The Central Bank of Nigeria (CBN) has stopped naira payment to recipients of diaspora remittances (dollar inflows) from International Money Transfer Operators (IMTOs).
The customers are by a new regulation released on Monday, allowed to receive their funds through foreign currencies of their choice, including payment of the funds into domiciliary accounts.
The new policy, contained in a circular signed by CBN Director, Trade & Exchange Department, O.S. Nnaji, is expected to simplify and improve receipt and administration of diaspora remittances into Nigeria.
According to Nnaji, recipients of such IMTOs remittances have the option of receiving these funds in foreign currency cash or into their domiciliary accounts.
According to the apex bank, beneficiaries of diaspora remittances through the IMTOs shall now get such inflows in foreign currency (US Dollar) through the designated banks of their choice.
“These changes are necessary to deepen the foreign exchange market, provide more liquidity and create more transparency in the administration of Diaspora remittances into Nigeria,” Nnaji said.
“In addition, these changes would help finance a future stream of investment opportunities for Nigerians in the diaspora, while also guaranteeing that recipients would receive a market reflective exchange rate for the market.”
The apex bank also noted that beneficiaries shall have unfettered access and utilisation to such foreign currency proceeds , either in cash and or in their domiciliary accounts.
Speaking on the policy shift, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the apex bank has broken the monopoly in the remittance market, which will hale save the naira. He said those hoarding the dollar and causing unnecessary volatility in the market will insure major losses in the coming days.
In another circular to authorised dealers, the CBN clarified that following different interpretations on the operationlisation of domiciliary accounts and to ensure the stability of the foreign exchange market, export proceeds domiciliary accounts will continue to be operated on existing regulations.
The regulators allow account holders use their funds for business operations only, with any extra funds sold in Investors’ & Exporters’ window.
Also, where domiciliary accounts are funded by electronic transfer or wire services, account holders will be allowed unfettered and unrestricted use of the funds for eligible transactions.
It said that where accounts are funded by cash deposits, existing regulations will continue to apply.
“These clarifications are necessary given the vastly improved capabilities of the Central Bank of Nigeria to monitor transactions, forestall money laundering and prevent adverse effects of dollarization of the economy, adding that Bank Verification Number will be used to enforce compliance,” the apex bank said.