The Central Bank of Nigeria (CBN) has banned banks and financial technology companies (fintechs) from international money transfer services. This significant development is contained in the revised guidelines for International Money Transfer Operators (IMTOs) operations, which were officially released on January 31, 2024.
The CBN has also decided not to offer IMTO licences to fintech startups. However, the central bank has yet to clarify how this policy affects fintech companies that have previously received permission to transfer funds internationally.
This new set of guidelines is part of efforts by the apex bank to shake up the money transfer ecosystem and improve liquidity in the Nigerian FX market. The move aligns with a recent CBN circular aimed at curbing speculation of foreign currency hoarding by Nigerian banks, addressing concerns about activities that can distort market dynamics.
Ultimately, the CBN’s goal is to bring stability to the foreign exchange market, which has faced challenges due to the depreciation of the nation’s currency, the Naira.
Key Changes on the Guidelines:
Banks and fintechs can no longer operate as International Money Transfer Operators (IMTOs). However, they can act as agents for licensed IMTOs.
Application fee for an IMTO license jumps from N500,000 to N10 million (a 1,900% increase). The annual renewal fee is also set at N10 million.
The CBN raised the minimum operating capital requirement for IMTOs to $1 million for foreign entities and its equivalent for local ones. This change is a significant increase from previous amounts.