The Central Bank of Nigeria (CBN) on Monday introduced an FX policy that will tackle the age-long practice of Forex over-invoicing, which unscrupulous businesses have used to cart away the nation’s foreign exchange, insisting that banks and other authorized dealers should henceforth desist from opening ‘Forms M’ for payments that are routed through a buying company, agent, or other third parties.

In a major policy shift that has attracted praises from major player in the banking industry, the CBN in a circular stated all form should be in favour of the ultimate supplier of the product or service

”As part of continued efforts by the Central Bank of Nigeria to ensure prudent
use of our 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 opening of Forms M whose
payment are routed through a buying company/agent or any other third-
”Accordingly, all Authorised Dealers are hereby requested to only open
Forms M for Letters of Credit, Bills for collection and other forms of payment
in favour of the ultimate supplier of the product or service. This directive is
with immediate effect.”

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 Authorized Dealers shall use this mechanism to verify quoted
prices before Forms M are approved.