Regulatory Guidelines For Obtaining an IMTO License in Nigeria

The Central Bank of Nigeria (CBN) defines an International Money Transfer Operator (IMTO) as a company approved to facilitate the transfer of funds from individuals or entities residing abroad to recipients in Nigeria, ensuring the payment of corresponding sums through a recognized clearing network. These services are primarily inbound, focusing on remittances sent to beneficiaries within Nigeria.

 

The license ensures compliance with the CBN’s regulatory framework, allowing IMTOs to operate legally and provide money transfer services. The CBN’s Trade and Exchange Department is responsible for issuing IMTO licenses in Nigeria. IMTOs can now facilitate transfers on a “person-to-person,” “business-to-person,” and “business-to-business” basis

 

IMTOs can now facilitate transfers on a “person-to-person,” “business-to-person,” and “business-to-business” basis. The Central Bank of Nigeria (CBN) issued the Revised Guidelines on International Money Transfer Services in Nigeria in January 2024, establishing a comprehensive framework for licensing and regulating International Money Transfer Operators (IMTOs) within the country. These guidelines delineate the procedures and requirements for obtaining an IMTO license, ensuring that operators adhere to standards that promote transparency, security, and efficiency in cross-border fund transfers.

 

Overview of the IMTO Licensing Process

 

The licensing process for IMTOs is structured into two main phases: Approval-in-Principle (AIP) and Final Approval. This phased approach allows the CBN to thoroughly assess applicants’ compliance with regulatory standards before granting full operational status.

 

Phase 1: Approval-in-Principle (AIP)

 

Applications for an IMTO license require a formal submission to the Director of Trade and Exchange Department at CBN, accompanied by supporting documents, including business plans, evidence of approval to operate in other jurisdictions, and a minimum share capital. The application should include the following:

 

1. Application Fee: A non-refundable fee of N10,000,000 (Ten Million Naira) payable via electronic transfer or bank draft.

 

2. Corporate Documentation, which includes;

• Certificate of Incorporation: Proof of the company’s legal registration in Nigeria.
• Memorandum and Articles of Association: Certified copies indicating that the primary business objective includes providing money transfer services.
• Forms C02 and C07: Details of the company’s share allotment and particulars of directors.

 

3. The applicant’s ownership and management Information:

• Ownership Structure: Detailed information on shareholders and their respective holdings.
• Board Resolution: A formal resolution approving the application for an IMTO license.
• Profiles of Directors and Key Management: Comprehensive resumes, including contact information and professional backgrounds.

 

4. Financial Requirements:

• Minimum Share Capital: Evidence of a minimum paid-up share capital of US$1 million for foreign IMTOs or its equivalent for indigenous IMTOs.
• Tax Clearance: Evidence of tax compliance for the preceding three years.

 

5. Credit Reports: Creditworthiness assessments from a licensed credit bureau for the company’s shareholders and key officers.

 

6. Regulatory Compliance: Demonstrated adherence to the CBN’s guidelines on Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT), and Countering Proliferation Financing (CPF).

 

7. Additional Information: Any other documents or reports as specified by the CBN.

 

Upon satisfactory review of these submissions, the CBN may grant an AIP, allowing the applicant to proceed to the next phase. It is crucial to note that the AIP does not authorize the commencement of operations.

 

Phase 2: Final Approval

 

Within three months of obtaining the AIP, applicants must apply for Final Approval, providing the following information/documents;

 

1. Agency Agreements: Copies of formal agreements with authorized dealer banks (ADBs) that will act as local agents.

 

2. Detailed Business Plan: A comprehensive plan outlining:

 

• Nature of the Business: Description of services and target market.
• Internal Controls and Monitoring: Mechanisms to ensure compliance and manage risks.
• Security Measures: Protocols to protect transaction integrity and customer data.
• Financial Projections: Three-year forecasts and market analysis.
• Fee Structure: Details of transaction charges borne by customers.
• Transaction Flow Diagrams: Illustrative representations of the end-to-end process.
• Consumer Protection Policies: Strategies for dispute resolution and safeguarding customer interests.

 

3. Information Technology Policy: Comprehensive IT policies covering aspects such as data privacy, network security, encryption, and incident response.

 

4. Risk Management Framework: An enterprise-wide approach to identifying, assessing, and mitigating risks.

 

5. Contingency and Disaster Recovery Plans: Strategies to ensure business continuity in the event of disruptions.

 

6. Operational Readiness: Evidence of infrastructure and systems in place to commence operations.

 

Successful evaluation of these components may lead to the granting of Final Approval, authorizing the applicant to commence IMTO operations in Nigeria.

 

The Revised CBN Guidelines introduce several critical regulatory stipulations. Below is a breakdown of regulatory compliance considerations for the applicant;

 

• Prohibited Entities: Banks and Financial Technology (FinTech) companies are prohibited from obtaining IMTO licenses but may act as agents.

 

• Annual Renewal: IMTO licenses require annual renewal, with a fee of N10,000,000 payable each year. Failure to renew within the first quarter may result in suspension of operations.

 

• Operational Restrictions: IMTOs are limited to inbound transfers, focusing solely on remittances into Nigeria.

 

• Record-Keeping: IMTOs must maintain accurate records of all transactions for a minimum of five years and submit regular returns to the CBN.

 

• Consumer Protection: Operators are required to implement robust mechanisms for consumer protection and dispute resolution.

The New IMTO Guidelines emphasize internal control systems, monitoring procedures, and compliance with anti-money laundering and counter-terrorism financing regulations as it ensures that all IMTOs operating within Nigeria meet the necessary financial and operational standards, which helps maintain the stability and integrity of the financial system. The regulation also ensures consumers are protected by ensuring IMTO’s are legitimate and trustworthy, protecting consumers from fraudulent and unreliable operators.

In the light of the above, operating without a license is illegal in Nigeria. The regulation ensures that all IMTOs operate within the legal framework and are accountable for their activities. This is why IMTO’s are required to keep accurate records of transactions and submit returns to the CBN. This helps the CBN monitor and regulate the sector effectively.

 

Team 618 Bees.

 

We hope you find this information helpful. Feel free to reach out to us via our dedicated Call Center lines; +2349017190079/08080819653 (WhatsApp available) or 01-2803791 or by email via hello@618bees.com. We look forward to assisting you with all of your business and compliance filings in 2021. Contact us today! 

 

 

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