The Central Bank of Nigeria (CBN) has accused commercial banks of compromise in the ways they handle proceeds from international money transfer inflows into the country.
A circular to banks titled: Illicit International Money Remittances Through The Banking System, and signed by CBN Acting Director, Trade and Exchange, W.D. Gotring, accused the lenders of opening multiple illegal company and personal accounts where they harvest dollar proceeds for onward disbursements to recipients in Nigeria.
The practice, Gotring said, is against guidelines for the operation of International Money Transfer Service (IMTS) in Nigeria of September 26, 2014, warning the lenders to desist from such unwholesome practices.
“Further to the guidelines for the operation of International Money Transfer Service (IMTS) in Nigeria of September 26, 2014, we have observed that some Deposit Money Banks (DMBs) are operating accounts either as companies or companies masking themselves as individuals for the purpose of illegally receiving money transfer flows into the accounts for onward disbursements to recipients in Nigeria,” he said in the circular obtained yesterday.
He therefore ordered the lenders to conduct Know Your Customer’s Business (KYCB) checks on all their customers to ensure that they do not transact in illegal/illicit flows and also freeze compromised/ identified defaulting accounts.
“The CBN therefore reiterates that the DMBs have the absolute responsibility to conduct Know Your Customer’s Business (KYCB) checks on all their customers to ensure that they do not transact in illegal/illicit flows. Consequently, DMBs are hereby directed to identify and freeze accounts receiving illicit flows, submit the mandate and account details of these accounts held in naira or foreign currency to the CBN for onward reporting to the security agencies,” he said.
Findings by The Nation showed that the banks have continuously been engaging in illegal foreign exchange transactions to gain access to large chunk of dollar flows from the Diaspora estimated at $21 billion annually and is expected to hit $35 billion this year after the CBN devalued the naira. The naira devaluation remains a big incentive for Nigerians in Diaspora to send more dollars home as they would get more value.
Besides, the World Bank Migration and Remittances Factbook 2016 released showed that Nigerians living abroad sent home $21 billion in 2015. The figure, it said, is by far the largest volume of remittances to any country in Africa and the sixth largest in the world.
“The United States is the biggest remittance sending country to Nigeria, followed by the United Kingdom. Nigerians receive $5.7 billion in remittances sent from friends and family members in the US and $3.7 billion from the United Kingdom in 2015 and a total of $21 billion within the year. Nigeria is also the third largest destination country for migrants from other African nations,” it said.
It says a quarter of a billion people around the world are migrants, and over $600 billion in remittances are sent annually.
The global lender says international remittances to developing countries reached over $441 billion in 2015, more than foreign direct investment and thrice more than official aid flows. It says 34 per cent of all international remittances are sent between developing countries.
It disclosed that remittances constitute more than 10 per cent of Gross Domestic Product (GDP) for 25 countries. It insists that international remittances have been growing steadily and remain stable even during episodes of financial volatility.
“In 2015, the number of international migrants surpassed 250 million, a quarter of a billion people, globally. International migrants now represent more than 3.4 per cent of the world’s population. South-South migration is now larger than South-North migration. Over 38 per cent of international migrants have migrated from developing countries to other developing countries. 14.4 per cent of international migrants are refugees,” it said.
Speaking on the development, Senior Mobile Analyst at WorldRemit, one of the global money transfer firms, Alix Murphy, says the World Bank’s latest report shows that countries have now hit two significant milestones – quarter of a billion migrants globally and $600 billion of remittances sent annually.
She believes that despite being the biggest economy in Sub-Saharan Africa, Nigeria’s financial system is still deeply fragmented, making sending and receiving money very challenging for ordinary Nigerians. According to her, 56 per cent of Nigerians are unbanked, so offering a variety of pay-out options, including direct to bank account and instant cash pick-up, is extremely important for reaching everyone in society.
