Nigeria's CBN Tightens Remittance Regulations for Greater Oversight
The Central Bank of Nigeria (CBN) has announced new regulations for International Money Transfer Operators (IMTOs), including major players like Western Union and MoneyGram. Starting May 1, these operators must open Naira-denominated settlement accounts with licensed banks in Nigeria. The move is designed to channel remittances through official financial systems. The decision affects millions of
Nigeria's CBN Tightens Remittance Regulations for Greater Oversight
The Central Bank of Nigeria (CBN) has announced new regulations for International Money Transfer Operators (IMTOs), including major players like Western Union and MoneyGram. Starting May 1, these operators must open Naira-denominated settlement accounts with licensed banks in Nigeria. The move is designed to channel remittances through official financial systems.
The decision affects millions of Nigerians living abroad and their families at home. A circular issued by the CBN on March 24 states that all international money transfers from cities like London, New York, or Dubai must pass through designated local banks. This is a change from past practices, where some funds bypassed official oversight and fueled the parallel foreign exchange market.
Enhancing Traceability and Combating Illicit Flows
The CBN has clearly outlined the objectives of the new framework. According to the circular signed by Musa Nakorji, the regulator aims to improve “traceability and effective monitoring of all transactions.” This oversight is expected to increase transparency and help combat illicit financial flows.
The central bank also requires IMTOs to use Bloomberg BMatch for all exchange rate pricing. The goal is to reduce price differences between operators and commercial banks, encouraging transactions through the official foreign exchange market. Operators must strictly follow anti-money laundering (AML) and counter-terrorism financing (CTF) rules. They must also keep detailed transaction records for CBN review.
A Critical Economic Measure
Diaspora remittances are a key source of foreign exchange for Nigeria. The World Bank ranks Nigeria among the largest recipients of remittances in Sub-Saharan Africa, with billions flowing in every year. However, many of these funds have moved through informal channels, depriving the official market of crucial foreign currency.
With the Naira facing significant depreciation, the CBN’s new rules aim to improve dollar liquidity and stabilize the currency. IMTOs must comply with these requirements by May 1.
