CBN: IMTOs’ naira settlement for diaspora remittances deepens FX transparency, security

The Central Bank of Nigeria (CBN) has directed all international money transfer operators (IMTOs) to open naira settlement accounts. The operators are to henceforth, route all remittance transactions through the naira settlement accounts. By this move, recipients of diaspora remittances will be paid in the local currency from May, ending decades of dollar payments to Nigerians when relatives abroad send money home. The CBN said the latest policy is aimed at deepening diaspora remittances while improving transparency, traceability, and monitoring of foreign exchange (FX) flows.

Diaspora remittances remain a major source of foreign exchange for the country. The protect FX inflows from speedily leaving Nigeria, the CBN has directed that effective May 1, all such remittances coming into the country will be received in naira.

Musa Nakorji, director of the trade and exchange department at the CBN, said: “All IMTOs are hereby directed to open naira settlement accounts and ensure that all transactions are routed strictly through their designated settlement accounts, maintained with authorised dealer banks (ADBs) in Nigeria,” he said.

The CBN said all transactions related to international money transfers, including disbursements to beneficiaries and other settlements, must be processed exclusively through the designated accounts. According to the apex bank, IMTOs may designate existing accounts or open new ones and are allowed to operate multiple settlement accounts across different ADBs.

The regulator said such accounts “shall only be credited with remittance flows and proceeds of foreign exchange conversions by licensed IMTOs (or their agents) with authorised market participants in the Nigerian Foreign Exchange Market (NFEM)”.

The CBN also directed IMTOs to notify its trade and exchange department of all designated settlement accounts and provide updates when necessary.

To enhance market efficiency, the bank said the ADBs may process foreign currency transfers from IMTO settlement accounts to other authorised dealers and approved participants, including bureau de change (BDC) operators.

On pricing, the apex bank instructed IMTOs to benchmark their rates against real-time market prices on Bloomberg’s BMatch platform.

“IMTOs shall observe real-time market prices from the Bloomberg BMatch and utilise this as guidance for pricing transactions with their customers and authorised dealers,” the CBN said.

The bank said the move would improve price discovery, reduce information asymmetry, and encourage participation in the official FX market.

The regulator also reminded the IMTOs to comply with anti-money laundering, combating the financing of terrorism, and counter-proliferation financing (AML/CFT/CPF) requirements, while maintaining proper records for audit and regulatory review.

Accelerating border payments

For Nigeria and other emerging economies, the path forward requires policies that encourage investment, support innovation and provide buffers for financial institutions to seamlessly handle cross-border payments.

Such balanced approach requires countries to build stronger economies, attract investment that would improve e-payment experience for their citizenry.

That explains why the Central Bank of Nigeria (CBN), Olayemi Cardoso, sought for intensive and unformed reforms in digital cross-border payments to achieve desired growth and stability in the financial system.

Speaking at the G‑24 Technical Group Meetings held in Abuja, he emphasised that efficient payment systems are essential for economic inclusion. He noted that high remittance costs, settlement delays, fragmented systems, and heavy compliance burdens still limit the participation of households and Micro, Small and Medium Enterprises (MSMEs) in global trade.

For him, high remittance costs, settlement delays, fragmented systems, and heavy compliance burdens still limit the participation of households and Micro, Small and Medium Enterprises (MSMEs) in global trade.

Reforms in the financial system are meant to address these limitations and for a more efficient and seamless payment ecosystem that benefits all stakeholders.

He highlighted that global remittance corridors still incur average costs above six per cent, with settlement delays of several days, excluding millions from modern economic activity.

He cautioned that while digital payments present significant opportunities, they also carry risks such as currency substitution, weakened monetary transmission, increased FX volatility, capital-flow pressures, and regulatory fragmentation.

On Nigeria’s reforms, he stated: “We have strengthened our Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) frameworks in line with Financial Action Task Force (FATF) guidelines, requiring strict dual-screening of cross-border transactions to mitigate risks”.

He stated that to deepen regional integration, the CBN introduced simplified Know Your Customer/AML requirements for low-value cross-border transactions to encourage broader participation in PAPSS, easing processes for Nigerian SMEs and enabling faster intra-African trade payments.

“We have also embraced fintech innovation through our Regulatory Sandbox, allowing payment-focused fintechs to test secure, instant cross-border solutions under close CBN supervision. Nigeria’s commitment to working with G-24 members, the IMF, the World Bank Group, and other partners to build a more inclusive, resilient, and development-oriented global financial architecture,” he said.

The G-24 TGM 2026, themed “Mobilising finance for sustainable, inclusive, and job-rich transformation,” convened global financial stakeholders to advance the modernisation of finance in support of emerging and developing economies.

Nigeria’s milestones in strengthening AML/CFT

Recall that the Financial Action Task Force (FATF) recently removed Nigeria from its grey list of countries with money laundering and terrorist financing risks.

