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NAICOM’S GUIDELINES FOR FOREIGN HEALTH INSURANCE PROVIDERS: KEY COMPLIANCE CONSIDERATIONS FOR INSURERS AND POLICYHOLDERS IN NIGERIA

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BY ADERONKE ALEX-ADEDIPE & OLUWAYEMI IBIRINDE

Introduction

On 31 March 2026, the National Insurance Commission (“NAICOM”) issued the Guidelines for the Operation of Foreign or International Health Insurance Providers (the “Guidelines”) pursuant to the Nigerian Insurance Industry Reform Act, 2025 (“NIIRA 2025”). The Guidelines establish, for the first time, a comprehensive regulatory framework governing foreign or international private medical insurers and reinsurers (“IPMI-R Providers”) seeking to provide health insurance services to entities registered or individuals who are resident in Nigeria.

Historically, international health insurance products were commonly procured directly from offshore insurers by multinational corporations, expatriates and high-net-worth individuals without any comprehensive regulatory framework governing such activities in Nigeria. Industry reports estimated that this resulted in approximately US$2 billion in annual premium outflows, while limiting regulatory oversight and the participation of domestic insurers. The Guidelines seek to address these gaps by requiring foreign health insurers to obtain NAICOM’s approval before operating in Nigeria, establishing approved local partnerships and complying with specified consumer protection, reporting and governance obligations.

In this newsletter, we examine the key provisions of the Guidelines and highlight some of the legal and commercial considerations for insurers and policyholders.

Who Do the Guidelines Apply To?

The Guidelines apply to all International Private Medical Insurers or Reinsurers (IPMI-R Providers) seeking to transact, market, underwrite or otherwise engage in health insurance business emanating from Nigeria.

Specifically, they apply to:

  1. foreign health insurers and reinsurers offering products to entities registered in Nigeria;
  2. foreign providers offering health insurance to persons residing in Nigeria; and
  3. intermediaries and authorised representatives acting on behalf of foreign health insurers.

Accordingly, the regulatory focus is not the location of incorporation of the insurer but whether the health insurance business or clientele originates from Nigeria.

What are the Key Compliance Requirements?

  1. Prior NAICOM Approval

The most significant change introduced by the Guidelines is that no foreign health insurer may transact, market or underwrite health insurance business originating from Nigeria without obtaining the prior written approval of NAICOM.

Similarly, no Nigerian entity or individual may transfer health insurance risks to an IPMI-R Provider unless that provider has received NAICOM’s approval.

The Guidelines further provide that where NAICOM does not communicate its approval or rejection within ten (10) working days after receiving complete documentation, the application shall be deemed approved.

  1. Mandatory Local Partnership Model

Unlike the previous regulatory position, the Guidelines prohibit foreign insurers from directly issuing health insurance policies to Nigerian entities or persons residing in Nigeria except through an authorised representative domiciled in Nigeria.

Every approved IPMI-R Provider must adopt one of the following operational models:

  • Model 1: Domestic Insurer Partnership;
  • Model 2: Domestic Administrator or Intermediary Partnership; or
  • Model 3: Health Maintenance Organisation (HMO) Partnership.

These partnership models ensure that licensed Nigerian entities participate in premium administration, claims support, regulatory reporting and other operational functions.

To obtain approval, an IPMI-R Provider must submit comprehensive documentation including:

  1. evidence of incorporation in its home jurisdiction;
  2. proof of regulatory licensing in its home jurisdiction;
  3. detailed product descriptions;
  4. a business plan;
  5. premium worksheets;
  6. proposed Nigerian intermediaries;
  7. its preferred operational model; and
  8. any additional information requested by NAICOM.
  1. Consumer Protection Requirements

The Guidelines introduce several customer protection obligations designed to improve accountability and transparency.

Approved providers are required to:

  1. provide clear information regarding policy terms and exclusions;
  2. ensure products meet customers’ needs;
  3. establish effective complaints management procedures;
  4. include claims settlement procedures within policy documentation; and
  5. ensure complaints are handled fairly through their Nigerian representatives or intermediaries.

These obligations significantly strengthen the position of Nigerian policyholders.

