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Money Laundering: CBN Reads Riot Act To Banks Ahead 2019

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Commercial banks in Nigeria have been warned not to play into the hands of politicians who may want to use them to launder monies away from the country in the run-up to the nation’s general election in 2019.

“We have had meetings with the banks, and we have told them to be wary, money laundering issue may arise, and we have advised them to be very careful on money laundering issues. I believe they will be careful themselves because they have been told that if they are caught on money laundering, they will be heavily penalised,” Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele said yesterday during a media briefing to mark the end of the two-day meeting of the bank’s Monetary Policy Committee.

Noting that the banks have their acceptance criteria for lending to the politicians, Emefiele said he doesn’t expect the banks to lend to the politicians this time. “Everybody must have learnt their lessons and I believe that the right thing for everybody is to conduct their business carefully,” he said, adding that “we as central bank are staying behind and watching to make sure that when things go wrong or about to go wrong, we will deal with it appropriately.”

Meanwhile, the MPC has for the longest time by a vote of all its 11 members, voted to retain the nation’s Monetary Policy Rate (MPR) at 14 per cent; asymmetric corridor of +200/-500 basis points around the MPR. The Committee retained the Cash Reserve Ratio (CRR) at 22.5 per cent; and 4. Retain the Liquidity Ratio at 30 per cent.

Many, especially operators in the real sector had expected the MPC to loosen the headline interest rate to encourage the flow of credit to the real sector. On the contrary, while the Committee acknowledged that loosening would help in reduction of the aggregate cost of credit and spur business spending and investment, thereby reinforcing the CBN’s support for output growth and economic recovery, it, however, held the view that doing so will reverse more rapidly, the gains of price and exchange rate stability achieved so far given the liquidity impact that would entail.

The bank said that the ensuing liquidity will exert pressure on the exchange rate in the light of increased capital flow reversals arising from monetary policy normalisation by the US Fed. This would further depress the capital market.

The Committee underscores that by holding its policy position constant, it has confidence in the various policies and administrative measures deployed by the Bank which it said have resulted in the moderation in domestic price levels and stability in the foreign exchange rate.

The central bank indicated that it would likely hold the MPR at the current level while watching on the inflation headline drop to a single level. Nigeria’s annual inflation rate dropped to 11.26 per cent in October compared to 11.28 per cent in September, according to latest figures from the National Bureau of Statistics.

Reading out communiqué of the 121st meeting of the MPC yesterday, Emefiele said while the Committee believed that although the domestic economy was recovering modestly from recession, however, “the recovery was tepid and efforts should be stepped up to strengthen aggregate output and demand.”

In this regard, the Committee urged the CBN to deepen and broaden access to finance to high employment elastic sectors with particular emphasis on small and medium scale enterprises. The Committee called on the CBN to extend the success recorded under the Anchor Borrowers Programme to other items including fish and palm oil, etc. by introducing more stringent measures to curb access to foreign exchange for products that can be produced within Nigeria.



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