CBN Tightens Noose on Currency Mutilation, Counterfeiting

Godwin Emefiele
CBN Governor, Mr. Godwin Emefiele

Obinna Chima and Nume Ekeghe

The Central Bank of Nigeria (CBN) yesterday vowed to impose stiff sanctions on commercial banks and individuals that dispense mutilated and counterfeit currencies.
The central bank has also called for an increase in private companies participating in the currency management value chain to enhance its clean note policy.

The CBN Governor, Mr. Godwin Emefiele, said this yesterday during the unveiling of the Bank’s Clean Notes Policy and Banknotes Fitness Guidelines in Lagos.

Emefiele said CBN branch controllers across the country have been empowered to work with security agencies in their respective states to ensure that cases of currency mutilation are addressed.
He noted that bank notes remain important for payments and settlement of commercial transactions in Nigeria, saying the central bank takes the state of the nation’s currency very important.

Emefiele, who was represented by the Deputy Governor (Operations), CBN, Mr. Folashodun Shonubi, said: “It is worth noting that the bank has the responsibility for preserving the integrity of the naira and sustaining public confidence in the national currency as enshrined in Section 2 of the CBN Act 2007.

“To attain these objectives, the bank strives to ensure an optimal supply of clean and quality banknotes in a balanced denominational mix to meet public demand, while also maintaining a balanced currency structure that is both efficient and cost effective.

“The responsibility for clean notes in circulation is not exclusively that of the central bank, rather a collaborative effort between the central bank, banknote suppliers, deposit money banks, manufacturers of currency management equipment, currency transportation and processing companies, security agencies, and the general public.

“I commend the existing collaboration between the CBN and the stakeholders in the currency management value chain, and wish to stress that this should be deepened and strengthened for the overall good of the industry.
“Currency management is vital to our daily lives because despite the improvements in electronic payments system, banknotes remain predominant for payment and settlement of commercial transactions in Nigeria.”

Speaking further, Emefiele said the central bank had registered eight companies to carry out cash-in-transit and two cash processing companies to operate in Nigeria.
He urged commercial banks to patronise only these registered companies for CIT and sorting services.
“It is expected, therefore, that more private sector participation in the currency management value chain would further strengthen the efforts toward ensuring availability of clean banknotes,” he added.

In addition, Emefiele revealed that the apex bank intends to embark on a project that would enable it mop-up mutilated banknotes from circulation.
He also said the central bank would continue to embark on sustainable institutional reforms and enact policies that would promote efficient currency management in Nigeria.

He said: “I will like to seize this opportunity to urge Nigerians to handle the naira properly, as it is a criminal offence to abuse the naira. Moreover, the naira is our identity as a country, so we need to respect it.
“I wish to bring to your attention that after this unveiling event, the bank would monitor and sanction any commercial bank/financial institution that contravenes the provisions of the two policy documents.”

Speaking in an interview on the side-lines of the event, Shonubi said: “When people go around, they look at your currency and that represents the nation. And half the time we show them currency notes that are less than fit, it must tell on us in some shape and manner.
“The whole industry not just the central bank has committed to changing that image.

“The document unveiled today explains how it would be done; what everybody’s role and responsibilities are and how we can make it a reality.
“From the banks who actually handle the notes to ensure the notes they have are always fit for purpose. We also feel it would affect commerce because people would be more inclined to spend when they have new notes in their hands and merchants more willing to accept.

“So, we believe it would definitely help the economy and how money moves around.”
In her presentation, the Director, Currency Operations, CBN, Mrs. Priscillia Ejeme, said despite the huge volume of CIC and its attendant challenges, the CBN remained committed to ensuring that the nation has fit notes in circulation.

Also alluding to the incentives for banks to bring in bad notes, she said: “We would give a timeframe by which banks would need to bring all mutilated bank notes to us for replacements and we would do it in a way that they would be encouraged to bring them forward.”

She also added that ATMs are expected to have only mint and close to mints dispensed, which the guideline stipulates as Level 1 and Level 2.
She also urged banks to sort increase sorting of mutilated notes to the CBN to retrieve the cleaner notes.

On sanctions she also said: “There would a penalty for counterfeits from ATMs and it is currently N1 million for counterfeits detected via ATMs or across the counters.”
On his part, the Director, Banking and Payment System Department, CBN, Mr. Dipo Fatokun, said: “The clean note policy document provides the uniform standard of only clean and fit bank notes in Nigeria.”