  1. Reporting and Ongoing Regulatory Obligations

Approved providers are required to submit quarterly production returns to NAICOM and pay the prescribed Insurance Supervisory Service (ISS) Levy.

The Guidelines therefore establish continuing regulatory oversight rather than a one-time approval process.

Compliance Considerations

Pending further regulatory guidance, organisations that utilise international health insurance arrangements should consider the following.

a. Review Existing Insurance Arrangements

Multinational companies should determine whether their current international health insurance programmes involve IPMI-R Providers that have obtained, or intend to obtain, NAICOM approval.

b. Assess Existing Partnership Structures

Foreign insurers should evaluate whether their existing operating model aligns with one of the three partnership structures prescribed under the Guidelines and identify any restructuring that may be required.

c. Review Distribution and Intermediary Arrangements

Insurers, brokers, HMOs and third-party administrators should assess whether their contractual arrangements adequately reflect the roles and reporting obligations contemplated under the Guidelines.

d. Strengthen Compliance Frameworks

Organisations should establish internal governance procedures to monitor ongoing compliance with NAICOM’s approval requirements, reporting obligations and customer protection standards.

e. Review Existing Policies

The Guidelines permit policies issued before the effective date to continue until expiry. However, organisations should review renewal arrangements to ensure that future policies comply with the new regulatory framework.

Penalties for Non-Compliance

The Guidelines introduce significant sanctions for non-compliance.

  1. Any entity registered in Nigeria or person residing in Nigeria that transacts health insurance business with an unapproved IPMI-R Provider may be liable to a penalty of not less than the total premium involved.
  2. The Guidelines also required providers to regularise their operations within the prescribed ninety-day transitional period. Failure to satisfy the approval requirements may result in rejection of the application and suspension of the issuance of new policies and renewals.

Conclusion

With the Guidelines having taken effect on 31 March 2026, multinational employers, foreign insurers, HMOs, brokers and other intermediaries, should immediately prioritize assessing existing operational structures and contractual arrangements to ensure continued compliance with the new regulatory framework. Organisations that undertake this assessment proactively will be better positioned to navigate future regulatory developments while minimising compliance risks.

BEYOND LICENSING – CBN’S DRAFT GUIDELINES FOR FINANCIAL HOLDING COMPANIES IN NIGERIA

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BY ADERONKE ALEX-ADEDIPE AND ENIOLA SOGBESAN

BEYOND LICENSING – CBN’S DRAFT GUIDELINES FOR FINANCIAL HOLDING COMPANIES IN NIGERIA.

Introduction

On 10 June 2026, the Central Bank of Nigeria (CBN) issued an Exposure Draft of the Revised Guidelines for Licensing and Regulating Financial Holding Companies (FHCs) in Nigeria (the “Draft Guidelines”). The Draft Guidelines is the first review of Nigeria’s financial holding company framework since the introduction of the Guidelines for the Licensing and Regulation of Financial Holding Companies in Nigeria 2014 (the “2014 Guidelines”).

The Draft Guidelines seek to:

  1. strengthen the financial resilience of holding companies;
  2. improve group-wide governance and oversight;
  3. clarify ownership and control requirements;
  4. enhance regulatory supervision of financial groups; and
  5. address concerns arising from shared service arrangements and complex group structures.

For existing FHCs, banking groups, investors, and prospective promoters, the Draft Guidelines signal a shift from a regime focused primarily on licensing to one that places greater emphasis on governance, capital adequacy, ownership accountability, and consolidated supervision.

Key Highlights of the Draft Guidelines

  1. Definition and StructureThe Draft Guidelines introduce a clear definition of what constitutes a FHC. Under the Draft Guidelines, a FHC is defined as a non-operating holding company that has two or more direct subsidiaries, one of which must be a bank. The Draft Guidelines further stipulate that a FHC may adopt either a Parent HoldCo or Intermediate HoldCo structure.Under the Parent HoldCo structure, a parent holding company holds direct equity investment in each Nigerian subsidiary, however under the Intermediate HoldCo structure, an intermediate holding company is incorporated for the purpose of holding equity investment in foreign subsidiaries. Accordingly, all existing FHCs are required to notify the CBN of their preferred structure within six (6) months of the effective date of the Guidelines. Also, once the preferred structure is approved by the CBN, such FHC must operate that structure for a minimum of 5 years before it may elect to reverse or alter the approved structure.

