By Yakubu LAAH InvestAdvocate

Lagos (INVESTADVOCATE)-The Central Bank of Nigeria (CBN) on Friday warned on the sale of foreign exchange without adequate documentation.

In a circular with reference number TED/FEM/FPC/GEN/01/025 and dated November 21, 2014 by Olakanmi Gbadamosi, director, trade & exchange department to authorised dealers and the general public, the CBN said it has observed some authorised dealers have been indulging in the sole of foreign exchange  for  items which  are  not supported  with  necessary  shipping documents, particularly on open account basis.

‘’The circular reads thus: This is to inform off authorised dealers and the general public that we have observed that some authorised dealers have been indulging in the sole of foreign  exchange  for  items which  are  not supported  with  necessary  shipping documents, particularly on open account basis.

It is therefore important to note that only imports which are cash backed with evidence of shipment and other relevant document are eligible for foreign exchange

For the avoidance of doubt, only transactions for which Letters of Credit are cash backed, or with matured Clean Lines or matured Bills for Collection are eligible for purchase of foreign exchange in the forex market.

For the sake of emphasis, “Front Loading” purchase of foreign exchange in both RDAS and Interbank shall no longer be permitted with effect from the date of the circular.

 Any infraction whatsoever of these requirements, by any authorised dealer, shall be appropriately sanctioned. Please ensure strict compliance,’’ the CBN said.