In a pivotal move, the Central Bank of Nigeria (CBN) has officially prohibited banks and financial technology companies (fintechs) from engaging in international money transfer services. This significant regulatory update, outlined in the revised guidelines for International Money Transfer Operators (IMTOs) released on January 31, 2024, introduces stringent measures to reshape the financial landscape.
The key directives are as follows:
Prohibition on Operation:
All banks are barred from offering International Money Transfer services but can act as agents. Similarly, fintech companies are disallowed from obtaining approval for IMTO operations.
Applicability of BOFIA 2020: The provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020, which prohibits the employment of certain persons in banks, are extended to IMTOs. This includes individuals, shareholders, and officers of a bank.
Application Fee Surge:
The application fee for an IMTO license experiences a substantial increase from N500,000 in 2014 to a staggering N10 million in the revised guidelines. This represents an approximately 1,900% surge over the past decade.
The documentation requirements for IMTO applicants now include a non-refundable application fee of N10 million, approval to operate in other jurisdictions, and evidence of tax clearance and incorporation documents in Nigeria for indigenous IMTOs.
Furthermore, the CBN has established a minimum operating capital requirement for IMTOs, setting it at $1 million for foreign entities and an equivalent amount for local IMTOs. This marks a significant shift from the previous capital requirements.
CBN’s Regulatory Stance:
The CBN, known for its proactive regulatory approach, emphasizes strict adherence to these guidelines. The central bank issues a clear warning that non-compliance will face immediate sanctions, reinforcing its commitment to robust regulatory oversight.
This regulatory move aligns with the CBN’s broader efforts to curb foreign currency speculation and hoarding within Nigerian banks. The financial watchdog aims to bring stability to the foreign exchange market, addressing concerns about the depreciation of the naira. While strategically fortifying the currency, the ban on banks and fintechs from international money transfers may introduce complexities to remittance payments into the country.
