Under the new CBN directives, International Money Transfer can no longer be wired directly into bank accounts or in cash in local currency, they must be picked up and paid out in Dollars only.
Nigerian banks on Friday, 4th December, 2020 commenced Dollar payout for diaspora inflows, closing Naira remittance accounts. This came to effect a day after the regulator eased money transfer rules to try to boost Forex liquidity in the country, on Thursday.
The Central Bank of Nigeria CBN) on Thursday 3rd December issued directives to International Money Transfer Operators (IMTOs) on foreign currency payment in cash to beneficiaries of Diaspora remittances. The fresh directives followed the new rules unveiled by the apex bank on Monday which allow beneficiaries of such remittances to collect the proceeds as cash in foreign currency.
This is in accordance with the fresh directives to banks and IMTOs by Mr. O. Nnaji, Director, Trade and Exchange Department, of the CBN, in a circular which reiterates and clarified the previous circular of November 30, 2020.
“We wish to reiterate and clarify to All International Money Transfer Operators (IMTO) the ‘IMTO’s must ensure that all funds in favour of beneficiaries/recipients in Nigeria be deposited into the Agent Banks‘ correspondent account.
“Agent Banks (Deposit Money Banks) in Nigeria will be responsible for all payment to beneficiaries/recipients either in foreign currency cash (USD) or into the beneciaries’/recipients’ domiciliary account in Nigeria. ‘The mode (if payment either in cash or transfer is at the sole discretion of the beneficiaries/recipients. Please ensure strict compliance and be guided accordingly.”
It says the changes will help reduce arbitrage whereby money transfer operators profit from unofficial channels.
Under the new rule, diaspora remittances would be paid in cash in U.S. dollars or into a domiciliary (foreign-currency) account at market rates. Previously, remittances were paid in Naira and the bank had restricted domiciliary account usage.
Government believes the move will help strengthen the Naira against the Dollar and give citizens a better deal.