CBN issues stern warning to IMTOs

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

Central Bank of Nigeria (CBN) has issued a stern warning to all International Money Transfer Operators (IMTOs) operating within the country.

The CBN’s warning centers on the practice of IMTOs selling forex at rates exceeding the approved thresholds, which are based on the NAFEX rates plus or minus 2.5%. As of Wednesday, NAFEX closed at N773.04/$1.

This warning comes in response to recent instances of violations and breaches by some IMTOs and outlines potential penalties for further non-compliance.

In a previous circular dated August 9, 2023, referenced as TED/FEM/PUB/PC/001/006, the CBN provided explicit guidelines and conditions for IMTOs, clarifying crucial parameters related to payment methods, pricing, and rate quotations that must be strictly adhered to when offering international money transfer services.

Regulatory authority identifies forex violations

However, in a recent warning issued via a circular dated September 13, 2023, and referenced as TED/FEM/PUB/PC/001/009, and as disclosed by Nairametrics, the regulatory authority has identified several infractions during routine checks on the activities of these money transfer operators.

The CBN has identified issues such as arbitrary rate quotations falling outside the allowable range, which is in clear violation of existing regulations.

It was observed during routine checks that some IMTOs were operating in breach of the aforementioned circular.

These actions included providing rate quotes beyond the permissible range and engaging in other questionable practices, all of which are in violation of existing regulations.

Such deviations from the rules pose a threat to the stability of Nigeria’s financial markets and have the potential to introduce unfair practices that could harm consumers.

To eliminate any ambiguity, the Central Bank has restated its guidelines regarding rate quotations, emphasizing that IMTOs are required to quote rates within a permissible range of -2.5% to +2.5% around the previous day’s closing rate of the Nigerian Foreign Exchange Market for their transactions.

Failure to adhere to this stipulation will not be tolerated.

The CBN has outlined a series of sanctions that will be imposed on IMTOs found to be in breach of this regulation.

These penalties include:

  1. Mandatory sale of forex proceeds directly to the Central Bank of Nigeria.
  2. Suspension from participating in international money transfer operations.
  3. The potential revocation of their operating licenses.

Moving forward, any IMTO found in violation of this specific regulation will face sanctions, including but not limited to the mandatory sale of their proceeds to the Central Bank of Nigeria, suspension from operations, and the possibility of losing their operating license.