CBN Requires Naira Accounts for IMTOs to Enhance Remittance Processes

The Central Bank of Nigeria (CBN) has announced new regulations designed to enhance transparency and streamline processes in the foreign exchange market by requiring International Money Transfer Operators (IMTOs) to set up naira settlement accounts with authorized dealer banks.

According to a circular issued by the CBN, signed by Dr. Musa Nakorji, the Director of the Trade and Exchange Department, this directive is part of a broader strategy to bolster the traceability of remittance flows, ensure compliance, and improve the overall efficiency of the country's foreign exchange system.

In addition to this measure, the CBN has introduced tighter operational guidelines for IMTOs and Authorized Dealer Banks (ADBs) to increase the inflow of remittances and promote greater transparency in the market.

The circular states, "To enhance diaspora remittances and facilitate effective monitoring of all transactions, all IMTOs are instructed to open naira settlement accounts and ensure that all transactions are exclusively processed through their assigned accounts maintained with ADBs within Nigeria."

It further clarifies that all transactions related to international money transfers, including payments to beneficiaries and any associated settlements, must be conducted through the IMTO's designated settlement accounts at their chosen ADB. IMTOs are permitted to either designate existing accounts or create new settlement accounts, utilizing multiple ADBs in alignment with their operational strategies.

This regulation will take effect on May 1, 2026, marking a significant step towards formalizing remittance flows, which are crucial for Nigeria's foreign exchange reserves.

Moreover, the circular emphasizes that settlement accounts will exclusively receive remittance flows and proceeds from foreign exchange transactions conducted by licensed IMTOs or their representatives with authorized market participants in the Nigerian Foreign Exchange Market (NFEM). IMTOs must ensure that their accounts are designated accordingly and managed according to the established regulatory framework. They are also required to provide a list of these accounts to the Director of the Trade and Exchange Department and update it periodically as required.

To enhance market efficiency, ADBs may process foreign currency transfers from IMTO settlement accounts to other ADBs and licensed Bureau de Change operators. IMTOs are instructed to reference real-time market prices from the Bloomberg BMATCH platform when pricing their transactions, which aims to facilitate better price discovery and reduce information gaps between IMTOs and banks. This initiative is expected to drive higher participation in the official foreign exchange market.