    The Draft Guidelines list individuals, non-bank corporate investors and banks [commercial, merchant and non-interest] as eligible promoters of FHCs. This clarification provides greater regulatory certainty for investors considering the use of a holding company structure to expand their presence within Nigeria’s financial services sector.

  1. Permissible and Non-Permissible Activities
    Under the Draft Guidelines, the following activities are permissible for FHCs. These activities include-
    1. holding equity investment in subsidiaries engaged in financial services;
    2. investment in government securities or placement with banks;
    3. with the prior approval of the CBN, raising bonds and debentures;
    4. subject to the prior approval of the CBN, borrowing internationally to capitalize any of its subsidiaries and;
    5. providing either by itself or through any subsidiary, shared services to the group members in respect of facilities, legal and ICT services and other services that may be prescribed by the CBN from time to time.

However, FHCs are prohibited from engaging in the following activities –

    1. investing in entities not involved in financial services;
    2. pledging its shares in any subsidiary as collateral for any purpose;
    3. establishing, divesting or closing any subsidiary without the prior approval of CBN;
    4. interfacing with any customers of its subsidiaries and;
    5. bearing the expense of any of its subsidiaries.
  1. Corporate Governance Requirements
    In addition to the provisions of the Corporate Governance Guidelines for Financial Holding Companies in Nigeria, the Draft Guidelines introduce additional corporate governance rules for FHC’s.Some of these additional corporate governance are –
    1. subsidiaries of FHCs are prohibited from acquiring shares in the FHC and/or other subsidiaries of the FHC;
    2. Nominee companies that are subsidiaries of the FHC are prevented from investing client funds in the FHC or any other subsidiary;
    3. where a FHC loses control in the only or all Nigerian banking subsidiaries for a period that exceeds six (6) consecutive months, its license shall be revoked;
    4. where a FHC that has only two (2) subsidiaries loses control in either subsidiary for a period that exceeds six (6) consecutive months, its license shall be revoked;
    5. No employee of a FHC shall be appointed as a non-executive director in the FHC or any other subsidiary; and
    6. interlocking directorship within a FHC is limited to a maximum of one other company.More importantly, the Corporate Governance rules of the Draft Guidelines are required to be read in conjunction with the Nigerian Code of Corporate Governance 2018, Corporate Governance Guidelines for Financial Holding Companies in Nigeria and where applicable the SEC’s Code of Corporate Governance for Public Companies and Listed Entities in Nigeria.
  1. Intra-Group Transactions, Prudential Requirements & AML/CFT Compliance
    The Draft Guidelines make extensive provisions for intra-group transactions. More specifically, FHCs are prohibited from interfering in the daily operations of their subsidiaries and all transactions with their subsidiaries must be strictly on an arm’s length basis. In particular, the Draft Guidelines expressly prohibit the practice where board members of a subsidiary attend board meetings of the FHC and vice versa.All FHCs are required to maintain a minimum regulatory capital which shall exceed the sum of the minimum regulatory capital of its subsidiaries by at least 20%. In determining what constitutes minimum regulatory capital, the Draft Guidelines provide that only the paid up capital shall be recognized. Additionally, excess capital in one subsidiary shall not be computed to make up for a shortfall in the share capital of another subsidiary.Furthermore, the Draft Guidelines require all FHC’s to comply with all AML/CFT/CPF regulations and to appoint a compliance officer who shall not be below the grade of a senior management staff responsible for filing the required returns with the CBN.

What Should Financial Holding Companies Be Doing Now?

Although the Draft Guidelines remain in draft form, affected institutions should begin evaluating the potential implications of the proposed framework.

Key considerations include:

    1. assessing compliance with the proposed ownership thresholds;
    2. reviewing group structures and foreign subsidiary arrangements;
    3. evaluating shared service models and related documentation;
    4. assessing capital adequacy and funding arrangements;
    5. reviewing governance frameworks and board oversight mechanisms; and
    6. identifying areas that may require regulatory engagement or restructuring.