Commenting on the announcement, Cardoso, said: “The FATF’s decision to remove Nigeria from the grey list is a strong affirmation of our reform trajectory and the growing integrity of our financial system it reflects a clear policy direction and the coordinated efforts of key national institutions working together to deliver sustainable, standards-based reforms. Our priority now is to consolidate these gains, ensuring that compliance, innovation, and trust continue to advance hand in hand to reinforce financial stability and strengthen Nigeria’s global credibility.”

The FATF leads global action to tackle money laundering, terrorist and proliferation financing.

The 40-member body, which has the backings of the World Bank Group and International Monetary Fund (IMF) sets international standards to ensure national authorities can effectively go after illicit funds linked to drugs trafficking, the illicit arms trade, cyber fraud and other serious crimes.

For Nigeria, exiting FATF grey list, opened her potential in the global financial markets. The FATF leads global action to tackle money laundering, terrorist and proliferation financing.

The 40-member body, which has the backings of the World Bank Group and International Monetary Fund (IMF) sets international standards to ensure national authorities can effectively go after illicit funds linked to drugs trafficking, the illicit arms trade, cyber fraud and other serious crimes.

The Paris-based watchdog’s decision represents a huge progress for Nigeria financial system as it works to restore investor confidence, reduce the cost of capital and strengthen financial system credibility.

Other countries removed from the list include, South Africa, Mozambique and Burkina Faso.

“As of February 2025, the FATF has reviewed 139 countries and jurisdictions and publicly identified 114 of them. Of these, 86 have since made the necessary reforms to address their AML/CFT weaknesses and have been removed from the process,” the report said.

FATF identifies countries or jurisdictions with serious strategic deficiencies to counter money laundering, terrorist financing, and financing of proliferation.

“For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing risks emanating from the country,” it said.

By closing gaps in regulatory oversight and enhancing enforcement against illicit financial flows, the four nations have now met the FATF’s requirements for delisting, boosting their standing among global financial institutions and capital markets.

Nigeria and South Africa were added to the list in February 2023 while Mozambique was included in October 2022 and Burkina Faso initially in February 2021.

President, Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, said: “The recently announcement of the Financial Action Task Force on the Exist of Nigeria from its Grey list known as Dirty money list shows Nigeria commitment in achieving the 40 FATF recommendations. The move has tremendously induced confidence, and removed tension in the financial market”.

E-payment gains for economies

Cardoso said he witnessed first-hand the transformative power of digital finance to broaden economic participation, create meaningful employment, and improve the lives of millions of Nigerians. It is for this reason that the CBN is intent on seizing our nation’s unique opportunity to harness fintech innovation for national development.

“Nigeria is undergoing a rapid and significant financial evolution. Over the past decade, our nation’s fintech landscape has grown from a handful of startups into one of Africa’s most vibrant innovation ecosystems. Even amid global economic headwinds, Nigerian fintech firms continued to attract investment and drive change,” he said.

He explained that with improved stability of Nigeria’s currency and domestic economy, it is clearer than ever that financial innovation can advance inclusion at scale.

“This report reflects the Central Bank’s commitment to fostering a thriving fintech landscape while safeguarding the stability of our financial system. It is the product of extensive engagement between regulators and industry stakeholders. By surveying fintech operators, financial institutions and policymakers, we have gathered candid insights on what is working, what is not, and where we can do better”.

“The findings illuminate both our progress and the gaps we must address, from modernising regulatory frameworks and payments infrastructure to supporting startups in reaching Nigeria’s unbanked communities. The report is careful to contextualise Nigeria’s fintech journey within global trends, reminding us that we are part of a rapidly evolving digital finance landscape that offers immense opportunities as well as new risks,” he stated.

Continuing, he said that for the CBN, innovation is a strategic imperative.

“We are committed to creating an environment where new ideas can flourish under prudent oversight, and where inclusion is at the heart of our endeavours. Fintech must help deliver financial services to the last mile of our population, from the bustling cities to the rural villages, so that no Nigerian is left behind in the digital economy.

According to the CBN, financial technology, or fintech, refers to the use of innovative digital technologies to deliver financial services. It encompasses a broad range of market segments, from digital payments and remittances to lending platforms, crowdfunding, insurance technology (InsurTech), investment and wealth management technology (WealthTech), and regulatory technology (RegTech).

It explained that as digital platforms transform how people send money, access credit, and interact with financial institutions, Nigeria finds itself both a leader and a testing ground.

Nigeria hosts some of Africa’s most influential fintech firms and continues to attract significant investment. In 2024, Nigerian startups raised over US$520 million in equity funding out of a continental total of US$2.2 billion, ranking among the continent’s leading ecosystems by both capital raised and deal activity.

And this trend is not new: five years earlier, in 2019, Nigerian tech startups raised approximately US$747 million, about 37 percent of all African startup funding that year.

 Nwadike, a financial analyst, writes from Abuja