Leaked Bank Memo Spooks Holders Of Domiciliary (Dollar) Accounts

A memo purportedly sent to the foreign exchange trading desk of a leading commercial Bank has spooked domiciliary account holders (depositors who keep money in dollars) in banks.

In the memo seen by CityNews, the bank mentioned that ” it has become necessary to review the utilization of inflows into customers DOM accounts”. Nairametrics cannot verify the authenticity of the memo. However, it has been widely shared on some social media platforms and was the subject of debate on Twitter.

In the purported letter, the bank recommended utilization actions for a different type of inflows such as inflows from non-oil and oil proceeds, offshore FX inflows, forex inflows from other Nigerian banks, and inflows from “Internal account to account FX transfers (sourced from offshore inflows)” and Internal account to account FX transfers (sourced from FX cash deposits) FX cash lodgment over the counter.

What seems to have spooked some Nigerians were the recommendations made in the memo. For example, under the category that addressed Offshore FX Inflows Local FX inflows (from other Nigerian banks), Internal account to account FX transfers (sourced from offshore inflows), it recommended that “Transfers to third parties are strictly prohibited”. This suggests inflows from abroad into your local account in Nigeria cannot be transferred to anyone else except you sell to the bank or transfer to yourself.

In another type of FX transfers, Internal account to account FX transfers (sourced from FX cash deposits) FX cash lodgment over the counter, it made the following recommendations.

• The origin and source of the FX deposit should be determined before customer can be credited to ascertain the legitimacy
• FX cash lodgments should be lodged by only account holders and they can have unfettered access by telegraphic transfer up to a limit of $40,000.00 monthly for payment of medical bills, school fees, subscription to professional bodies, etc., subject to existing CBN guidelines
• Transfer from one customer to another is prohibited
• Transfer within related companies is allowed subject to a limit of  $50,000.00 per month.
• Own use for eligible transfers and in cases as deemed by regulators (savings towards investments, etc.). This should be subject to regulatory limits and backed by signed instructions.
• Cash drawings.

It is unclear if these directives have the backing of the CBN as the origin or the source of the letter cannot be verified at the time of writing this article.

What this means: In recent days we have seen several internal leaks from banks recommending several measures aimed at curbing access to foreign exchange. For example, a text message purportedly shared by a bank for example stipulates that “customers can no longer affect FX transfers directly to third parties” explaining that customers can only “sell such funds to the banks”.

• The CBN is yet to comment on any of these memos and as far as we know has not issued any circular publicly to this effect.
• If this memo is true, then it suggests other banks are seriously considering capital controls that limit FX speculations in the hope that it will extinguish dollar demands.