The recent announcement of fresh guidelines for the transfer of money into and out of the country is a big relief to Nigerians. The Central Bank of Nigeria (CBN), in a preamble to the new regulations, said that money transfer operators must henceforth comply with the provisions of the “Anti-Money Laundering and Combating the Financing of Terrorism in Banks and other Financial Institutions Regulations of 2013.” In the 18-page document, the apex bank set down the rules for money transfers.
For a country which has been plagued by a devastating insurgency for years, these guidelines appear to have arrived a little late in the day. The lifewire of the Boko Haram insurgency has been its financing which, if withdrawn or blocked, would deal a death blow to terrorism in Nigeria.
We, however, think that the guidelines are better late than never. Let the CBN do its utmost to ensure that they are implemented to the letter. The bank should set up a special monitoring unit in addition to its existing watchdogs, to specifically monitor and identify loopholes in the regulations that money launderers may exploit, and whatever new stratagems they may come up with to thwart the rules.
The guidelines must be seen as part of the measures to strengthen the economy and fight terrorism. The outflow of funds from Nigeria through illegal transactions has been put at $800 billion in the last eight years. This is money that the country could have put to better use. Boko
Haram is believed to have received $70 million between 2006 and 2011 to fund its mass murders and destruction. Indeed, an international terrorism funding watch group has put Boko Haram as the seventh richest terrorism group in the world.
Most of the CBN guidelines make for sensible accounting and prudent security precautions. To guard against scams, international money transfer service providers must, among other things, be licensed by the CBN. Foreign technical partners of the providers must be registered in their own countries and have a minimum net worth of $10 million.
Pegging outbound money transfers at $2,000 a year with the rider that it might be reviewed is clearly calculated to conserve foreign exchange. But the $2,000 limit appears too restrictive,
and could lead to temptations to circumvent the requirement in one way or the other. We believe the CBN should watch the reaction to this part of the rule and make adjustments, if necessary. This limit will certainly need to be subject to periodic reviews.
The insistence that any amount beyond $500 should be processed through a bank account is in line with best practice all over the world. The rule that transactions be made in convertible
currencies is, of course, to make transfers as easy as possible. It also meets the need to clearly state the exchange rates, transfer charges and others, to ensure that transactions are as transparent as they should be, in order to maintain confidence in the system.
Generally, most money transfers involve Nigerians trying to send money from all over the world to dependants and loved ones, and for business transactions in Nigeria. These are in addition to transactions by foreign tourists and visitors, as well as international business interests. It is appropriate that the CBN took special note of the need to encourage and protect those transactions that are so important to millions of Nigerians.
The rule to prevent the splitting of transactions is to pre-empt the rather familiar practice of transferring big amounts in small units just to beat the limits and the reporting requirements.
The CBN disallows deposit banks from serving as principal providers of money transfer service but recognises them only as agents. The biggest funnel for money transfer and capital flight has always been the banks. We are not sure that being an agent, rather than a service provider, would make a difference. What will make all the difference is an eagleeyed
CBN that is alert and proactive enough to protect the Nigerian economy and ensure that everyone plays by the rules.
