How To Set Up a Licensed International Money Transfer Service Business (IMTO) In Nigeria

The one thing that Fintech has made possible to the point of looking almost casual is the astonishingly speedy movement of money across the globe. International remittances and transfers have come a long way from the era of money transfers that usually took up to a week and a lot of frustrating Due diligence checks. 

International Money Transfer services (along with International Mobile Money Remittance services) have proved to be a lifesaver for Nigeria in general and the Nigerian Fintech ecosystem in particular, with some reports confidently placing estimated Foreign exchange remittances to Nigeria at $25 Billion a year!  

However, the Regulatory Framework governing International Money Transfer services is still as thorough as ever, which is why this article will be dealing with the following topics specifically:- 

– The Regulatory Framework governing International Money Transfer services in Nigeria. 

– The licensing requirements for International Money Transfer service operators (IMTOs) in Nigeria. 

– The full extent of permissible and non-permissible activities for International Money Transfer service companies in Nigeria. 

What is the Regulatory Framework governing International Money Transfer services in Nigeria? 

International Money Transfer services are regulated by the Central Bank of Nigeria (CBN) through the Banks and Other Financial Institutions Act (BOFIA) and specifically the CBN Guidelines For The Operation of International Money Transfer Services in Nigeria 2014(or ‘The IMTO Guidelines’). 

What are the permissible and non-permissible activities stated for International Money Transfer Service companies under the IMTO Guidelines? 

Permissible Activities 

IMTOs are permitted to :- 

– Accept monies for the purpose of transmitting them to person’s resident in Nigeria or another country. 

– Render cross-border personal money transfer services such as monetary transfers towards family maintenance & monetary transfers services for foreign tourists visiting Nigeria. 

– Render cross-border money transfers between individuals only.  

Non-Permissible Activities 

IMTOs are not permitted to:-  

– Engage in monetary transfers between individuals and corporate entities(based on Anti-MoneyLaundering (AML/CFT) requirements). 

– Engage in Moneylending. 

– Act as an authorized dealer in precious metals. 

– Engage in taking monetary deposits as a service. 

– Engage in maintaining current accounts for its customers. 

– Establish letters of credit. 

– Act as a funds custodian for customers. 

– Engage in Institutional transfers. 

– Buy Foreign exchange from the domestic Foreign exchange market for settlement. 

What are the licensing requirements for IMTOs?  

To secure an IMTO license you need to do the following :- 

– submit an application prepared by your lawyer to the office of the Director, Trade & Exchange Department of the Central Bank of Nigeria with the following attachments- 

a). a resolution of your company’s board of directors deciding to offer International Money Transfer services; 

b). a copy of your company’s certificate of incorporation and MEMART (Memorandum &Articles of Association); 

c). a documented copy of your company’s shareholding structure; 

d). statutory Corporate Affairs Commission (CAC) forms on allotment of shares & the particulars of your company’s directors; 

e). profiles of the board of directors and management of your company including their resumes, functional email addresses & numbers along with the company ownership, governance and management structure; 

f). your company organogram; 

g). your company’s business plan; 

h). the IT policy of your company; 

i). the Enterprise risk management framework of your company; 

j). contingency & disaster recovery plan; 

k). credit reports from a licensed credit bureau for the shareholders & key officers of the IMTO; 

l). a 3 years Tax clearance certificate; 

m). your project deployment plan; 

n). a non-refundable application fee of 500Thousand Naira payable to the Central Bank of Nigeria; 

o). evidence of meeting the minimum paid up capital requirement of 2 Billion Naira for Nigerian companies and 50 Million Naira for Foreign companies backed by a guarantee from the parent company based overseas; 

p). evidence of presence in at least 7 countries; 

q). a letter of no objection from the Central Bank of Nigeria where an IMTO license applicant wants to engage in partnership with a foreign technical partner in starting up a worldwide or regional Money Transfer service, in addition to which there must be proof of the Foreign technical partner having a minimum net worth of $1 million as well as being a licensed & registered entity in its home country and having evidence of being firmly experienced in the business of money transfer services. 

Are there legitimate ways of carrying out International Money Value transfer services in Nigeria without the use of an IMTO license for smaller Fintech companies unable to afford the licensing costs? 

Yes, there are. You’ll need to consult your lawyer to find out the options available to you. 

Conclusion :- It is hoped that a basic understanding of how IMTOs work has been achieved with this write-up. This article is however not exhaustive, so you’ll need to further guidance from trained professionals if you’re thinking of venturing into this business going forward.