Cbn clarifies on operation of domiciliary accounts

Here is a summary of the Central Bank of Nigeria's (CBN) clarification on the operation of domiciliary accounts:

What is a Domiciliary Account?

A domiciliary account is a type of bank account that allows individuals and organizations to receive and manage foreign currencies, such as US dollars, pounds, euros, and others.

CBN Clarification

In a circular dated August 26, 2020, the CBN clarified the operation of domiciliary accounts in Nigeria. The circular aimed to provide guidance to banks, their customers, and the general public on the rules and regulations governing the operation of domiciliary accounts.

Key Points

  1. Eligibility: Only individuals and organizations with a valid business or personal reason can open a domiciliary account. This includes foreigners, Nigerians living abroad, and Nigerian companies with international transactions.
  2. Currency: Domiciliary accounts can be denominated in various foreign currencies, including US dollars, pounds, euros, and others.
  3. Minimum Balance: There is no minimum balance requirement for domiciliary accounts.
  4. Transaction Limits: The CBN set limits on transactions in domiciliary accounts to prevent money laundering and other financial crimes. For example, a customer can only withdraw up to 50% of the account balance in a single transaction.
  5. Conversion: The CBN allows the conversion of naira to foreign currencies and vice versa at the prevailing interbank exchange rate.
  6. Fees: Banks are allowed to charge fees for services related to domiciliary accounts, such as maintenance fees, transaction fees, and conversion fees.
  7. Reporting: Banks are required to report all transactions in domiciliary accounts to the CBN and other relevant authorities.
  8. Closure: The CBN can close a domiciliary account if it is used for illegal activities, such as money laundering or terrorism financing.

Conclusion

The CBN's clarification on the operation of domiciliary accounts aims to promote transparency, accountability, and stability in the Nigerian financial system. It is essential for individuals and organizations to understand the rules and regulations governing domiciliary accounts to avoid any legal or financial consequences.