Nigerian Banks Disown Money Transfer Companies. Are They scared?

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A crackdown has been launched by five Nigerian retail banks and the Central Bank of Nigeria against two popular European money transfer services, Azimo and Transferwise. The banks have issued disclaimers against the two international transfer platforms, warning members of the public against using their services or do so at their own risk.

Transferwise stopped money transfer service to Nigeria on November 16, 2020. It posted the following message on its website “Because of a recent change in regulation by the Central Bank of Nigeria, we’re no longer able to support transfers to NGN.” Currently, there is no timeline on when this route will reopen.

The crackdown has come on the heels of a new policy directive allowing US dollar withdrawal of remittances in Nigeria. Remittances are the second-largest source of foreign exchange in Nigeria after oil. It is unclear, however, if the disclaimers are the result of the new policy measures or just a pure coincidence.

Azimo and Transferwise Are Not Licensed in Nigeria

On November 16, 2020, The Central Bank of Nigeria noted that the two services are not licensed to operate as International Money Transfer Organisations in Ngeria. Nigeria is one of the most popular destinations for users of Azimo and Transferwise money transfer services. Transferwise has over 8 million customers in over 60 countries worldwide while Azimo serves over 1.5 million customers in more than 190 countries. Transferwise also offers a borderless account, which allows you to hold money in more than 40 currencies.

The central bank disclaimer reads in part:

The attention of the Central Bank of Nigeria (CBN) has been drawn to the activities of Messrs. Azimo and Messrs. Transfer Wise, both of which are purportedly transacting business, albeit unauthorised, as International Money Transfer Operators (IMTOs). The Bank wishes to notify the general public that neither Messrs. Azimo nor Messrs. Transfer Wise is licensed by the Central Bank of Nigeria to operate as an International Money Transfer Operator (IMTO).

Nigerian Banks Disown Azimo

Fidelity Bank, UBA, GT Bank, Zenith, and First Bank have individually issued disclaimers against Azimo. The banks have sent emails to their customers warning them against using the platform as they are not Azimo’s partner banks in Nigeria.

First Bank disclaimer states:

We disclaim the listing of FirstBank as one of the receiving or paying Banks on Azimo.com by Azimo Limited, offering Global Money Transfer Services. FirstBank has no affiliation with Azimo and hereby publicly disassociates itself from it.Azimo is not a registered Money Transfer Service with the Central Bank of Nigeria (CBN) as such, not licensed in Nigeria. Anyone who transacts with Azimo is therefore doing so at his/her peril.

Another bank has demanded Azimo to remove its name and logo on its website within 7 days or face a legal action in the United Kingdom.

Azimo, however, has not listed these banks as affiliate or partners on its website. It lists them as some of the Nigerian banks it can deposit the money you are sending into the accounts of your family and friends in Nigeria.

Azimo and Transferwise Services in Nigeria

Azimo has been operating in Nigeria since 2017. The five banks have been receiving money sent to its individual and business account holders via Azimo platform until now. Transfers were made through local bank deposit transfers or with a SWIFT payment to accounts in either EUR or USD. Azimo has listed 20 supported banks in Nigeria on its website, which customers were able to send money to. All along, Azimo customers have also been able to send money to cash pick up locations, mobile money wallets as well as buying airtime for their loved ones in Nigeria.

Transferwise has been operating in Nigeria for years. In 2016, the company stopped its operations in the country for 17 months citing currency exchange regime that did not allow it to offer a true mid-market rate to its customers. So far, Transferwise customers have been able to send money to individual and business accounts in most banks in Nigeria.

Transferwise is a popular money transfer service to Nigerians in the diaspora because of its fee structure and mid-market exchange rate. Moreover, its transfers to Nigeria are usually faster than most money transfer companies because it uses its local bank accounts in the country. Regardless of the country a customer is sending money from, Transferwise uses local funds in Nigeria to send to the recipient.

Are Azimo and Transferwise Safe?

Transferwise and Azimo were founded in London, the United Kingdom in 2011 and 2012 respectively. Both companies have been funded by reputable individuals and ventures. Transferwise is one of the well funded fintech in Europe. It has received funding from the likes of IJNR Ventures, IA Ventures, PayPal co-founder Max Levchin, and Wonga.com co-founder Errol Damelin while Azimo has been funded by GR Capital Partners, Greycroft Partners, MCI, Quona Capital, Rakuten, and Silicon Valley Bank, among others.

Being a European money transfer company, Transferwise is regulated by the FCA in the UK, FinCEN in the US, and a number of other regulators around the world. Azimo is regulated and supervised by De Nederlandsche Bank (DNB) in the Netherlands and the FCA in the UK.

Final Thoughts

It is unclear why the two companies were able to operate in the country for years if they did not meet regulatory requirements. All the disclaimers have been very brief, offering little details. It is possible that the central bank wants to tighten regulations following the US dollar remittance policy and make it easier to track all transactions. Additional operational guidelines for dollar remittances issued by the bank on December 16, 2020, stated that “all Mobile Money Operators (MMOs) are required to disable wallets from receipt of funds from International Money Transfer Organisations (IMTOs).” Furthermore, all International Money Transfer Organisations are required to immediately disclose beneficiaries of foreign currency.

Another speculation for the disclaimers is that money transfer organisations offer a direct and stiff competition to traditional banks in the country. The international money transfer market in Africa is growing rapidly with new entrants such as Transferwise and crypto-based remittance startups.

We asked Azimo and Transferwise for comments. We will update this post as soon as receive new information.

Top Transferwise and Azimo Alternatives to Send Money to Nigeria

Luckily, there are other options you can use to send money to your relatives and family members in Nigeria. They include WorldRemit, Xoom, Remitly, and Exchange4Free. You can also use crypto-based remittances startups such as Cryptofully, Bitsika, and BitPesa. Alternatively, you can transfer the money via Bitcoin to Nigeria without any external services.