International Money Transfer Operator (IMTO) License in Nigeria: Procedure and Requirements under the Updated Guidelines
International Money Transfer Operator (IMTO) License in Nigeria: Procedure and Requirements under the Updated Guidelines
Introduction
An International Money Transfer Operator (IMTO) is a Central Bank of Nigeria (CBN)-approved firm that facilitates the transfer of monies from persons or entities residing outside of Nigeria to Nigerian nationals. IMTOs are in charge of receiving funds from other countries and transferring it to Nigerian citizens.
The International Money Transfer Operator (IMTO) license is a necessary requirement for running a lawful money transfer business in Nigeria. To operate as an IMTO in Nigeria, a business must first get a CBN license by submitting an application to the Director of the Trade and Exchange Department. This article examines the procedure for obtaining an International Money Transfer Operator License in Nigeria.
Definition of International Money Transfer Operator
The Central bank of Nigeria Guidelines on International Money Transfer Services in Nigeria, 2024 defines International Money Transfer Operators 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 the IMTO belongs.
Requirements for obtaining an International Money Transfer Services in Nigeria
The application for approval to carry on business of international money transfer services shall be submitted to the Director, Trade and Exchange Department, Central Bank of Nigeria, Abuja.
No person or institution shall operate International Money Transfer Services unless such person/institution has been duly approved by the CBN.
Any financial product involving international money transfer by any person or institution that is not duly registered with the CBN is illegal.
The applicants must comply with the requirements of 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 of weapons of Mass Destruction.
The approval process shall be in two phases namely, Approval-in-Principle and Final Approval.
Documents Required by an International Money Transfer Operator (Approval-in-Principle)
Any International Money Transfer Operator willing to operate in Nigeria shall submit the following documents in support of the application to the Director, Trade and Exchange Department of the CBN:
- A non-refundable application fee of N10,000,000 (Ten Million Naira) or such other amount as may be specified by CBN from time to time, payable 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 Certified True Copy of MEMART, with the primary object clause indicating the provision of money transfer services
- The ownership structure of the IMTO
- Board of Directors approval to operate international money transfer service
- CAC Form C02 (Return of Shares) and C07 (Particulars of Directors)
- Profile of the company to include Curriculum vitae/bio data, contact and email address, telephone numbers of the Board and Management of the company.
- Information on the beneficial owners of the company (where applicable)
- Credit reports from a licensed credit bureau for the shareholders and key officers of the IMTO
- Minimum share capital of US$ 1 million for foreign IMTOs and the equivalent for indigenous IMTOs
- Any other information, document, or report as CBN may from time to time specify.
After complying with the above requirements and receiving favorable consideration, an IMTO can open a bank account and begin pre-operational processes. It’s important to note that the Approval-In-Principle application does not grant the IMTO the right to start operations, also Approval-in-Principle may be withdrawn if the IMTO does not meet with the requirements stated above.
Documents Required by an International Money Transfer Operator for Final Approval
The IMTO shall submit an application for final approval to CBN within three (3) months of receiving the Approval-In-Principle from CBN, subject to the following requirements:
- Names of authorised dealer bank(s) to serve as local agent(s) and copy of agency agreement
- Submission of a detailed business plan to the CBN which shall include:
- Nature of the business
- Internal control systems and monitoring procedures
- Security features for IMTOs with offices in Nigeria
- Three (3) years of financial projection/market analysis for the company
- Transaction and other charges that will be borne by the customers
- Diagrammatic illustration of transaction flows
- Consumer protection and dispute resolution mechanisms
- Information technology policy of the company including:
- Privacy policy
- Information ownership/disclosure/loss policy
- Backup and restore policy
- Network security policy
- Encryption policy
- Confidential data policy
- Password policy
- Third-party connection policy
- Incidence response policy
- Physical security policy
- Enterprise risk management framework
- Contingency and disaster recovery plan/business continuity plan
- Draft agreements with the participating parties
- Project deployment plan (time, location, operation, etc)
- Any other information as may be required by CBN from time to time
Overseas partnership requirements
An indigenous IMTO who wishes to engage a foreign technical partner shall obtain the prior approval of the CBN. The following conditions shall apply to the technical partner:
- The technical partner must be a registered entity, licensed in its home country to carry on money transfer activities.
- The overseas technical partner should be well established in the money transfer business, with a track record of operations.
- Have a minimum net worth of US$1 million, as per the latest audited financial statement, or as may be determined by the CBN from time to time.
- There should be a Memorandum of Understanding that clearly defines liabilities in the event of disputes and/or process failures.
- The CBN will further conduct appropriate due diligence on the promoters, directors, and key officers of the proposed money transfer operator.
Annual Renewal of License
IMTOs must renew their licenses annually for an annual fee of N10,000,000 (Ten Million Naira), which must be paid by January 31 of each year. The renewal must also take place within the first quarter of the year.
Failure by an IMTO to provide a copy of the CBN renewal approval to its agent bank(s) within the first quarter of the year shall be grounds for such agent bank(s) to discontinue any further transactions with the IMTO concerned.
Permissible Activities of an IMTO License Holder
The permissible activities of international money transfer operator shall include inbound money transfer only. The transactions shall be limited to the following operations:
- The acceptance of money for the purpose of transmitting it to a person resident in Nigeria or another country.
- Cross-border personal money transfer services, such as money transfer services for family maintenance and money transfer services in favour foreign tourists visiting Nigeria, shall be allowed under this arrangement.
- The money transfer services shall target individual customers and the transactions shall be on a “person to person”, “business to person“and business to business” transfer basis which may be reviewed by the CBN from time to time.
Non-Permissible Activities
The following activities are not permissible by IMTOs:
- An IMTO shall not engage in any other business other than those stipulated above.
- An IMTO shall not engage in any outbound transaction.
- Buy foreign exchange from the domestic foreign exchange market for settlement
Prohibition of Banks and Financial Technology Companies
All banks and financial technology firms are prohibited from becoming IMTOs. Banks may, however, act as IMTOS agents. Persons prohibited from working in banks under the BOFIA, 2020, are also prohibited from becoming IMTOs.
Conclusion
The International Money Transfer Operator license is indispensable for running a reputable money transfer business in Nigeria. It is issued by the Central Bank of Nigeria (CBN) to organisations requiring to provide cross-border money transfer services.
To receive an IMTO license in Nigeria, an organization must submit an application to the Director of the CBN’s Trade and Exchange Department. Once the application is approved, the IMTO can open a bank account and commence pre-operational procedures.
However, the award of approval-in-principle does not authorise the IMTO to begin activities. IMTOs must follow the CBN’s requirements on anti-money laundering and combating terrorist financing. They must keep accurate records of all transactions, issue receipts to clients, and submit returns to the CBN.
Obtaining an IMTO license increases money transfer operators’ credibility and trustworthiness, allowing them to participate in Nigeria’s enormous and developing remittance sector. The license signifies compliance with regulatory prerequisites, fosters openness, and instills trust in the security and dependability of the services offered.
By Adeola Oyinlade & Co.
Adeola Oyinlade & Co.; a leading full-service law firm in Nigeria provides help and offers advisory to both local and foreign clients on finance and banking related matters including how to process financial and banking licenses in Nigeria.
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