign exchange scam through which some importers and other businesses use to secure more foreign exchange allocations from banks.
As part of the measures, the apex bank in a circular directed banks to end the era of opening Forms ‘M’ in which payment is through third party, agent or buying company.
In the circular signed by the CBN Director, Trade and Exchange Department, Dr. Ozoemena Nnaji, the bank said it has introduced price verification mechanism on every product in order to check over-pricing or mispricing of imported goods.
In the circular dated August 24, the apex bank explained that the measure was to ensure prudent use of foreign exchange, adding that this was the only way to check such issues of over-invoicing, transfer pricing, double handling charges and avoidable costs.
The circular which was addressed to all authorised dealers and members of the public reads: “As part of continued efforts of the CBN to ensure prudent use of our foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges and avoidable costs that are ultimately passed to the average Nigerian consumers, authorised dealers are hereby directed to desist from opening Forms ‘M’ whose payment are routed through a buying company, agent or any other third parties.
“Accordingly, all authorised dealers are hereby requested to only open Forms ‘M’ for Letters of Credit, bills for collection and other forms of payment in favour of the ultimate supplier of the product or service. This directive is with immediate effect.
“Additionally, in line with best practices around the world, the CBN will be immediately introducing a product price verification mechanism to forestall over-pricing and/or mispricing of goods and services imported into the country.
“All authorised dealers shall use this mechanism to verify quoted prices before Forms ‘M’ are approved. Please ensure strict compliance.”
Form ‘M’ is a mandatory requirement for all imports into Nigeria.
As part of the measures, the apex bank in a circular directed banks to end the era of opening Forms ‘M’ in which payment is through third party, agent or buying company.
In the circular signed by the CBN Director, Trade and Exchange Department, Dr. Ozoemena Nnaji, the bank said it has introduced price verification mechanism on every product in order to check over-pricing or mispricing of imported goods.
In the circular dated August 24, the apex bank explained that the measure was to ensure prudent use of foreign exchange, adding that this was the only way to check such issues of over-invoicing, transfer pricing, double handling charges and avoidable costs.
The circular which was addressed to all authorised dealers and members of the public reads: “As part of continued efforts of the CBN to ensure prudent use of our foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges and avoidable costs that are ultimately passed to the average Nigerian consumers, authorised dealers are hereby directed to desist from opening Forms ‘M’ whose payment are routed through a buying company, agent or any other third parties.
“Accordingly, all authorised dealers are hereby requested to only open Forms ‘M’ for Letters of Credit, bills for collection and other forms of payment in favour of the ultimate supplier of the product or service. This directive is with immediate effect.
“Additionally, in line with best practices around the world, the CBN will be immediately introducing a product price verification mechanism to forestall over-pricing and/or mispricing of goods and services imported into the country.
“All authorised dealers shall use this mechanism to verify quoted prices before Forms ‘M’ are approved. Please ensure strict compliance.”
Form ‘M’ is a mandatory requirement for all imports into Nigeria.
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