CBN Prohibits Banks And Fintechs From Conducting International Money Transfers

The Central Bank of Nigeria (CBN) has announced that banks and financial technology firms (fintechs) are now prohibited from offering international money transfer services.

This decision coincides with a significant surge in the application fee for licensing International Money Transfer Operators (IMTOs), increasing by 1,900%. The CBN’s directive was revealed in a document dated Wednesday, January 31, 2024, which also details the updated guidelines for IMTO operations.

“All banks are prohibited from operating International Money Transfer services but can act as agents,” the document stated.

Additionally, it specified that fintech companies are ineligible for IMTO approval. The guidelines further extend employment prohibitions, as outlined in the Bank and Other Financial Institutions Act (BOFIA) 2020, to IMTOs.

The updated guidelines build upon the 2014 regulations, which initially limited these services to deposit money banks, now extending the restriction to encompass fintechs as well. Moreover, the CBN has raised the application fee for IMTO licensing from the previous N500,000 to N10 million, representing a substantial increase over the span of almost a decade.

Prospective IMTOs intending to operate in Nigeria must now submit applications along with a non-refundable fee of N10 million to the Director of the Trade and Exchange Department. The document listed several prerequisites for the application, such as approval to operate in other jurisdictions, evidence of tax clearance, and incorporation documents for indigenous IMTOs.

The document read, “A non-refundable application fee of N10,000,000.00 (Ten Million Naira only) or such other amount that the Bank may specify from time to time and payable to the CBN through electronic transfer or bank draft,” the document read.

“Approval to operate in other jurisdictions or agency agreement (for all IMTOs). Evidence of tax clearance and incorporation documents in Nigeria (for indigenous IMTOS) to include Memorandum and Articles of Association (Certified True Copy), of which the primary object clause shall indicate provision of money transfer services.”

In addition to the application fee, IMTOs will be subject to an annual renewal fee of N10 million, or as specified by the CBN, to be paid via electronic transfer or bank draft by January 31 each year.