Conclusion

The Draft Guidelines appears to be more than a routine update of the 2014 Guidelines. It reflects a broader regulatory shift towards stronger governance, clearer ownership structures, enhanced prudential safeguards, and more effective consolidated supervision of financial groups. For financial holding companies and banking groups, the message is clear: regulatory expectations are evolving beyond licensing and corporate structure requirements only.

The practical implication of the Draft Guidelines is that financial holding companies must begin to reassess their governance frameworks, group structures, risk management systems, and compliance functions to ensure alignment with the heightened regulatory standards. As the Central Bank of Nigeria continues to strengthen its supervisory oversight of financial conglomerates, early preparation and strategic compliance will be critical to achieving long-term sustainability and regulatory success.

REDEFINING AML COMPLIANCE: UNDERSTANDING CBN’S BASELINE STANDARDS FOR AUTOMATED AML SOLUTIONS FOR FINANCIAL INSTITUTIONS

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BY ADERONKE ALEX-ADEDIPE AND HILLARY OKOROTIE

Introduction

With the increasing need to ensure financial security in today’s rapidly digitizing landscape and evolving compliance demands, the Central Bank of Nigeria (CBN) issued its Baseline Standards for Automated Anti-Money Laundering (AML) Solutions for Financial Institutions (“AML Solutions”) on March 10, 2026. This was followed by a Guidance Note on implementation, released on March 31, 2026.

In this newsletter, we provide an overview of the requirements of the AML Solutions for financial institutions.

What is the Purpose of the AML Solutions?

The AML Solutions is aimed at establishing a structured and automated system for the identification and reporting of suspicious transactions and strengthening adherence to AML, Combating the Financing of Terrorism (CFT), and Countering Proliferation Financing (CPF) regulatory requirements. It also applies to all financial institutions operating in Nigeria.

What are Some of the Obligations of Financial Institutions?

  1. Customer Due Diligence (CDD), Know Your Customer (KYC) and Know Your Business (KYB): Financial institutions are required to implement effective CDD, KYC and KYB frameworks supported by automated or semi-automated onboarding, instant identity verification, and integration with national identity databases such as the Bank Verification Number (BVN) and National Identification Number (NIN) systems. They must also ensure proper documentation of beneficial ownership, maintain accurate and up-to-date customer data. AML Solutions must support end-to-end CDD, KYC, KYB, and enhanced due diligence processes, including automated risk profiling and behavioral transaction analysis. They must also enable continuous data integration of KYC/KYB data with customer risk profile to provide investigators with a unified view of customer profiles and transactional history for effective monitoring and decision-making.
  1. Sanction Lists & Politically Exposed Person (PEP) Screening: Financial institutions are required to conduct sanctions and screening of PEP at onboarding and on a continuous basis. They are also required to maintain clear procedures for reviewing, escalating, and resolving alerts and being able to demonstrate the effectiveness of their screening processes with proper documentation. AML Solutions must integrate domestic/international sanctions and watchlists with instant updates, automatically flagging or blocking transactions on confirmed matches in line with regulatory requirements.
  2. Risk Assessment & Transaction Monitoring: Financial institutions are required to conduct and document periodic business risk assessments and ensure AML systems reflect these risk profiles. The AML Solutions must assess transactions based on risk and identify possible money laundering activities. It should generate explainable alerts and enable pre-emptive actions to support decision-making.
  3. Reporting & Governance: Financial institutions must ensure accurate, complete, and timely regulatory reporting, supported by internal reviews and approval processes. The AML Solutions must be implemented to ensure automated or semi-automated generation of the required reports. They are also required to establish governance frameworks covering system ownership, access controls, model validation, and periodic audits.
  4. Security & Data Protection: There is also a requirement that all data processed and stored within AML systems comply with the scope of the Nigeria Data Protection Act (NDPA) 2023 and other applicable regulations. The AML Solutions must support this by securely collecting and storing relevant data, applying security controls such as encryption in transit, at rest, and in use, enforcing role-based access and secure authentication.

What is the Compliance Timeline for the AML Solutions?

