The Central Bank of Nigeria (CBN) has taken a big step by outlawing banks and fintechs from offering services for foreign money transfers. This broad change was stated in the updated standards for International Money Transfer Operators (IMTOs) operations, formally announced on January 31, 2024.
According to the new directive, banks may serve as agents but can no longer run foreign money transfer services. Furthermore, receiving clearance for IMTO services is no longer available to financial technology enterprises. The embargo also covers bank officers, owners, and management personnel. This is a change compared to the 2014 standards, which solely restricted deposit money banks.
The application cost for an IMTO license was increased by the CBN from N500,000 in 2014 to a significant N10 million in the new rules. This is a 1,900% increase over the previous ten years. If an IMTO wants to conduct business in Nigeria, they must apply and pay a non-refundable application cost of N10,000,000.
Among the necessary documents are evidence of tax clearance, agency agreements, approval to operate in foreign countries, and Nigerian incorporation documents. In addition, a N10 million yearly renewal fee is required, which must be paid by January 31 each year. The CBN underlines that failure to complete the renewal by the first quarter of each year will result in immediate penalties.
In contrast to the prior requirements of N2 billion for Nigerian companies and N50 million for international companies, the CBN has set a minimum operational capital requirement of $1 million for foreign IMTOs and an equivalent amount for local IMTOs. This regulatory reform addresses concerns about actions that could distort market dynamics and aligns with the CBN’s efforts to combat foreign exchange speculation and hoarding in Nigerian banks. The CBN’s aggressive stance highlights its dedication to strict regulatory supervision to stabilize the foreign currency market.