The Central Bank of Nigeria (CBN) has implemented a significant shift in the financial landscape by barring banks and fintech companies from conducting international money transfer services.
The sweeping directive, outlined in a document dated January 31, 2024, signals a paradigm shift in the regulation of International Money Transfer Operators (IMTOs) in the country.
Under the new guidelines, all banks are expressly prohibited from directly offering International Money Transfer services but are permitted to act as agents in facilitating such transactions. This extends the restrictions specified in the Bank and Other Financial Institutions Act (BOFIA) 2020 to IMTOs, bringing fintech companies under the purview of the prohibition.
Notably, the CBN’s directive expands upon the 2014 guidelines, which solely restricted deposit money banks from engaging in international money transfer services. The decision to include fintech companies aligns with the evolving dynamics of the financial sector, acknowledging the increasing role played by these entities in facilitating monetary transactions.
One of the most substantial changes introduced by the CBN is the astronomical increase in the application fee for licensing IMTOs. The fee, previously set at N500,000, has now skyrocketed to a staggering N10 million. This fee hike, marking a 1,900% increase, underscores the CBN’s commitment to enhancing regulatory oversight in the realm of international money transfers.
Prospective IMTOs eyeing entry into the Nigerian market will now face a formidable financial hurdle. The non-refundable application fee of N10 million is to be submitted with the application for licensing to the Director, Trade and Exchange Department. The stringent prerequisites include evidence of tax clearance, incorporation documents for indigenous IMTOs, and approval to operate in other jurisdictions or agency agreement.
Furthermore, the new guidelines stipulate an annual renewal fee of N10 million for licensed IMTOs. This fee, payable by January 31 each year, reflects the CBN’s intention to ensure ongoing compliance and financial responsibility among operators in the sector.
This regulatory overhaul comes at a time when the global financial landscape is undergoing significant transformation, with a growing reliance on digital and fintech solutions for monetary transactions. The CBN’s decision to restrict banks and fintech companies from direct involvement in international money transfer services is poised to reshape the dynamics of cross-border financial transactions in Nigeria.
While the move is likely to face scrutiny and analysis from various stakeholders, including financial institutions and fintech players, it underscores the CBN’s commitment to strengthening regulatory frameworks to meet the evolving demands of the financial sector. As Nigeria navigates this pivotal juncture in financial regulation, the impact of these changes will undoubtedly reverberate across the broader financial ecosystem.