Diaspora Remittances: CBN Threatens Sanctions Against Operators Paying Local Currency

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Obiajulu Joel Nwolu

Obiajulu Joel Nwolu is an established writer at africannewstoday.com. He is passionate about African affairs. He loves writing about interesting facts relating to the African continent and enjoys sharing his knowledge with others.

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The Central Bank of Nigeria has cautioned operators against paying recipients of diaspora remittances in the local currency rather than foreign currency.

The apex bank threatened to strip violators of their operational licences if they failed to comply with its remittance guidelines.

It disclosed this in a circular to International Money Transfer Operators and Payment Services on Wednesday signed by the director, trade and exchange department, and the director, payments system management department.

According to the circular, all licensed institutions are required to comply with the guidelines on remittances as contraventions will attract stiff regulatory sanction including revocation of licence.

The circular was titled, ‘Receipt of diaspora remittances: Additional operational guidelines’.

It read in part, “Following the recent policy pronouncement on an amendment to procedures for receipt of diaspora remittances, the CBN notes material compliance by the majority of market participants as beneficiaries of remittances through IMTOs now receive foreign currency through their designated banks.

“Regrettably, a few operators continue to pay remittances in local currency contrary to the regulatory directive. The CBN frowns at this practice.”

Due to this, the CBN provided additional operational guidelines which are that “switches and processors should immediately cease all local currency transfers in respect of foreign remittances through IMTOs.”

It added, “All MMOs are required to immediately disable wallets from receipts 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.”