CBN bursts forex racketeering among money transfer firms
Deposit money banks have allayed fears on the immediate implementation of the acceptance of cheques into savings accounts, as directed by the Central Bank of Nigeria (CBN), saying that it will help to monitor cash flows in the nation’s financial system.
They also said the embedding of the Bank Verification Number (BVN) on payments cards will facilitate the tracking of money laundering in the system.
An analyst and currency strategist at Ecobank Nigeria, Kunle Ezun, said: “I don’t think there is any difficulty placed on the banks by the directive. It is about the security for values for both customers and the financial institution.
“This is another way to track money laundering because more transactions can be recorded. Almost everything about transactions now can be tracked with BVN embedded on cards and cheques moved to savings accounts.”
Industry experts described the CBN directive as long overdue, as there is no other excuse for banks to hide under the cloak of savings account to reject cheques, while perpetrating underhanded deals against the banking system.
Besides, a new guideline for the operations of International Money Transfer Operators (IMTOs), which only three companies, MoneyGram, Western Union and RIA could meet, is seen as a foil to arrest racketeering among the operators.
The tripartite target of tracking illegal funds flows, quantity of money in circulation and deepening of cash-less project is behind the new directive handed down to banks on Tuesday.
CBN had on Tuesday ordered banks to begin with immediate effect the acceptance of cheques into savings account to the tune of N2 million per customer daily.
It also ordered the embedding of Bank Verification Number (BVN) on payments cards to facilitate identification and biometric-based authentication on payments devices.
The development raises a new hope that the long-mooted talks about biometric payments system would soon be realised, as Automated Teller Machine (ATM), Point of Sale (POS) and Kiosk (in the case of agent banking channels’ transactions would become biometric enabled.
Expatiating further, Ezun, said the possibility of a full blown biometric channel for transactions debuts as a foil to identity theft.
He said: “Even the current machines have the capacity to operate with biometrics; it’s just that they have not been activated to perform the function.
“This is a plus for the system, although it is long overdue. Previously, CBN couldn’t implement its monetary policy effectively, because it needs to have a total view of how much money is in the system. It is a problem for monetary policy if you cannot estimate properly the money in circulation.
“People have stashed values outside the system on the excuses of not having any current account and those values end up not coming into the system. It is now an enabler for everybody,” he said.
For him, it is going to strengthen the payment system as every amount of cheques will have opportunities to be captured, and no one has any reason to reject it, as long as the person has an account.”
With regard to the international money transfers, CBN’s Acting Director of Corporate Communications, Isaac Okorafor, said the huge number of Diaspora remittances, estimated in excess of $25 billion are not getting into the economy because of racketeering by the IMTOs.
The new guide for IMTOs, he said, directed that all such remittances be channelled into banks and paid in naira according to market rates, since the exchange rate is no longer pegged.
Under the new arrangement, the dollars would be sold to Bureau De Change (BDC) operators by banks, to take care of travellers’ allowances and reduce pressure on the reserves.
The new arrangements therefore, may have burst the rent seeking deals between the operators and banks, as those who were operating freely are now alleging a “draconian rule” against CBN.
An industry source who pleaded anonymity, disclosed that two-third of the remittances bandied around do not enter Nigeria and some parts that did are not fully declared.
“Some of the illegal flows are suffocating the naira, because the dollars are first turned to naira and in return, the dollars are chased with the same naira by the same people,” the source said.
But the CBN spokesman said that CBN “did not stop the licence of any money transfer operator in Nigeria. All we have done is to ensure that money transfers are done transparently, legally and for the benefit of the country’s economy.