CBN has banned IMTO from selling dollars above the approved rates pricing limit.
NewsOnline Nigeria reports that the Central Bank of Nigeria (CBN) has cautioned all International Money Transfer Operators (IMTOs) operating within the country in a significant move aimed at stopping forex arbitrage.
The apex bank warned IMTOs for selling forex higher than the approved rates which is the NAFEX rates plus or minus 2.5%. NAFEX closed at N773.04 on Wednesday.
The warning addresses recent violations and breaches by some IMTOs and outlines potential sanctions for further non-compliance.
Violations Uncovered
In an earlier circular released on September 13, 2023, referenced TED/FEM/PUB/PC/001/009, and seen by Nairametrics, the CBN provided explicit guidelines and conditions for IMTOs.
The circular clarified essential parameters around payment mode, pricing, and rate quote that must be strictly adhered to while offering international money transfer services.
The regulatory body has observed several infractions following routine checks on the activities of these money transfer operators. The CBN identified issues such as arbitrary rate quotes outside the permissible range, in clear violation of the extant regulations.
However, in the course of routine checks by the Central Bank of Nigeria, it was observed that some IMTOs were operating and acting in breach of above referenced circular. These actions included arbitrary rate quotes outside of permissible range and other sharp practices, in violation of extant regulations.
Such deviations from the rules compromise the stability of Nigeria’s financial markets and have the potential to introduce unfair practices that may disadvantage consumers.
New Regulations
To remove any ambiguity, the Central Bank has restated its guidelines on rate quotes, emphasizing that IMTOs are obligated to quote rates within an allowable limit of -2.5% to +2.5% around the previous day’s closing rate of the Nigerian Foreign Exchange Market for their transactions. Failure to comply with this stipulation will not be tolerated.
Consequences of Non-Compliance
The CBN has specified a series of sanctions that will be enforced on IMTOs found in breach of this regulation. The penalties include:
- Being compelled to sell their forex proceeds directly to the Central Bank of Nigeria.
- Suspension from engaging in international money transfer operations.
- The potential loss of their operating license.
Going forward, any IMTO in breach of this specific regulation would face sanctions, including but not limited to being compelled to sell their proceeds to the Central Bank of Nigeria, suspension from operations and loss of operating license.
