The International Money Transfer Operator (IMTO) license is a crucial requirement for operating a legitimate money transfer business in Nigeria. This license ensures compliance with the regulatory framework set by the Central Bank of Nigeria (CBN) and provides a range of benefits to operators. The IMTO license is granted by the Central Bank of Nigeria (CBN) to companies seeking to engage in cross-border money transfer services. However, it is a mandatory license for entities involved in remittances, enabling them to legally operate within the Nigerian financial ecosystem. Hence, the license ensures compliance with regulatory guidelines, and fosters transparency in the money transfer industry.
Remittances (Diaspora) in this sense are generally defined to mean reoccurring person-to-person payments of relatively low value from persons living abroad to persons in their home country. The Central Bank of Nigeria (CBN) on September 26th, 2014, issued the Guidelines for the International money transfer services in Nigeria which provided a framework for the licensing and operations of International Money Transfer Operators (IMTOs) in Nigeria.
Following the recent reforms to liberalize the foreign exchange market and ensure transparency in foreign exchange market transactions, boost diaspora remittances and other foreign capital inflows to Nigeria, promote efficient price discovery mechanisms and the evolution of an appropriate market determined exchange rate and enhance the ease of doing business for International Money Transfer Operators (IMTOs) in Nigeria and money transfer recipients, on 31stJanuary 2024, the CBN issued the revised Guidelines on the operations of International Money Transfer Operators (IMTOs) in Nigeria.
The Central Bank of Nigeria (CBN) introduced significant changes on IMTOs operation in Nigeria. These include stricter regulations and guidelines to improve transparency, efficiency, and security in cross-border money transfers. These changes may include requirements such as enhanced documentation, verification procedures, and Monitoring mechanisms to combat fraud, money laundering, and illicit financial activities.
1.1 KEY CHANGES INTRODUCED IN THE REVISED IMTO GUIDELINES
The key provisions of the new Guidelines will be examined, and the advantages/ implication for IMTO’s and the Fintech sector.
- Prohibition of Persons/Institution:
One significant change under the new Guidelines is the prohibition of all banks and Financial Technology Companies (FinTech) from obtaining IMTO approval or licenses. Though banks under the guidelines can still act as agents. In the previous Guidelines issued in 2014, only deposit money banks were prohibited. However, the CBN has extended the ban to fintechs. The revised Guidelines do not provide a clear definition of FinTechs and in addition, it is not entirely clear as to how this prohibition would impact on FinTechs with existing IMTO licenses.
- Employment of Certain Persons:
The provisions of BOFIA 2020 on the prohibition of employment of certain persons in banks shall also apply to IMTOs. In line with BOFAI 2020, all the conditions stipulating the exclusion for certain individuals from the management of banks shall also apply to the management of International Money Transfers Services. This means that Shareholders and Officers of the company shall not undertake International Money Transfer Operations.
- Application Approval and Fee:
The Application for approval to carry on the business of international money transfer services shall be submitted to the Director, Trade and Exchange Department, Central Bank of Nigeria, Abuja.
The IMTO license application fee under the old Guidelines was N500,000 (Five Hundred Thousand Naira). However, this amount has now been reviewed upwards to N10,000,000 (Ten Million Naira) payable to the CBN via electronic transfer or bank draft. This increase is significantly higher than the license application fees for payment service banks (PSBs), switching and processing companies, mobile money operators (MMOs), payment terminal service providers (PTSPs), Payment Solution Service Providers (PSSPs) and Super Agents. Independent of the minimum share capital requirement which is set at US$1 million for foreign IMTOs and its equivalent for indigenous IMTOs, this further heightens the entry barrier for startups looking to obtain an IMTO license.
- Provision for Definition and Structure:
The IMTO Guidelines dated September 26th, 2014, referred to as the “Old Guidelines” did not expressly define the term IMTOs or what should be classified as international money transfer operations. Due to this omission, the definition of IMTOs was implied from the scope of permissible activities that IMTOs could undertake. However, the revised Guidelines now provide for a clear definition of IMTOs.
