On January 31, 2024, the Central Bank of Nigeria (CBN) pursuant to its powers under section 2(d) of the Central Bank of Nigeria Act, 2007, and the Banks and Other Financial Institutions Act, 2020 issued a Revised Guideline on the Operation of International Money Transfer Services in Nigeria (the Revised Guideline) thereby replacing the 2014 CBN Guideline on the Operation of International Money Transfer Services in Nigeria.

The release of the Guideline is to provide guidance to International Money Transfer Operators (IMTOs) on financial remittances as spelt out by the CBN as well as guide them on the licensing requirements and means of seeking approval.

It is against this background that this piece aims to examine some salient provisions of the Guidelines.

WHO IS AN INTERNATIONAL MONEY TRANSFER OPERATOR (IMTO)?

An International Money Transfer Operator (IMTO) is an organization approved by the CBN to facilitate the transfer of funds from individuals or entities residing abroad to residents in Nigeria and the payment of a corresponding sum to a beneficiary through a clearing network to which the IMTO belongs.[i]

WHO CAN CARRY OUT INTERNATIONAL MONEY TRANSFER SERVICES IN NIGERIA?

Any person or institution that meets the CBN requirement can carry out international money transfer services in Nigeria. Such an applicant must submit an application to the Director, Trade and Exchange department of the CBN with the necessary documents.[ii]This is because carrying on international money transfer business or floating any financial product involving international money transfer by any person or institution without registering same with the CBN is illegal.

Additionally, any person or institution applying to the CBN to carry out international money transfer services must comply with the CBN Guidelines for Licensing of Banks and Other Financial Institutions in Nigeria on Anti-Money Laundering, Combating the Financing of Terrorism, and Countering Proliferation Financing of Weapons of Mass Destruction and Terrorism.[iii]

The approval process is always in two phases namely:

1. Approval in principle; and
2. Final approval

These will be discussed briefly

DOCUMENTS REQUIRED BY AN INTERNATIONAL MONEY TRANSFER OPERATOR (APPROVAL-IN-PRINCIPLE)

An International Money Transfer Operator (IMTO) desirous of operating in Nigeria shall submit the following documents in support of the application to the Director, Trade and Exchange Department of the CBN:

1. A non-refundable fee of N10,000,000 (Ten Million Naira) or such other amount as may be specified by CBN payable through electronic transfer or bank draft.
2. Approval to operate in other jurisdictions or agency agreement (for all IMTOs)
3. Evidence of tax clearance and incorporation documents (with the primary object clause of the MEMART indicating the provision of money transfer services
4. The ownership structure of the IMTO
5. Board approval to operate international money transfer service
6. CAC Form C02 (Return of Shares) and C07 (Particulars of Directors)
7. Profile of the company
8. Information on the beneficial owners of the company
9. Credit reports from a licensed credit bureau for the shareholders and key officers of the IMTO
10. Minimum share capital of US$ 1 million for foreign IMTOs and the equivalent for indigenous IMTOs
11. Any other information, document, or report as may be required by CBN from time to time.

Once the above supplementary documents have been submitted with the application and the same is favorably considered, an IMTO may then proceed to open a bank account and begin the processing of pre-operational processes.

It is imperative to state that the grant of the Approval-In-Principle application does not give IMTO liberty to commence operations.[iv]

DOCUMENTS REQUIRED BY AN INTERNATIONAL MONEY TRANSFER OPERATOR FOR FINAL APPROVAL

Within 3(three) months of obtaining the Approval-In-Principle application from CBN, the IMTO shall submit an application for final approval to CBN subject to the fulfillment of the following requirements:

1. Names of authorized dealer bank(s) to serve as local agent(s) and copy of agency agreement
2. Submission of a detailed business plan which shall include:
3. Nature of the business
4. Internal control systems and monitoring procedures
5. Security features for IMTOs with offices in Nigeria
6. Three years of financial projection/market analysis for the company
7. Transaction and other charges that will be borne by the customers
8. Diagrammatic illustration of transaction flows
9. Consumer protection and dispute resolution mechanisms
10. Information technology policy of the company including
11. Privacy policy
12. Information ownership/disclosure/loss policy
13. Backup and restore policy
14. Network security policy
15. Encryption policy
16. Confidential data policy
17. Password policy
18. Third-party connection policy
19. Incidence response policy
20. Physical security policy
21. Enterprise risk management framework
22. Contingency and disaster recovery plan/business continuity plan
23. Draft agreements with the participating parties
24. Project deployment plan (time, location, operation, etc)
25. Any other information as may be required by CBN from time to time

ANNUAL RENEWAL OF LICENSE

IMTOs are to renew their license annually at an annual renewal fee of N10,000,000 (Ten Million Naira) which must be paid on or before January 31 of the year. Also, the renewal shall be done within the first quarter of the year.[v]

Failure by an IMTO to avail its agent bank(s) a copy of the CBN renewal approval within the first quarter of the year shall be a ground for such agent bank(s) to cease any further transaction with the IMTO concerned.

PROHIBITION OF BANKS AND FINANCIAL TECHNOLOGY COMPANIES

All banks and financial technology companies are prohibited from being IMTOs. Banks may however act as agents of IMTOS. Additionally, persons prohibited from employment in banks under the BOFIA, 2020 are also prohibited from being IMTOs.[vi]

CONCLUSION

The CBN‘s Revised Guidelines, 2024 is a step towards creating a more secure, transparent, and efficient financial ecosystem testamentary of its stance as the apex regulator of financial institutions in Nigeria. With the proper implementation and enforcement, these Guidelines are poised to drive positive change and foster sustainable growth in the industry.

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[i] See Paragraph 1.1 of the Revised Guidelines on International Money Transfer Services in Nigeria, 2024

[ii] See Paragraph 2.0 of the Revised Guidelines

[iii] See CBN Guideline Referenced: FPR/DIR/GEN/CIR/001/061

[iv] See generally Paragraph 2.1 of the Revised Guidelines

[v] See paragraph 2.3of the Revised Guidelines

[vi] See generally paragraph 2.7 OF the Revised Guidelines

Written by Muhiz Adisa for The Trusted Advisors

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