• The Central Bank of Nigeria requires money transfer operators to open naira settlement accounts locally from May 1.

• Authorities aim to improve transparency and curb parallel foreign exchange market activity.

• The reform targets billions of dollars in remittances, a of Nigeria’s external liquidity.

The Central Bank of Nigeria (CBN) has tightened regulations for international money transfer operators. The new rules will require companies such as Western Union and MoneyGram to open naira-denominated settlement accounts with licensed banks in Nigeria. The measure will take effect on May 1.

The decision directly affects millions of Nigerians living abroad and their families at home. The CBN issued a circular on Tuesday, March 24, mandating all international money transfer operators to route transactions through local banking channels.

In practice, every transfer sent from cities such as London, New York, or Dubai must pass through these designated accounts before reaching the final beneficiary. Previously, a portion of these flows bypassed official oversight and fed into the parallel foreign exchange market, which authorities have sought to curb for several years.

Transparency and fight against illicit flows

The CBN stated its objective clearly. The regulator aims to strengthen “traceability and effective monitoring of all transactions,” according to the circular signed by Musa Nakorji.

In addition, the central bank requires operators to reference Bloomberg BMatch for exchange rate pricing. The CBN seeks to reduce pricing disparities between operators and banks and to encourage transactions on the official foreign exchange market.

Operators must also comply strictly with anti-money laundering and counter-terrorism financing rules. Moreover, they must maintain detailed transaction records and make them available to central bank supervisors.

A critical issue for Nigeria’s economy

Diaspora remittances represent a major source of foreign exchange for Nigeria’s economy. The World Bank ranks Nigeria among the largest recipients of remittances in Sub-Saharan Africa, with several billion dollars flowing into the country each year.

However, a significant share of these flows still moves through informal channels, depriving the official market of valuable foreign currency reserves. The naira has lost substantial value in recent years and remains under pressure.

By channeling remittances into the formal banking system, the CBN aims to improve dollar liquidity and stabilize the currency. Authorities have given operators until May 1 to comply with the new requirements.

This article was initially published in French by Fiacre E. Kakpo

Adapted in English by Ange J.A de Berry Quenum