Procedures for Obtaining an International Money Transfer Operator License (IMTO) in Nigeria

Generally, any company seeking to conduct the business of providing money transfer services in Nigeria must obtain a license from the Central Bank of Nigeria.

In 2014, the CBN issued the Guidelines on International Money Transfer Services in Nigeria (2014) for the maintenance of adequate and reasonable financial services to the public and specifically for the regulation of international money transfer operators (IMTO) services in Nigeria. Accordingly, the guidelines serve as the main regulatory framework for the operation of IMTO in Nigeria.

According to the CBN guidelines, all applicants who want to obtain an IMTO license must forward their licensing requests to the Director, Trade and Exchange Department of the CBN, Abuja, and pay a non-refundable fee of N500,000. Upon a successful application, the license permits the holder to accept money for the purpose of transmitting it to a person resident in Nigeria or another country. 

There are currently about 60 approved international money operators in Nigeria. This article focuses on the procedures.

Documentary Requirements for Obtaining the IMTO License

All applications for licensing must be made to the Director, Trade and Exchange Department of the CBN, Abuja, and  must be accompanied by the following:

1. board of directors’ approval to offer international money transfer services. 
2. A copy of the applicant’s certificate of incorporation 
3. Memorandum & Articles of Association (certified copy), of which the primary object clause shall indicate the provision of money transfer services. 
4. The shareholding structure of the company is 
5. Forms C02 (Return on Allotment of shares) and C07 (Particulars of Directors) 
6. Profiles of the Board and Management of the Company to include: CVs, functional contact e-mails and telephone numbers; ownership, governance, and management structure 
7. The organogram of the company
8. business plan, to include: 

• The Nature of the Business 
• Features of the scheme 
• Internal control systems and monitoring procedures 
• Security features that will be put in place:
• Three years of financial projections and market analysis for the company 
• transaction and other charges that customers will bear. 
• A profit-sharing agreement among the parties 
• Diagrammatic illustration of transaction flows 
• Consumer Protection and Dispute Resolution Mechanism

9. information technology policy of the company, including 
   • Privacy Policy 
   • Information Ownership, Disclosure, and Loss Policies 
   • The Backup and Restore Policy 
   • “Network Security Policy” 
   • Encryption Policy 
   • Confidential Data Policy 
   • Password Policy 
   • Third Party Connection Policy 
   • Incidence Response Policy 
   • Physical Security Policy 
10. Enterprise Risk Management Framework 
11. Contingency and Disaster Recovery Plan (business continuity plan) 
12. Draft agreements with the participating parties 
13. Tax Clearance Certificate for three (3) years
14. Project Deployment Plan (time, location, operation, etc.) 
15. credit reports from a licensed credit bureau for the shareholders and key officers of the money transfer services operator; 
16. Any other information as may be required by the CBN from time to time 
17. A non-refundable application fee of N500,000 (Five Hundred Thousand Naira) or such other amount that the bank may specify from time to time, payable to the “Central Bank of Nigeria” by electronic transfer 
18. Evidence of meeting the minimum paid-up share capital of 

1. N2,000,000,000 (Two Billion Naira) for Nigerian companies; and 
2. N50,000,000 (Fifty Million Naira) or its equivalent for foreign companies, plus the guarantee of the parent company.
3. We have a presence in at least seven (7) different countries.

Overseas Partnership Requirements 

A money transfer operator who wishes to engage a foreign technical partner that will provide a global or regional payment or money transfer platform should obtain a letter of no objection from the CBN. The following conditions shall be applicable to the technical partner: 

1. Be a registered entity, licensed in its home country to carry on money transfer activities.
2. 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. 
3. The overseas technical partner should be well established in the money transfer business, with a track record of operations. 
4. There should be an MOU that clearly delineates 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. 

Permissible Operations of an IMTO License Holder

The allowable limit for outbound money transfers is $2,000 or its equivalent per transaction, subject to periodic review by the CBN. The permissible operations of international money transfer services are:

1. The acceptance of money for the purpose of transmitting it to a person resident in Nigeria or another country. 
2. Cross-border personal money transfer services, such as money transfer services for family maintenance and money transfer services favouring foreign tourists visiting Nigeria, shall be allowed under this arrangement.
3. The money transfer services shall target individual customers mainly, and the transactions shall be on a “person to person transfer” basis to safeguard against corporate customers that might structure their transactions into smaller amounts to circumvent the statutory reporting threshold.

Non-Permissible Activities 

A money transfer operator is not authorized to: 

1. Act as an authorized dealer in gold or other precious metals 
2. Engage in deposit taking and/or lending money 
3. Maintain current accounts on behalf of customers 
4. Establish letters of credit 
5. Act as a custodian of funds on behalf of customers
6. Engage in institutional transfers
7. Buy foreign exchange from the domestic foreign exchange market for settlement

What Happens When an IMTO Licensee Acts Contrary to the CBN Guidelines?

A money transfer service operator shall not engage in any other business other than as authorized by the CBN. If a money transfer service operator or its agent fails to comply with these guidelines, the CBN may take any corrective action against the defaulters as may be prescribed from time to time. Some of the sanctions the CBN may make against an IMTO, its board of directors, officers, or agents include: 

(a)Withhold Corporate approvals; 

(b)Financial Penalties;

(c)Suspension from Money Transfer operation; and 

(d)Revocation of the Money Transfer Service operation license.

Conclusion

In conclusion, the CBN guideline sets the rules for operating international money-transfer services in Nigeria, and it also establishes a basis of regulation that applies to such operations at all levels.

It is important to note that this guideline is applicable to all operators and service providers who wish to offer their services within or outside Nigeria.

The CBN has licensed many IMTOs to date with many foreign-based companies entering the Nigerian market alongside local ones. It is critical that these new firms understand and comply with regulations around licensing and compliance.