Central Bank of Nigeria Removes Limits on Domiciliary Accounts, Allowing Unrestricted Access to Funds

The Central Bank of Nigeria (CBN) has made significant changes to the regulations governing domiciliary accounts, lifting the previously imposed limits. In a statement titled ‘CBN issues further guidance on operational changes to foreign exchange market,’ the CBN announced that account holders would now enjoy unrestricted access to funds in their domiciliary accounts. Additionally, they would be able to freely deposit funds and make daily withdrawals of up to $10,000.

The new regulations emphasize the importance of transparency and compliance with anti-money laundering and counter-terrorism financing laws. While cash deposits into domiciliary accounts will no longer be restricted, deposit money banks (DMBs) are required to conduct proper Know Your Customer (KYC) procedures and due diligence. They must also provide detailed returns to the CBN, including the purpose of transactions.

This move comes after reports in May 2021 indicated that banks had introduced new limits on transfers from cash lodgements in domiciliary accounts. The maximum limit for foreign currency transfers had been set at $5,000 per month. However, following discussions during a Bankers’ Committee meeting, the CBN decided to remove this limit in order to promote transparency, liquidity, and price discovery in the foreign exchange (FX) market. The objective is to improve FX supply, discourage speculation, enhance customer confidence, and ensure overall stability.

Furthermore, the CBN affirmed that all visible and invisible transactions, such as medical expenses, school fees, business travel allowances, and remittances, would be eligible for the Investors’ and Exporters’ window. Banks were urged to process eligible invisible transactions promptly, utilizing the applicable rate at the I & E window.

The CBN also emphasized its commitment to settling committed FX forward transactions in a timely manner to enhance market confidence. As part of ongoing reforms, the CBN pledged to normalize its Cash Reserve Ratio maintenance processes and ensure fair implementation across the banking industry, while actively engaging stakeholders.

Overall, the CBN’s decision to lift limits on domiciliary accounts reflects a strategic effort to streamline foreign exchange operations, foster trust in the financial system, and support the stability of Nigeria’s FX market.