How to Get an International Money Transfer Licence in Nigeria

The International Money Transfer Operators (“IMTO”) licence is required for the provision of cross-border payment services to Nigerians and foreigners in overseas countries. In Nigeria, no person or institution is allowed to provide international money transfer services unless such person or institution has been duly licensed by the Central Bank of Nigeria (“CBN”).

The International Money Transfer licence allows its holders to do any or all of the following:

(a) To accept monies for the purpose of transmitting them to persons resident in Nigeria or another country;

(b) To provide cross-border personal money transfer services, such as, money transfer services towards family maintenance and money transfer services favoring foreign tourists visiting Nigeria shall be allowed under this arrangement; and

(c) To provide money transfer services that target individual customers mainly and the transactions shall be on “person to person transfer” basis to safeguard against corporate customers that might structure their transactions into smaller amounts to circumvent the statutory reporting threshold.

It is noteworthy that an IMTO shall not engage in any other business other than as authorized by the CBN. Specifically, an IMTO is not authorized to do the following:

(a.) Acting as an authorized dealer in gold or other precious metals;

(b.) Engaging in deposit taking and/or money lending business;

(c.) Maintenance of current accounts on behalf of customers;

(d.) Establishing of letters of credit; or

(e.) Acting as a custodian of funds on behalf of customers.

(f.) Engaging in institutional transfers.

(g.) Buying of foreign exchange from the domestic foreign exchange market for settlement.

The licensing and regulation of the International Money Transfer Operators (“IMTO”) in Nigeria are pursuant of the Guidelines for the Operation of International Money Transfer Services in Nigeria, 2014 (“IMTO Guidelines”).

The permissible operations of International money transfer services shall include allowable inbound and outbound international money transfer transactions. The transactions shall consist of the following activities:

(a)The acceptance of monies for the purpose of transmitting them to persons resident in Nigeria or another country.

(b)Cross-border personal money transfer services, such as, money transfer services towards family maintenance and money transfer services favoring foreign tourists visiting Nigeria shall be allowed under this arrangement.

(c) The money transfer services shall target individual customers mainly and the transactions shall be on “person to person transfer” basis to safeguard against corporate customers that might structure their transactions into smaller amounts to circumvent the statutory reporting threshold.

A licensed IMTO company shall not:

a. Act as an authorized dealer in gold or other precious metals;

b. Engage in deposit taking and/or lending money;

c. Maintain current accounts on behalf of customers;

d. Establish letters of credit; or

e. Act as a custodian of funds on behalf of customers.

f. Engage in institutional transfers. A money transfer service operator shall not engage in any other business other than as authorized by the Bank.

g. Buy foreign exchange from the domestic foreign exchange market for settlement.

The required share capital for an International Money Transfer Service company in Nigeria is N2,000,000,000.00 (Two Billion Naira) where the licence is sought by a Nigerian company.

However, where a foreign payment company is seeking to apply for an IMTO in Nigeria, then the share capital must be at least N50,000.000 (Fifty Million Naira) or its equivalent, plus the guarantee of the parent company.

The CBN requires promoters to make a deposit of the above sum in a designated account domiciled with the CBN as demonstration of the promoters’ seriousness about the business. The deposited sum will be refundable after the grant of the licence.

The Corporate Affairs Commission (“CAC”) will not incorporate an IMTO unless a provisional approval of the CBN called “Approval-In-Principle” (“AIP”) has been obtained.

Below are the requirements for incorporation of an IMTS company in Nigeria:

i. Two proposed names for the company: these names will be submitted to the Corporate Affairs Commission for name search, screening and approval. Upon approval, the promoters may thereafter proceed to the CBN to obtain an AIP after which they can register the company with the approved name;

ii. Proposed registered address, email address and phone number of the company;

iii. Details of the Shareholders, Director(s) and Company Secretary to include their names, Contact/Home address, Email address, Phone number, Date of birth, Occupation, National Identification Number (NIN), and electronic signatures respectively. Please note that for foreigners, an international passport will be sufficient for means of identification;

iv. Object of the Company: The proposed company must be registered as an International Money Transfer Service company.