The compliance timeline for the AML Solutions is 18 months for deposit money banks and 24 months for other financial institutions. However, all financial institutions are required to prepare and submit a detailed implementation plan to the CBN within 3 months of the issuance of the AML Solutions. The implementation plan must provide a clear and detailed roadmap on the steps the financial institution intends to implement to meet all obligations set out in the AML Solutions.

What is the Risk of Non-Compliance?

Where financial institutions fail to implement the AML Solutions or does so in a manner that results in ineffective AML/CFT/CPF controls, they may be subject to penalties. This liability extends not only to the financial institutions but also to personnel responsible for the implementation of the AML Solutions. Applicable penalties will be imposed in accordance with existing regulations, including the CBN AML-CFT-CPF Administrative Sanctions Regulations 2023, the Banks and Other Financial Institutions Act, and other relevant regulatory frameworks.

Conclusion

The AML Solutions imposes clear and enforceable obligations on financial institutions to implement effective, technology-driven frameworks for detecting and monitoring money laundering and other related activities. It is therefore imperative for financial institutions to promptly implement these requirements in line with the prescribed timelines.

KEY REGULATORY UPDATE: CBN GUIDELINES ON INSTANT PAYMENT FUNCTIONALITIES AND MOBILE BANKING SECURITY

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By: Aderonke Alex-Adedipe and Mark Imonitie

Introduction

On 12 March 2026, the Central Bank of Nigeria (CBN) issued a circular (the “Circular”) to all financial institutions (FIs) offering Instant Payment (IP) services in Nigeria.

The Circular provides the CBN’s Guidelines on instant payments and introduces sweeping measures to strengthen IP operations, enhance security protocols, improve consumer protection, and align with global best practices. This newsletter highlights the key provisions introduced by the Guidelines.

  1. VOLUNTARY OPT-IN AND OPT-OUT FUNCTION

Under the existing framework, FIs are not mandated to provide a feature on their mobile banking application, enabling customers to voluntarily opt in or out of IP services.

The new Guidelines however require FIs to allow customers to opt in or out at any time, subject to Multi-Factor Authentication (MFA).

New customers will be onboarded in opt-in mode by default. While opted out, customers cannot perform instant online fund transfers from their account; however, such transfers remain available via a physical branch visit.

  1. FLEXIBILITY IN SETTING TRANSACTION LIMITS

Prior to establishing the Guidelines, the maximum transaction limits of N25,000,000.00 for individuals and ₦250,000,000.00 for corporate entities, were fixed, with no option for customers to set personalized limits within those thresholds.

The Guidelines will subsequently allow both individuals and corporate entities to adjust these limits as needed, subject to enhanced due diligence and appropriate risk management by the FI.

To ensure security, the new transaction limit takes effect only after the customer completes the Multi-Factor Authentication (MFA) process.

  1. LIVELINESS CHECKS AND ENHANCED SECURITY FOR ONLINE TRANSACTIONS
    The Guidelines provide that where a customer seeks to open an account online or reactivate an online account, the following enhanced security measures shall apply:

    • liveliness check of the online account;
    • real-time validation of BVN/NIN database for online account openings/reactivations;
    • enhanced authentication mechanisms such as biometric authentication, soft token, hard token, for online account reactivations.

    A liveliness check is a biometric security measure which confirms that a user is a live, physically present human rather than a photo, video, or deepfake—by analyzing facial traits like skin texture, eye movement, and depth during remote onboarding or transactions, thereby preventing spoofing attacks.

  2. FRAUD MONITORING FUNCTIONALITY

The Guidelines mandate that all FIs implement and activate enterprise-wide fraud monitoring functionality covering both in-flows and out-flows. This measure restricts suspicious transactions in real-time while enabling prompt fraud detection and response.

  1. MANDATORY DEVICE BINDING

Under the existing framework, customers can operate their mobile banking application concurrently on multiple devices. The new Guidelines restrict mobile banking applications to one active device at a time, prohibiting concurrent use across devices. Switching to a new device triggers automatic deactivation of the previous one, followed by re-activation and authentication.

