Why we ordered closure of IMTOs Naira accounts – CBN

The Central Bank of Nigeria at the weekend explained why it ordered Deposit Money Banks (DMBs) to close all the Naira accounts of International Money Transfer Operators (IMTOs) in the country.

Recall that the apex bank had issued the directive on Friday in its circular to DMBs, IMTOs and payment service providers titled ‘Receipt of Diaspora Remittances: Additional Operational Guidelines 2,’ jointly signed by the director of banking supervision and director of payments system management.

The move, it was gathered, followed CBN’s decision on Wednesday, which ordered switches and processors to immediately halt all domestic currency transfers in respect of foreign remittances through IMTOs.

“DMBs are to close all naira accounts for IMTOs. This is to ensure that diaspora remittances are received by beneficiaries in foreign currency only (cash and/or transfers to domiciliary accounts of recipients),” the circular said.

“DMBs are permitted to open new Opex accounts for the purpose of the IMTO operations, such as salary payments and other operating expenses excluding diaspora remittance receipts.

“DMBs must ensure that proper audit of IMTO accounts is done to forestall further use of Naira accounts for diaspora remittances purposes.”

The CBN had warned that operators paying beneficiaries of diaspora remittances in local currency could forfeit their operational licences if they persisted with the practice.

“Following the recent policy pronouncement on amendment to procedures for receipt of diaspora remittances, the CBN notes material compliance by majority of market participants as beneficiaries of remittances through IMTOs now receive foreign currency through their designated banks,” CBN said in the earlier circular released on Wednesday

“However and regrettably, a few operators continue to pay remittances in local currency contrary to regulatory directive. The CBN frowns on this practice,” it added.