The Central Bank of Nigeria (CBN) has taken a decisive step by prohibiting both traditional banks and financial technology companies (fintechs) from offering international money transfer services. The new guidelines, revealed on January 31, 2024, also introduce a significant increase in the application fee for International Money Transfer Operator (IMTO) licenses and establish a minimum capital requirement.
Under these revised regulations, banks can no longer directly engage in international money transfers but are permitted to act as agents. Similarly, fintech companies are barred from seeking approval for IMTO operations. This marks a notable expansion of restrictions, as the previous guidelines, issued in 2014, only applied to deposit money banks.
The CBN has increased the application fee for an IMTO license from N500,000 in 2014 to a substantial N10 million, indicating a remarkable surge of around 1,900% over the past decade. IMTOs must submit their applications along with the non-refundable fee and specified documents to the Director, Trade and Exchange Department.
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Moreover, the CBN has established a minimum operating capital requirement for IMTOs, setting it at $1 million for foreign entities and an equivalent amount for local IMTOs. This is a departure from previous capital requirements, which were N2 billion for Nigerian companies and N50 million for foreign entities.
The central bank’s proactive stance is driven by its commitment to regulatory oversight and maintaining stability in the foreign exchange market. The measures come in the wake of the CBN’s concerns about foreign currency speculation and hoarding within Nigerian banks, activities that can distort market dynamics.
While the CBN’s moves are aimed at safeguarding the financial system and stabilizing the currency, the impact on remittance payments into Nigeria is a potential concern. The CBN’s strict adherence to these guidelines is emphasized, with immediate sanctions expected for non-compliance. These regulatory changes mark a significant shift in Nigeria’s monetary landscape, ushering in a new era of stringent oversight and compliance within the financial sector.
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