The Central Bank of Nigeria (CBN) has taken a decisive stance against International Money Transfer Operators (IMTOs) allegedly involved in foreign exchange arbitrage. This determination was conveyed in a circular marked TED/FEM/PUB/FPC/001/009, titled ‘Rate Quote and Other Market Conduct by International Money Transfer Operators.’ Dr. W.J. Kanya, the Director of Trade and Exchange Department at CBN, endorsed this circular which was released on Wednesday.
The CBN had previously issued a guideline, referenced as TED/FEM/PUB/FPC/001/006, specifically tailored for IMTOs. This guideline outlined essential terms and conditions; encompassing payment methods, pricing, and rate quotations, which IMTOs were required to adhere to when offering international money transfer services.
However, the CBN has identified instances where some IMTOs were operating in contravention of its directives. These violations encompassed actions such as providing rate quotes beyond the allowable range, along with other sharp practices, in violation of existing regulations.
The circular unequivocally states, “For the avoidance of doubt, International Money Transfer Operators are required to quote rate within the allowable limit of -2.5 per cent to +2.5 per cent around the previous day’s closing rate of the Nigerian Foreign Exchange Market for their transactions.”
In light of these breaches, the CBN has announced a series of sanctions that may be imposed on erring IMTOs. These penalties include, but are not limited to, mandating IMTOs to sell their proceeds to the Central Bank of Nigeria, suspension of operations, and even revocation of operating licenses.
It is imperative for all IMTOs to take heed and ensure strict compliance with this specific regulation to avoid facing the aforementioned sanctions. The CBN’s stringent measures underscore its commitment to maintaining stability and integrity within the Nigerian Foreign Exchange Market.