CBN Bans Banks, Fintechs from International Money Transfer Services, Jerks Up Application Fee by 1,900%

The Central Bank of Nigeria (CBN) has issued a prohibition on banks and financial technology companies (fintechs) offering international money transfer services.

This notice is outlined in the updated guidelines for the operations of International Money Transfer Operators (IMTOs), which were formally published on January 31, 2024.

The document read: “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.

“The provisions of BOFIA 2020 on the prohibition of employment of certain persons in banks shall also apply to IMTOS.” 

The central bank now extends its prohibition to individuals involved in bank management, shareholders, and officers of banks, not just deposit money banks as outlined in the 2014 guidelines.

This expansion now includes fintechs. Additionally, the apex bank has significantly raised the application fee for an IMTO license from N500,000 in 2014 to N10 million in the updated guidelines, marking a staggering increase of approximately 1,900% over a decade.

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According to the document, any IMTO seeking to operate in Nigeria must submit its application along with specified documents to the Director of the Trade and Exchange Department, among other requirements.

“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; payable to the CBN through electronic transfer or bank draft. 

“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.” 

Moreover, there is an annual renewal obligation amounting to N10 million Naira, or as specified by the apex bank from time to time, payable to the CBN through electronic transfer or bank draft by January 31st of each year.

Furthermore, it was emphasized that the renewal of IMTO approval must occur within the first quarter of each year. It was also stated that if an IMTO fails to provide its agent bank with a copy of the CBN renewal of its IMTO approval for that year within the first quarter, the bank must halt any further transactions with the IMTO.

The CBN has also set a minimum operating capital requirement for International Money Transfer Operators (IMTOs) at $1 million for foreign entities and an equivalent amount for local IMTOs. This marks a change from the previous requirement of N2 billion for Nigerian companies and N50 million or its equivalent for foreign companies.

(Nairametrics)