Under the revised Guidelines, IMTOs are defined as companies approved by the CBN to facilitate the transfer of funds from individuals or entities residing abroad to recipients in Nigeria and the payment of a corresponding sum to a beneficiary through a clearing network to which the IMTO belongs.
- Double phased Approval Process:
The revised Guidelines now provide for a two phased approval process of License approval such as Approval-in-Principle (AIP) and Final approval. These are the two licensing phases required to obtain an IMTO license. This is however unlikely to have a significant impact on IMTOs as this has been the practice for years with respect to the CBN licensing stages.
- Annual Renewal:
The revised Guidelines now expressly provide for an annual renewal of N10,000,000 (Ten Million Naira) payable on or before 31st January of every year and failure to renew the IMTO license within the first quarter of the year could impact on the ability of the IMTO to operate. Where an IMTO fails to avail its agent bank a copy of CBN renewal of its IMTO approval for that year within the first quarter of the year, the bank shall cease further transaction with the IMTO.
- Bank Account, Records and Returns:
IMTOs are to hold customer’s funds meant for remittance in a designated account domiciled with the agent (ADB) and maintain complete, accurate accounting records. The New Guidelines provide for new recording keeping and return requirements. For instance, under the old Guidelines, IMTOs were required to keep transaction information for a period of 6 (six) years. However, the revised Guidelines reviewed it downwards to 5 (five) years.
Additionally, the revised Guidelines provide for daily, weekly, and monthly returns, although the practicality of this remains uncertain.
- Mode and Currency of Transfer for In-Bound Remittances:
Under the old Guidelines including the IMTO circular dated 10 July 2023 on the payment option in Naira for receipt of proceeds of diaspora remittances, IMTOs were permitted to use bank accounts, mobile money wallets and cash as the channels for the payout of diaspora remittances in Nigeria. However, the revised Guidelines now limit this to cash and bank accounts. Additionally, the payout currency is now limited to Naira thereby restricting the ability of IMTOs to payout remittances either in Naira or United States Dollars.
1.2 ADVANTAGES OF THE REVISED IMTO GIDELINES 2024
The revised Guidelines introduced by the Central Bank of Nigeria (CBN) on International Money Transfer Operators (IMTO’s) offer several advantages including:
- Enhanced Transparency in cross-border money transfers to reduce fraudulent activities.
- Improved security with tighter regulations which seeks to enhance the security of international money transfers, reducing the risk of money laundering, fraud, and other illicit financial activities.
- Monitoring and oversight of IMTO’s allowing the CBN to better regulate the industry.
- Formalization of remittance channels or process for efficiency and reliability for both senders and recipients.
The revised Guidelines on International Money Transfer Operations (IMTOs) will aid reforms in liberalizing the foreign exchange market, ensure transparency in foreign exchange market transactions, boost diaspora remittances and other foreign capital inflows to Nigeria, promote efficient price discovery mechanisms and the evolution of an appropriate market determined exchange rate and enhance the ease of doing business for International Money Transfer Operators (IMTOs) in Nigeria and money transfer recipients
 2.6 (i) Revised Guidelines for International Money Transfer Operations in Nigeria 2024
 2.6 (ii) Revised Guidelines for International Money Transfer Operations in Nigeria 2024
 2.1 (i) Revised Guidelines for International Money Transfer Operations in Nigeria 2024
 1.1 Revised Guidelines for International Money Transfer Operations in Nigeria 2024
 2.1 and 2.2 Revised Guidelines for International Money Transfer Operations in Nigeria 2024
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 2.3 Revised Guidelines for International Money Transfer Operations in Nigeria 2024
 3.7,3.8 and 3.9 Revised Guidelines for International Money Transfer Operations in Nigeria 2024
 4.2.1 Revised Guidelines for International Money Transfer Operations in Nigeria 2024