BDCs Admits Fintechs, Unlicensed Online Firms Diverting Diaspora Remittances

CBN issues stern warning to IMTOs
CBN issues stern warning to IMTOs

BDCs Admits Fintechs, Unlicensed Online Firms Diverting Diaspora Remittances

Bureau De Change Operators in Nigeria have agreed with the acting CBN Governor that most transfers conducted by the International Money Transfer Operators (IMTOs) have been diverted and are not being tracked. 

The acting CBN Governor, Folashodun Shonubi, had earlier in August attributed the crash of the naira against the dollar and its inability to manage the foreign exchange market to the diversion of diaspora remittances to the unofficial markets including the parallel. 

This coincided with the time the naira at the parallel market hit a record low of N955/$1, although it has now dropped to N860/$1 as demand pressure and forex scarcity worsened. 

Shonubi explained that many diaspora remittances came to Nigeria in dollars and were not documented officially, as they end up in the parallel market. 

Diaspora remittances diverted to unlicensed online firms 

 The President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, revealed that most of these funds are diverted to unofficial markets including some unlicensed online firms. 

  • While acknowledging that most of the diaspora remittances are being diverted even outside the parallel market Gwadebe said, ‘’We had a meeting with the banks where we even tried to bring up the issue of diaspora remittances so that we can harness it and bring liquidity, but they said they don’t see it. That’s the truth of the matter, a lot of unlicensed online firms are in the process. 
  • ‘’It’s not in the official market, it’s not even in Nigeria, it’s not even coming, that is the truth of the matter, It’s being left abroad to be financing the 41 banned items and other illegal speculation holding activities. People are sending money but the thing is that it is not coming through a regulated and official channel.’’ 

Acknowledges malpractices by some BDC operators 

On the accusation that BDCs are part of the parallel market and involved in illegal activities, the ABCON President said, 

  • ‘’There are different categorizations of BDCs. Yes, I know that there are some BDCs that receive diaspora remittances and are not reporting officially. Today we had a sensitization and I think that is what the CBN is trying to do. Any Bureau De Change that is doing transactions and refused to send the returns of its activities is going to be summarily dealt with. 
  • ‘’The CBN has changed the format on how you will send your returns, adding some other features to those returns we had been sending before. They have realized that some licensed BDCs are operating yet they will say they are not operating hiding the fact that there are no interventions by the CBN, they are saying no transactions and sending nil returns to Central Bank. 
  • ‘’Central bank has discovered that and they have done sensitization exercise where they have introduced other information that will be needed from every BDC.’’ 

Some fintechs diverting diaspora remittances 

 On the accusation that these diaspora remittances are diverted to fintechs and some other channels other than the official forex window and even the parallel market, Gwadebe said, 

  • ‘’Yes, to some other channels that operate under different jurisdictions all over and lack standardized regulations. Can you tell me about Binance that is not in Nigeria, Nigerians are not doing transactions of Binance. These are borderless platforms, they don’t have borders, they don’t have offices, you don’t even know where they are, are they operating in Kenya, South Africa, Nigeria or Ghana. 
  • ‘’They just don’t transfer money through an agent, there are a lot of online platforms that is being advertised in all these places where we have Nigerians and they are highly speculative, sometimes their rates is even higher than what is obtainable in the parallel market.’’ 

He said that there are a lot of fintech companies to which these remittances are being diverted, noting that they buy it at very high rates.