NIGERIA:CBN threatens firms over diaspora remittances in local currency

The Central Bank of Nigeria (CBN) has directed payment switching and processing companies to stop local currency transfer of diaspora remittances received through International Money Transfer Operators (IMTOs), with a threat to revoke licenses of defaulting firms. The apex bank also directed Mobile Money Operators (MMOs)  to disable wallets from receipt of funds from IMTOs.

The directives, according to CBN, were to ensure compliance with  its recent policy which allows beneficiaries of diaspora remittances to receive the proceeds in foreign currency.

CBN gave these  directives in a circular, yesterday, to IMTOs and Payment Service Providers (PSPs) titled, “Receipt of Diaspora Remittances: Additional Operational Guidelines”.

Signed by the Director of Trade and Exchange Department and Director of Payments System Management Department, the circular stated: “Following the recent policy pronouncements on amendments to procedures for receipt of diaspora remittances, the Central Bank of Nigeria (CBN) notes material compliance by majority of market participants as beneficiaries of remittances through lMTOs now receive foreign currency through their designated banks.

“However and regrettably a few operators continue to pay remittances in local currency contrary to the regulatory directive. CBN frowns at this practice.

“In the light of this, CBN hereby provides the following additional operational guidelines:

“Switches and Processors should immediately cease all local currency transfers in respect of foreign remittances through IMTOs.  All MMOs are required to immediately disable wallets from receipt of funds from IMTOs.

“Payment service providers are directed to cease integrating their systems with IMTOs going forward and must prevent comingling of remittances with other legitimate transactions.   All IMTOs are required to immediately disclose to beneficiaries that they exercise discretion to receive transfer in foreign currency cash or directly into their domiciliary accounts.  

“A central reporting portal for all foreign remittances to be managed by the Nigerian interbank Settlement System (NIBSS) is currently under development to improve visibility of foreign remittance flows.  

“All licensed institutions are required to comply with the foregoing guidelines as contraventions will attract stiff regulatory sanction including revocation of license.  CBN remains committed to promoting transparency in the administration of diaspora remittances into Nigeria and will continue to enforce policies that will stabilize and deepen the Nigeria foreign exchange market.”

SOURCE:VANGUARD / Babajide Komolafe