  1. ADDITIONAL REQUIREMENTS

The Guidelines introduce the following measures for mobile financial services applications and internet banking:

  • New account owners: Upon activation of a mobile banking application, inflow and outflow transactions are limited for the first 24 hours, and FI’s shall set the limit not to exceed ₦20,000.00 (Twenty Thousand Naira).
  • Existing account owners: Upon activation of a mobile banking application, outflow transactions are limited for the first 24 hours, and FI’s shall set the limit not to exceed ₦20,000.00 (Twenty Thousand Naira)
  • First-time login on a new device for internet banking requires enhanced Multi-Factor Authentication (MFA).

Conclusion

The Central Bank of Nigeria’s (CBN) new Guidelines on Instant Payment Functionalities for Financial Institutions mark a significant advancement in safeguarding digital transactions nationwide.

Effective 1 July 2026, financial institutions (FIs) must implement these measures. Among other requirements, the Guidelines necessitates comprehensive security and Data Protection Impact Assessments (DPIAs) to ensure compliance with the Nigeria Data Protection Act 2023 particularly resulting from mandatory features like multi-factor authentication (MFA), facial recognition, and continuous transaction monitoring.

About us:

Pavestones is a full-service legal practice, licensed by the Nigeria Data Protection Commission as a Data Protection Compliance Organization. We provide quality and innovative legal and data protection  support across diverse industries, helping clients operate in compliance with applicable laws and regulations to drive sustainable business growth.

REGULATORY UPDATE: NDPC EXTENDS DATA AUDIT FILING DEADLINE

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By Seun Timi-Koleolu and Omodele Fatodu

The Nigeria Data Protection Commission (“NDPC”) has announced an extension of the deadline for the filing of the 2025 Data Protection Compliance Audit Returns (“CAR”) from March 31 to May 30, 2026. Data Processors and Controllers of Major Importance (“DPCMIs”) are therefore encouraged to utilise this period to ensure that their data protection frameworks are aligned with regulatory expectations and to file their Compliance Audit Returns within the extended timeline.

DPCMIs should note that failure to file within the prescribed timeline will attract regulatory sanctions. In particular, late filing of the CAR is subject to a penalty of 50% of the applicable filing fee, in addition to the risk of further regulatory scrutiny or enforcement action by the NDPC.

  1.  Practical Steps During the Extension Period

To make effective use of the extended timeline, DPCMIs should consider the following:

  1. Data Mapping: Ensure that all personal data processing activities are clearly identified and documented, including the nature of data collected, purposes of processing, storage locations, and third-party disclosures.
  2. Policy Review: Review privacy policies and internal data protection procedures to confirm that they are up to date and aligned with regulatory requirements and actual data processing practices.
  3. Remediation of Prior Findings: Ensure that any identified gaps or recommendations from prior audits have been appropriately addressed and implemented.
  4. Engage a licensed Data Protection Compliance Organisation (DPCO): A licensed DPCO can conduct the data protection compliance audit and file the CAR on behalf of the organisation, helping to ensure that the audit meets NDPC expectations.
  1. Update on Filing Fees

DPCMIs are also reminded that the filing fees applicable to the CARs were revised under the General Application and        Implementation Directive, 2025 (“GAID”). The fees depend on the DPCMI category, as well as the number of data subjects processed by the organisation, as outlined below:

  1. Ultra-High Level DPCMI
    Tier A – 50,000 data subjects and above: N1,000,000
    Tier B – 25,000 – 49,999 data subjects: N750,000
    Tier C – below 25,000 data subjects: N500,000
  2. Extra-High Level DPCMI
    Tier A – 10,000 data subjects and above: N250,000
    Tier B – 2,500 – 9,999 data subjects: N200,000
    Tier C – below 2,500 data subjects: N100,000
  1. Further Guidance

For a more detailed overview of compliance obligations under Nigerian data protection laws, and the role of DPCOs, please refer to our previous publications:

Conclusion

The extension of the 2025 data audit filing deadline provides organisations with an extended opportunity to review their data protection practices and file their Compliance Audit Returns on time.

Pavestones is a full-service legal practice, licensed by the Nigeria Data Protection Commission as a DPCO. We provide support to organisations across diverse industries in conducting data protection compliance audits, preparing and filing Compliance Audit Returns, and ensuring alignment with the GAID and Nigeria Data Protection Act, 2023.

