Introduction
On January 31, 2024, the Central Bank of Nigeria (CBN) issued a Revised Guideline on the Operation of International Money Transfer Services in Nigeria. This new guideline, which replaces the 2014 version, is designed to provide clarity for International Money Transfer Operators (IMTOs) on financial remittances and outline the licensing requirements and approval processes.
Who is an International Money Transfer Operator (IMTO)?
An IMTO is an organization authorized by the CBN to facilitate fund transfers from individuals or entities abroad to residents in Nigeria. These operators ensure that the corresponding amount is paid to beneficiaries through a recognized clearing network.
Who Can Operate International Money Transfer Services in Nigeria?
Any person or institution meeting CBN’s requirements can offer international money transfer services in Nigeria. Applicants must submit their applications, along with necessary documents, to the Director of the Trade and Exchange Department of the CBN. Operating without CBN registration is illegal.
Licensing and Approval Process
Applicants must comply with CBN’s guidelines on Anti-Money Laundering, Combating the Financing of Terrorism, and Countering Proliferation Financing. The approval process includes two phases:
- Approval in Principle
- Final Approval
Documents Required for Approval in Principle
To obtain approval in principle, an IMTO must submit the following:
- A non-refundable fee of ₦10,000,000
- Approval to operate in other jurisdictions or an agency agreement
- Tax clearance and incorporation documents
- Ownership structure and board approval for international money transfer services
- CAC Form C02 (Return of Shares) and C07 (Particulars of Directors)
- Company profile and information on beneficial owners
- Credit reports for shareholders and key officers
- Minimum share capital of $1 million for foreign IMTOs (or equivalent for local IMTOs)
- Any other documents required by the CBN
Approval in principle allows the IMTO to open a bank account and start pre-operational processes but does not permit them to commence operations.
Documents Required for Final Approval
Within three months of obtaining approval in principle, the IMTO must apply for final approval, submitting:
- Names and agreements of authorized dealer banks
- A detailed business plan, including internal controls, security features, financial projections, transaction charges, and IT policies
- Enterprise risk management framework and disaster recovery plans
- Draft agreements with participating parties and a project deployment plan
- Any other information as required by the CBN
Annual License Renewal
IMTOs must renew their licenses annually, with a fee of ₦10,000,000, payable by January 31 each year. Failure to provide renewal approval to agent banks within the first quarter can lead to cessation of transactions by the agent banks.
Prohibition of Banks and Financial Technology Companies
Banks and financial technology companies are prohibited from acting as IMTOs but can serve as agents. Individuals barred from bank employment under the Banks and Other Financial Institutions Act (BOFIA), 2020, are also prohibited from being IMTOs.
Conclusion
The CBN’s Revised Guidelines for 2024 aim to enhance security, transparency, and efficiency in Nigeria’s financial ecosystem. Proper implementation and enforcement of these guidelines are expected to drive positive change and promote sustainable growth in the industry.
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