The Central Bank of Nigeria (CBN), says domiciliary accounts used to deposit export proceeds (inflow from exports of goods and services from Nigeria) can only be used for business operations.
This is contained 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 directive also allows any extra funds remaining in the domiciliary accounts to be sold in the Investors and Exporters (I&E) Window, suggesting that the CBN is warning exporters not to sell their foreign proceeds in the black market.
‘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.’’
“Where accounts are funded by electronic/wire transfer, account holders will be allowed unfettered and unrestricted use of these funds for eligible transactions. Where accounts are funded by cash lodgments, the existing regulations will continue to apply.”
The CBN also claimed it was issuing these clarifications in view of its “vastly improved capabilities of the CBN to monitor transactions, forestall money laundering and prevent the adverse effect of dollarization in Nigeria’s economy” which the CBN has frowned upon for years.
The latest regulations from the CBN appear to be directed at clarifying widespread information that there are plans for a clampdown of domiciliary accounts.
For export proceeds, this circular appears to be warning exporters to use their forex proceeds for “legitimate” transactions and sell the rest in the I&E window instead of selling it in the black market.
On Domiciliary accounts, the CBN is basically saying that inflows through electronic wires will be allowed for use by Nigerians for transactions deemed eligible. This means, if you received a foreign transfer into your account, you can use it to pay for transactions such as e-commerce payments or transfers to anyone at any time.
However, for dollar cash deposits into your accounts, the central bank is reiterating that there will be restrictions on how that money is used such as restricting it from direct transfers or even using it to pay for e-commerce transactions.
Currently, a limit of $10,000 applies when you want to utilize foreign currency cash deposits.