REGULATORY BODIES

The principal body of laws regulating the International Money Transfer Service in Nigeria are contained in the following Legislations:

i. Central Bank of Nigeria Act 2007

ii. Bank and Other Financial Institution Act (BOFIA), Law of the federation of Nigeria, 2004.

iii. CBN Guidelines on International Money Transfer Services in Nigeria 2014

There are other regulations and circulars of the CBN which are applicable to the International Money Transfer Services in  Nigeria.

POST INCORPORATION

Upon incorporation, the following are the three (3) main post-incorporation regulatory registrations and approvals for setting up and operating an international money transfer service company in Nigeria:

1. Registration with the Federal Inland Revenue Service (FIRS);

2. Registration with the Special Control Unit against Money Laundering (SCUML); and

3. Registration with the Central Bank of Nigeria (CBN);

LICENSE REQUIREMENTS

Any company that is desirous of providing international money transfer services in Nigeria must apply and obtain the IMTO license from the CBN through the Director, Trade and Exchange Department of the CBN.

The followings are the requirements for registration with the Central Bank of Nigeria:

• Board of directors’ approval to offer international money transfer services;

• A copy of the applicant’s certificate of incorporation;

• Certified true copy of the company’s Memorandum & Articles of Association of which the primary object clause shall indicate the provision of money transfer services;

• Shareholding structure of the company;

• CAC Form showing Allotment of shares) and Particulars of Directors of the company;

• Profile of the Board and Management of the Company to include: CVs, functional contact e-mails and telephone numbers, ownership, governance and management structure;

• The organogram of the company;

• Business plan includes:

• The nature of 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 the company will bear
• Profit sharing agreement among the parties,
• Diagrammatic illustration of transaction flows,
• Consumer Protection and Dispute Resolution Mechanism.

• 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

• Enterprise Risk Management Framework

• Contingency and Disaster Recovery Plan (business continuity plan)

• Draft agreements with the participating parties

• Tax Clearance certificate for three (3) years

• Project Development Plan (time, location, operation, etc.)

• Credit reports from a licensed credit bureau for the shareholders and key officers of the money transfer services operator

• Any information as may be required by the CBN from time to time

• A non-refundable application fee of N500,000 (Five hundred thousand naira) or any other amount that the bank may specify from time to time, payable to the Central Bank of Nigeria by electronic transfer;

• Evidence of meeting the minimum paid-up share capital of either

i. N2,000,000,000 (Two billion naira) for Nigeria companies; or

ii. N50,000,000 (Fifty million naira) or its equivalent for foreign companies, plus the guarantee of the parent company.

• Presence in at least seven (7) different countries.

A money transfer operator, who wishes to engage a foreign technical partner that will provide global or regional payment or money transfer platform, shall obtain a letter of no objection from the CBN.

The following conditions shall apply to the technical partner:

a. The foreign technical partner must be a registered entity, licensed in its home country to carry on money transfer activities.

b. It must 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.

c. The Overseas technical partner should be well established in the money transfer business, with a track record of operations.

d. There should be a Memorandum of Understanding (“MoU”) that clearly delineates liabilities between the partners in the event of disputes and/or process failures.

Note that the CBN will further conduct appropriate due diligence on the promoters, directors, and key officers of the proposed money transfer operator.

TRANSFER LIMITS

Allowable limit of the outbound money transfer shall be US$2,000 or its equivalent per transaction, subject to periodic review by the CBN.

All in-bound money transfers to Nigeria shall only be disbursed to beneficiaries through bank accounts or mobile money wallets. Where the beneficiary does not have a bank account or mobile money wallet, payments shall only be made upon the provision of a satisfactory reference from a current account holder in a bank, confirming that the beneficiary is the bona fide owner of the funds.

The following conditions shall apply in the transaction:

i. The currency to be given to a money transfer agent for an outbound transfer shall be the Naira;

ii. An outward payment transaction shall be executed in a convertible currency agreed between the parties; and

iii. Where a currency conversion service is offered before initiation of a payment transaction or at the point of payment, the money transfer services operator must disclose all charges, as well as the exchange rate to be used for converting the payment transaction

PENALTIES

If a Money Transfer Service Operator or its agent fails to comply with the conditions of the CBN licence or Guidelines, the CBN may take any corrective action against the IMTO as may be prescribed from time to time.

In addition to the use of remedial measures, the CBN may take any or all of the following sanctions against an IMTO, its board of directors, officers or agents:

(a) Withhold Corporate approvals;

(b)Financial Penalties;

(c) Suspension from Money Transfer operation; and

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