CBN will sanction IMTOs for exchange rate pricing violations – International Monetary Transfer Operators (IMTOs) have violated foreign exchange (FX) rate pricing, according to the Central Bank of Nigeria (CBN).
CBN sanctions include being required to sell their profits to the Central Bank of Nigeria, suspension of operations, and revocation of their operating licence.
This was stated in a circular to all IMTOs dated September 13, 2023 and signed by W.J Kanya, director of the CBN’s department of trade and foreign exchange.
On August 9, 2023, the CBN issued guidelines to the IMTOs and a circular enumerating terms and conditions, including payment mode, pricing, and rate quote, that must be complied with while providing International Money Transfer Services.
According to the new regulation, the margin on buying and selling by BDC operators must be between -2.5 percent and +2.5 percent of the previous day’s window-weighted average rate on the Nigerian foreign exchange market.
According to the CBN, routine reviews revealed that some IMTOs were operating and acting in violation of the circular.
In violation of existing regulations, the IMTOs quoted arbitrary rates outside of the permissible range and engaged in other unethical practises.
“For the avoidance of doubt, International Money Transfer Operators are required to quote rates within the allowable range of 2.5% to +2.5% around the Nigerian Foreign Exchange Market’s closing rate from the previous day for their transactions.
“In the future, any IMTO that violates this regulation will be subject to sanctions, including, but not limited to, being required to sell their proceeds to the Central Bank of Nigeria, suspension from operations, and loss of operating licence,” the circular states.