Why CBN banned third party from accessing form M for forex

The Central Bank of Nigeria (CBN) says henceforth, it will no longer grant approval for payment of foreign exchange to form M applicants who want to access it through a company and agent.

This implies that the apex bank has finally brought an end to accessing forex for form M through third parties.

According to a memo signed by O.S. Nnaji, the director of trade and exchange department at the bank, the CBN said the decision became necessary it will now pay the ultimate provider of goods and services the forex directly.

“As part of continued efforts by the Central Bank of Nigeria to ensure prudent use of 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 the opening of Forms M whose payment is routed through a buying company/agent or any other third-parties,” the memo read.

“All authorised dealers are hereby requested to only open form M for letters of credit, bills for collection and other forms of payment in favour of the ultimate supplier of the product or service”.

The bank said the “directive is with immediate effect”.

According to the apex bank, global best practices will henceforth be followed in verifying prices before approving forex for the purchase of goods and services abroad.

“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.” CBN further stated.