CBN bars local deposits in non-resident accounts to boost Diaspora investments

The Central Bank of Nigeria (CBN) has issued a directive prohibiting local deposits into the newly launched Non-Resident Nigerian Ordinary Account (NRNOA) and Non-Resident Nigerian Investment Account (NRNIA).

These accounts are designed to facilitate remittances and investments by Nigerians living abroad, aligning with the CBN’s broader strategy to harness diaspora resources for economic development.

In a circular dated January 10, 2025, and signed by Dr. W. J. Kanya, Acting Director of the Trade and Exchange Department, the apex bank outlined the specific regulations governing these accounts.

The circular emphasized that deposits into the accounts must originate from external sources through approved channels, except for proceeds from approved local investments tied to prior foreign currency inflows.

“Deposits into non-resident accounts must originate from external sources through approved channels. Local deposits are prohibited, except for traceable proceeds from approved local investments linked to prior foreign currency inflows and settlement of foreign exchange transactions i.e., sale of FCY balances to authorised dealers. Transfers to other local accounts within Nigeria are allowed only in Naira,” the circular stated.

The NRNOA and NRNIA accounts aim to provide Nigerians in the diaspora with secure and flexible platforms for managing funds and investing in the Nigerian economy.

The NRNOA allows non-resident Nigerians (NRNs) to remit foreign earnings into Nigeria and manage funds in either foreign currency (FCY) or Naira. These earnings may include salaries, allowances, dividends, and rental income, with provisions for local spending on family maintenance, education, and healthcare.

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The NRNIA, on the other hand, is tailored for diaspora investments in domestic assets. Eligible investments include government bonds, equities, securities, mortgage products, and the Diaspora Bond, enabling NRNs to contribute directly to Nigeria’s financial markets.

The CBN explained that the restriction on local deposits is part of a strategic effort to ensure the accounts fulfill their intended purpose—boosting remittances and diaspora investments while supporting economic growth.

Digital Access: Banks must integrate digital platforms, in partnership with the Nigeria Inter-Bank Settlement System (NIBSS), to streamline onboarding and account management. These platforms will also enable remote updates to Know-Your-Customer (KYC) details and issuance of Bank Verification Numbers (BVNs).

Eligibility criteria for opening these accounts include proof of Nigerian citizenship, such as a valid or expired Nigerian passport or foreign passport accompanied by evidence of Nigerian descent. U.S.-based investors must also comply with the IRS Foreign Account Tax Compliance Act (FATCA) regulations.

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The prohibition on local deposits underscores the CBN’s commitment to creating a transparent financial framework aligned with global Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) standards.

The measures are also expected to strengthen external inflows, providing a stable foundation for Nigeria’s foreign exchange reserves and economic stability.

Interest earned on these accounts will be subject to Nigerian tax laws, though specific exemptions—such as for government bonds—will be detailed in an upcoming FAQ document.

By focusing on diaspora engagement, the CBN hopes to unlock the significant economic potential of Nigerians living abroad, channeling their resources into impactful investments that contribute to the nation’s growth.