Regulatory Alerts2010-07-06 | OFISD-01-2010Illegal Clearing and Conversion/Diversion of Third Party Cheques and Dividend Warrants
The Central Bank of Nigeria has issued a circular addressing illegal activities by some Microfinance Banks (MFBs) and Primary Mortgage Institutions (PMIs). These institutions have been found to be involved in fraudulent practices such as unauthorized clearing, conversion, and diversion of third-party cheques and dividend warrants belonging to various entities. This has led to significant revenue losses and jeopardizes the credibility of the sub-sectors and financial system at large. The Central Bank warns all MFBs to cease these activities or face appropriate legal consequences.
Central Bank Of Nigeria
CBN website: www.cenbank.org Ref: OFI/DIR/GEN/CIR/01/05 6th July, 2010
Circular To All Microfinance Banks And Primary Mortgage Institutions
The attention of the Central Bank of Nigeria has again been draw to a series of illegal clearing and conversion/diversion of third party cheques and dividend warrants belonging to parastatals, agencies, corporate bodies and individuals by some Microfinance Banks (MFBs) and Primary Mortgage Institutions (PMIs). This fraudulent practice, which has resulted in the loss of huge revenues to the affected institutions and individuals, is also capable of destroying the credibility of the two sub-sectors and the financial system in general.
In view of the foregoing and further to our earlier circular NO: OFID/DO/GRC/VOL.387 of 29th April, 2004, it has become imperative again to warn all financial institutions, particularly, the MFBs to desist from this unwholesome practice as any institution or individual found to be involved would be appropriately and decisively dealt with in accordance with the law. O. A. Fabamwo Ag. Director, Other Financial Institutions Supervision Dept.