CBN Bans Banks, Fintechs From International Money Transfer Services Hikes Application Fee By 1,900%

The Central Bank of Nigeria (CBN) has banned banks and financial technology companies (fintechs) from operating International Money Transfer Services (IMTS).

VerseNews reports that the apex bank on January 31, 2024 announced this in revised guidelines for IMTOs, which also increased the application fee for IMTO licenses from N500,000 to N10 million.

The guidelines prohibit banks from operating IMTS but allow them to act as agents. Financial technology companies are not permitted to obtain approval for IMTO.

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.”

In the previous guidelines issued in 2014, only deposit money banks were prohibited. However, the CBN has extended the ban to fintechs.

The apex bank also increased the application fee for IMTO licence from N500,000 in 2014 to N10 million in the revised guidelines. This is an increase of about 1,900% in about 10 years.

The document noted that any IMTO intending to operate in Nigeria shall submit its application to the Director, Trade and Exchange Department with the following documents, among others:

“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.”

The minimum share capital for foreign IMTOs is set at $1 million, while local IMTOs must meet an equivalent amount in naira.

Previously, it was N2 billion for Nigerian companies and N50 million or its equivalent for foreign companies.

The CBN also removed the allowable limit of exchange rates quoted by IMTOs.

The revised guidelines aim to promote transparency and ensure compliance with regulations in the foreign exchange market.