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CBN warns against patronage of unlicensed int’l money transfer operators

03 Aug 2016, 12:59 pm
Financial Nigeria
CBN warns against patronage of unlicensed int’l money transfer operators

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The CBN’s warning came after WorldRemit, a global online remittance provider, accused the apex bank of imposing “draconian” rules, which has stifled the operations of all IMTOs in Nigeria except Western Union, MoneyGram, and Ria.

Central Bank of Nigeria Governor Godwin Emefiele

The Central Bank of Nigeria has warned Nigerians both at home and in the diaspora to be wary of unlicensed international monetary transfer operators (IMTOs).

The apex said in a statement released on Tuesday that the warning became necessary due to the activities of some unregistered IMTOs that threaten Nigeria’s economy.

“All financial service providers in Nigeria, just as in other jurisdictions, are required to be duly licensed in order to protect both customers and the financial system as well as to ensure the credibility of financial transactions,” according to the statement signed by Isaac Okoroafor, the Acting Director of Corporate Communication.

The CBN’s warning came after WorldRemit, a global online remittance provider, accused the apex bank of imposing “draconian” rules, which has stifled the operations of all IMTOs in Nigeria except Western Union, MoneyGram, and Ria.

In a circular issued on July 22nd, 2016, the CBN said it directed all banks to require licensed IMTOs to remit foreign currency transfers to Nigeria for disbursement in naira to beneficiaries. The apex bank said these foreign currency proceeds are to be sold by banks to bureau de change operators for onward retail to end users in order to ease the scarcity of forex and stabilize the exchange rate.

However, WorldRemit said the CBN’s move would create an oligopoly in Nigeria, where only three operators dominate the country’s remittance market, at the expense of Nigerians.

“This move is arbitrary, inexplicable and hugely detrimental to the Nigerian diaspora who rely on hundreds of money transfer companies and banks, providing them with choice, convenience and competitive pricing,” said Ismail Ahmed, WorldRemit’s Founder and CEO.

“This reverses the progress made by the country when the Nigeria Central Bank banned Western Union’s exclusivity agreements that had created a near-monopolistic position in the international money transfer market. Western Union controlled 78% of the market share when CBN outlawed exclusivity agreements with local banks.”

Notwithstanding these accusations, the CBN said it will not condone any attempt by IMTOs to undermine the country’s foreign exchange policy. “Members of the public are advised to beware of the activities of such unregistered IMTOs for the greater economic good of Nigeria,” the apex bank said.

With about $20 billion sent home annually by the country’s migrants around the world, Nigeria is the sixth largest recipient of remittances in the world, according to the World Bank’s Migration and Remittances Factbook 2016. The major sources of Nigerian remittances are the United States ($5.7 billion) and the United Kingdom ($3.7 billion).


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