New CBN Measures on Diaspora Remittances: What They Mean for Market Participants

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BY ADERONKE ALEX-ADEDIPE AND PROMISE ITAH

Introduction

On March 24, 2026, the Central Bank of Nigeria (CBN) issued a circular on Measures to Further Deepen Diaspora Remittances and Compliance (the “Circular”). The Circular, which is effective from May 1, 2026, builds on the CBN’s revised guidelines for international money transfer services in Nigeria, and is aimed at enhancing  diaspora remittances, strengthening transparency, traceability, and effective monitoring of all remittance related transactions.

In this newsletter, we highlight the measures introduced by the CBN and assess their practical implications for participants.

What Are the New Measures?

The following measures have been prescribed by the CBN.

  1. Designated Naira Settlement Accounts: All transactions related to International Money Transfer Operators’ (IMTO) operations, including payments to beneficiaries and any settlements, must be processed through designated settlement accounts held with authorised dealer banks (ADBs or Banks). IMTOs may either open new accounts or use existing ones for this purpose and can maintain multiple naira settlement accounts based on their business needs. However, they are required to regularly provide the CBN with an updated list of these designated accounts through the Director of the Trade and Exchange Department.
  2. Account Funding Restrictions: The circular makes it clear that these settlement accounts can only receive money from remittances or foreign exchange transactions carried out by the IMTOs or their agents through authorized participants in the Nigerian Foreign Exchange Market (NFEM). This means that no other funds are allowed to be deposited into these accounts.
  3. Authorised Transfers to Other Market Participants and BDCs: To improve the flow of foreign exchange and support fair pricing, ADBs are permitted to process foreign currency transfers from IMTO settlement accounts to other ADBs and approved market participants, including licensed Bureau de Change (BDC) operators.
  4. Real-Time FX Pricing: IMTOs must set their remittance rates to reflect current market prices from Bloomberg’s BMatch platform rather than being set independently. By doing this, the CBN aims to ensure more accurate pricing, reduce information gaps between banks and IMTOs, and encourage greater use of the official FX market.
  5. Compliance and Record Keeping: In addition to complying with the above measures, all IMTOs (and ADBs) must strictly comply with anti‐money laundering and counter-terrorism financing rules. Detailed records of all remittance transactions (origins, amounts, beneficiaries, conversions, etc.) must also be kept for regulatory review and audit purposes.

 

What Are the Practical Implications?

The new measures may require certain operational changes. We have set out below, some key implications and action points for IMTOs, banks, BDCs and other stakeholders:

  1. IMTOs (Money Transfer Operators):

    In view of the above regulatory measures, IMTOs may require system upgrades and staff training and must also strengthen record-keeping and AML/KYC processes, maintaining detailed transaction logs for regulatory review.

  2. ADBs (Commercial Banks):

    ADBs should prepare for increased demand from IMTOs to open and manage multiple naira settlement accounts and streamline onboarding processes accordingly. Banks will also need to closely monitor these accounts to ensure they are used solely for remittance flows and comply with FX funding requirements, while supporting IMTOs in meeting AML/CFT obligations.

  3. BDCs:

    Since ADBs are permitted to process foreign currency transfers from IMTO settlement accounts, BDCs may engage ADBs and their IMTO partners to access this FX liquidity.

  4. General Market Effects:

    In general, the measures are expected to improve transparency by channeling remittance flows through the formal banking system, giving the CBN greater visibility into FX inflows. In the medium term, it is expected that this will reduce reliance on informal markets, support better rate alignment, and contribute to improved liquidity and stability in the FX market.

Conclusion

The CBN’s new measures on diaspora remittances are part of a series of significant steps toward formalising diaspora remittance flows and improving transparency in Nigeria’s foreign exchange market. By mandating designated settlement accounts, real-time pricing, and stricter compliance standards, the framework is expected to enhance liquidity, strengthen regulatory oversight, and reduce reliance on informal channels. While stakeholders will need to adjust their operations to meet the new requirements, the CBN expects that the reforms should, over time, support better price discovery and contribute to greater stability of the naira.