Nigeria: The Central Bank of Nigeria (CBN) updated the guidelines for International Money Transfer Operators (IMTOs). As per the released guidelines, the Banks and fintechs in Nigeria are now prohibited from providing international money transfer services.
Reportedly, all banks are prohibited from operating International Money Transfer services but can act as agents. Also, Financial Technology Companies are not allowed to obtain approval for IMTO.
Moreover, the CBN has also increased the application fee for the IMTO license from the N500,000 fee set in 2014 to N10 million.
The recently, released guidelines objectives to provide direction to IMTOs in compliance with the regulatory framework established by the CBN. Whereas the previous guidelines released in 2014 are only applied to deposit money banks with the new rules that now include fintechs.
The actual CBN guidelines quote, “All banks are prohibited from operating International Money Transfer services but can act as agents. The Financial Technology Companies are not even allowed to obtain approval for IMTO.”
The guidelines further add, “The provisions of BOFIA 2020 on the prohibition of employment of certain persons in banks shall also apply to IMTOS.”
“All the conditions by BOFAI 2020 are stipulating the exclusion for certain individuals from the management of banks and shall apply to the management of International Money Transfers Services,” says the guidelines by CBN.
As per the sources, the central bank wanted to get final approval and said that any IMTO desires to operate in Nigeria, have to submit its application to the Director of the Trade and Exchange Department.
IMTO should submit approval in Nigeria to operate in other jurisdictions or agency agreements, evidence of tax clearance and incorporation documents. Indigenous IMTOs should also include Memorandum and Articles of Association that are truly certified copies that indicate the provision of the primary object clause of money transfer services.
Notably, CBN also increased the application fee for the IMTO licence from the N500,000 fee set in 2014 to N10 million.
According to the increased application fee, an annual renewal fee of N10 million Naira or any amount that the apex bank may specify from time to time, is needed for the IMTO license.
The fee can be paid through electronic transfer or bank draft on or before 31st January of the Year.
The renewal of IMTO approval is also required within the first quarter of every year. In a situation where IMTO fails to provide its agent bank with a copy of the CBN renewal of its approval for that year within the first quarter, the bank should then cease any further transactions with IMTO.
According to the circular, a minimum share capital of $1 million for foreign entities and an equivalent amount for local IMTOs is required to lead the operation.
Previously, International Money Transfer Operators (IMTOs) used to demand the minimum operating capital of N2 billion for Nigerian companies and N50 million or its equivalent, for foreign companies
According to the bank’s statement, ” Complying with the above requirements would avail the applicant of an Approval-In-Principle to proceed to open a bank account and process pre-operational processes, after which it will receive favourable outcomes.”
However, by restricting banks and fintechs from international money transfer services, the CBN is strategically working to strengthen the currency and stabilize the forex market.
As stated in the guidelines, the applicants must comply with the CBN’s anti-money laundering, combating the financing of terrorism. They also need to counter proliferation financing of weapons of mass destruction regulations.
To stabilize Nigeria’s volatile exchange rate, the Central Bank of Nigeria (CBI) issued an order that instructed the banks to offload their excess dollar reserves by Feb 01, 2024.