Illegal money transfer operators have taken over money transfer business from International Money Transfer Operators (IMTOs) despite findings they charge five per cent transaction fee, three per cent higher than two per cent charge by licensed operators.
The illegal operators are not under the regulation of Central Bank of Nigeria (CBN) but have the advantage of paying customers in naira without being sanctioned.
CBN Governor, Godwin Emefiele, said analyzed data on IMTOs inflows into the country over the past year, and through investigations showed that some IMTOs, rather than compete on improving transaction volumes and create more efficient ways for Nigerians in the Diaspora to remit funds, resorted to engaging in arbitrage arrangements on the naira-dollar exchange rate, which to a large extent resulted in a significant drop in flows into the country.
Emefiele said the practice encouraged the use of unsafe unofficial channels, which also supported diversion of remittance flows meant for Nigeria, thereby undermining Nigeria’s Foreign Exchange management framework.
IMTOs’ businesses had suffered setback after CBN directed them to pay all diaspora remittances beneficiaries in dollars. The apex bank had also configured the key IT infrastructure in banks, IMTOs- which include Western Union, Moneygram and Ria services for remittances collection in dollars.
A Nigerian resident in the US, who asked not to be named, said the illegal operators are now firmly in control of the market because although they are charging higher fees, they are able to keep their transaction agreement.
“The unlicensed operators, mainly shipping companies, are fully in control of the market and business. Although they charge three per cent higher than the approved two per cent fee per transaction ($5 on every $100 transaction) they keep their own side of the bargain by paying beneficiaries in naira,” he said.
Continuing, the source said the licensed operators are failing to pay dollars to beneficiaries as directed by the apex bank.
“They keep telling the beneficiaries to come today, come tomorrow and no payment is made. Many people want to receive around $100 or GB 100 Pounds Sterling and do not have the time and resources to continually trace their payment when they are not paid at first instance. But the illegal operators will pay beneficiaries without any delay,” he said.
“The banks are also not keeping to the transaction agreement. They keep referring the diaspora remittances beneficiaries to their different branches, where they are never paid. In every branch visited, the cashier will direct the beneficiary to another branch and the trend continues,” the source added.
The CBN had for long, suspected and raised the alarm over the foreign exchange abuses by shipping and airline companies
In a circular to authorised dealers, Nigerian Custom Service, (NCS), Nigerian Shippers Council (NSC) and other stakeholders, CBN Director, Trade and Exchange Department, O.S Nnaji, said the bank had observed with dismay, the non-compliance by shipping and airline companies to its directive on export proceeds remittance.
These identified sectors were accused of diverting export proceeds and remittances away from approved channels while directing unmet dollar demand to the parallel market.
In another circular released at the weekend, Nnaji, said the apex bank will blacklist and close bank accounts of unlicensed companies facilitating diaspora remittances into the country. Such companies, he said will be banned from accessing banking services in the country.
The regulator said few operators continue to pay remittances in local currency contrary to regulatory directive all all remittances be paid in US dollars to the beneficiaries.
The apex bank had earlier mandated that Switches and Processors should immediately cease all local currency transfers in respect of foreign currency remittances through IMTOs.
It also directed that all Mobile Money Operators should immediately disable wallets from receipt of funds from IMTOs.
 despite finding){kind=link}