CBN provides fresh guidelines on diaspora remittances

CBN

By Geoff Iyatse
• Fund beneficiaries to decide how they would be paid   
• Issues special bills to strengthen financial market

The Central Bank of Nigeria (CBN) has issued fresh guidelines on the management and payment of diaspora remittances to recipients, mandating the international money transfer operator (IMTO) to ensure that transfer funds are deposited in “the agent bank’s correspondent account”.

The apex bank, in the circular issued yesterday, also authorized the recipients to decide how they would be paid. 

“The mode of payment either in cash or transfer is at the sole discretion of the beneficiaries/recipients,” said the circular signed by Director, Trade and Exchange Department, Dr. Ozoemena Nnaji. 

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The apex bank also said the commercial banks, as against IMTOs, would henceforth take responsibility for payment of remittances to beneficiaries/recipients. 

“Agent banks (Deposit Money Banks) in Nigeria will be responsible for final payment to beneficiaries/recipients either in foreign currency cash (USD) or into the beneficiaries’/recipients’ domiciliary account in Nigeria,” CBN stated.

The directive followed a similar one issued on Monday on the domiciliary account management. The bank had in the earlier circular provided policy guidelines on the operation of export proceeds and ordinary domiciliary accounts.  

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According to the regulator, holders of export proceeds domiciliary accounts could only use funds from the account for business operations or sell at the investors’ and exporters’ (I&E) window. This foreclosed a possible transaction with parallel market dealers.  

The use of funds in ordinary domiciliary accounts was also, by the circular, limited to transfer and “eligible transactions”. 
The directives, CBN said, were necessary to prevent money laundering and dollarization of the economy.

Also yesterday, the Central Bank announced the introduction of “special bills” aimed at deepening the financial market. The Bank listed the features of the bills to include a tenor of 90 days, zero-coupon, applicable yield to be determined by the CBN and the instrument to be tradable amongst banks. 

It added that the instrument will qualify as liquid assets in the computation of ratio for deposit money banks and that it would not be accepted for purchase agreement transactions with the CBN.   

“The CBN will continue to ensure optimal regulation of the systemic liquidity and promote efficient financial markets in support of economic recovery and sustained growth,” the circular signed by Director of Banking Supervision, Bello Hassan, noted.